Skilled CFOs can expertly manage risk with their eyes closed. Yet in today’s dynamic business and technology landscapes, uncertainty is the new risk. While yesterday’s CFOs saw the world in black-and-white, tomorrow’s CFOs must see shades of gray to enhance value.
There is continuous evolution in terms of finance chiefs forming into strategic business partners — a meaningful evolution that’s been transformational for both CFOs and for businesses. What is the next logical step? The CFO becomes the chief value architect for the business. But in turn, value creation has a whole new look.
As non-traditional business models emerge, revenue growth will come from a new segment of collaboration, data sharing, and outcomes-focused customer strategies. CFOs will have to navigate an ecosystem of partners, competitors, and customers where boundaries are uncertain.
In this spirit, here are five things that CFOs can do to enhance value when the old rules no longer apply.
1. Develop a broad-based, holistic business strategy.
Developing a holistic strategy to enhance revenue growth, position against traditional competitors, and build internal capabilities can be difficult — even more challenging than optimizing current business value, generating new business value, and creating dynamic capacity. Why? Creating a sustainable, holistic strategy involves doing all of those things. While the network effect of ecosystems inherently multiplies value for the business, it multiplies complexity for the finance organization.
CFOs must face this complexity with determination and enthusiasm. As principal value architects, they must focus their enterprise view and disciplined risk management mindset to determine the company’s role in the ecosystem.
2. Evolve valuation models.
Just as it’s always been, the CFO’s role is both guardian and champion of value, green-lighting potential and red-lighting pitfalls when it comes to investment and other strategic decisions.
As companies develop new business models, many will invest in products and services that will, by design, take time to generate profit. This will require CFOs to not only evolve their valuation models, but also to make carefully calculated decisions to protect overall profitability.
While the CFO must act as an arbiter of value using data-driven valuation models, they must also focus on what is said as well as how it is said. Being candid and transparent about valuation processes is as critical as tone does matter.
3. Embrace the power of culture.
As CFOs focus more on strategy, growth. and transformation, finance culture needs to come with them.
By balancing risk monitoring and empowerment, CFOs can help create a growth mindset that center organizations through periods of significant change without losing sight of core values.
CFOs must also build a strong culture across the business and with ecosystem partners. An inclusive organization that welcomes difference will be important, particularly as the future finance workforce will include unconventional talent.
4. Balance the core and the cutting-edge.
It is important to stay stable while being dynamic to fuel corporate growth and value creation.
CFOs must be able to manage wearing multiple hats at the same time to balance ensuring compliance and control with cultivating innovation and growth.
5. Make your principles your compass.
Managing skillfully through uncertainty can be daunting for seasoned and future CFOs alike. However, many are finding a solid ground by anchoring their work with core principles. No matter how much change swirls within and around a company, some fundamentals remain constant.
CFOs who take an adaptive approach to value creation — one that does not shy away from evolving processes, capabilities, technologies, culture, and talent — will be standouts. They will enable their organizations to move fast enough to create new and sustainable value, whatever the future may hold.
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