As an internal business partner to the CEO or business owner, the CFO is a key driver of increasing value in a company and not just “cost controllers”. A recent article in CFO Magazine highlights how CFOs are focused on improving the business models and operating models of various businesses.
There are inherent challenges in changing traditional operating models:
“Many finance chiefs are looking for change and want to move beyond traditional models to those that drive growth and value. But are hesitant – afraid of disrupting the business when the original model is already working.
“Some [CFOs] were concerned about taking the business forward under contradictory mandates, making it difficult for them to focus sharply on re-architecting the way their firms operate. They question how to drive growth while also running traditional finance functions, such as quarterly reporting and budgeting. They wonder how to control risk but fuel digitalization, which can actually fuel risk.”
CFOs face an increasingly difficult balancing act in juggling the need to drive change and growth in their companies while also maintaining traditional accounting and finance functions (e.g., Accounts Payable, Accounts Receivable, reporting, etc.).
In additional, digitalization and automation are rapidly changing many strategies and processes for both large and small businesses. This is particularly true here in the San Francisco Bay Area even with non-tech businesses.
The article offers some high-level advice on how to drive growth in a company:
“Find fuel for growth and find it early.”
CFOs pay a key role in finding savings and efficiencies in costs and expenses in order to create additional profits. These newly-found profits and cash flow can then become the “fuel” to invest in new growth initiatives.
“Move away from a zero-failure culture.”
“Finance has traditionally lived in fear of errors, and rightly so. Balance sheets matter. But, when driving value and finding new ways of doing business, failures matter because they indicate movement and growth. It no longer makes sense to spend six months developing business processes around a product that may have a shelf life of one year before the next iteration is developed. Be fast and flexible and allow for failures. They mean your team is innovating.”
“Make finance flashy.”
In our role as an outsourced CFO, we wouldn’t use the word “flashy” to make this point. The main point being made here is that CFOs are more than accountants and are drivers of growth strategies and initiatives in many different areas. This requires a modern skillset and training different than in the past.
“Build from the outside in.”
Good CFOs drive the changes to streamline processes and utilize new digital, cloud-based technologies in order to increase speed and efficiency (i.e., reduce expenses and increase scalability) through the business.
“Eat, sleep, and breathe the change.”
Continuous improvement and change is necessary for consistent, profitable growth. Leadership teams (i.e., CEOs, business owners, CFOs) need to embody this from the top of the company. CFOs are uniquely positioned to be value-added beyond basic accounting and become sources of predictive analytics that are transformative for the organization.