The Changing Role of the CFO

Here is what Jack Ma had to say of Daniel Zhang as he passed on to him the torch of chairmanship of Alibaba, “His analytical mind is unparalleled, he holds dear our mission and vision, he embraces responsibility with passion, and he has the guts to innovate and test creative business models."

Nothing defines the evolution of the CFO more eloquently than this. The attributes that Jack Ma spelled out are exactly how the role of the CFO has expanded today, to becoming a strategic leader who drives the company with the CEO. In fact, as Alibaba’s CEO, Daniel Zhang has achieved and managed 13 consecutive quarters of consistent and sustainable growth.

From Operational Excellence to Strategic Intelligence

The traditional expectations of operational excellence are par for the course for today’s CFO. In a disruptive, uncertain and global economic environment – one where business is seeing a power shift to emerging economies – the CFO is emerging in a new avatar of multiple leadership responsibilities. Of enterprise strategy. Of globalisation, with its challenges in terms of regulatory requirements and risk management. Of technology alignment. Of talent development. Of stakeholder management. And much more.

In short, the CFO’s fundamental goal is to elevate organisational excellence by unifying the outperformance of its people and leaders. This calls for creating a closer collaboration of organisational strategy, forecasting, risk assessment, finance operations, and talent management. In the process, the CFO emerges as the trusted ally of individual business units even as he or she integrates them for holistic organisational growth.

As an enterprise strategist, the CFO must formulate, validate and execute business strategy amidst growing complexity. They must demonstrate deep understanding of the business, and develop more effective processes, tools and methodologies. They must also lobby for their business on the national and global stage, drive the capital allocation agenda, lead the M&A strategy, design the right compliance protocols, and influence relevant policy development.

As a transformation architect, the CFO must ensure that their function plays a catalytic role in driving change – one that drives business outcomes that go beyond short-term cost reductions. They must be agile in making insightful technology investments that fan growth and maximise returns on investment.

CFOs are poised to be the perfect partners to CEOs in creating and implementing their vision for the organisation. Even as they demonstrate expert Finance leadership and controllership, they will bring strategic decision-making to the C-suite table. They will astutely balance collaboration and independence. Being the only leader in the organisation who has a complete view of the ‘big picture’, and all the relevant connections, the CFO will be the influencing persuader for others to see this holistic view. The tremendous access they have to diverse data also places CFOs in the driver’s seat in terms of helping other business leaders outperform – thereby earning their trust.

The Unified Face of Multiple Capabilities

The role of the CFO as a number cruncher was laid to rest long back. Their role as mere business partners is also approaching an end. Today, they wear the responsibility of Chief Performance Officer of organisation. CFOs are no longer just ensuring ‘correct’ financial numbers, but also actively driving operating rigour and excellence within the organisation. We need to keep this in mind when looking at the value-adding capabilities of the emerging CFO. Business acumen must cap commercial acumen. This includes data savviness – understanding information, and extracting business insights for the right actions, and for enhanced risk-taking ability.

People skills are extremely important, too. CFOs must engage leaders across the organisation to communicate clearly on financial and business performance. They should be able to invite information-sharing to have a truthful pulse on all that happens in their company. Only then can they generate ideas and solutions that facilitate business, earn trust, and build a competitive edge through investments in infrastructure and talent. Simultaneously, they should empower their teams to become co-creative problem solvers and innovators.

CFOs need to understand emerging technologies and their impact on business. How will cloud-based solutions, automation, AI and collaboration platforms drive speed, agility and innovation? How can advanced analytics create a more intelligent Finance function to provide differentiated insights and faster decision-making?

The role of the CFO today has a far greater impact and implications for an enterprise than it did any time in the past. Be it their capabilities or career paths, CFOs will evolve in multiple directions, and with multi-faceted skills. Globally, Finance department structures and operations have drastically transformed with rapidly changing business landscapes, and the consequent demands on the role. Such priorities will drive the need for a new CFO ‘avatar’ that blends technical, business and behavioural competence.

Like every other change, this too presents challenges and opportunities in equal and enormous measure. Truly transformative CFOs will constantly challenge the status quo on the role they play to keep their organisation’s structure and business model purpose-fit for today and the future

Sanjay Puria This article is based on discussions with Sanjay Puria looks at how Finance transformation is enabling business transformation.



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