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The 21st Century CFO

By Ian Swanson, CFO, Delicato Family Vineyards

Ian Swanson, CFO, Delicato Family Vineyards

In the post-capitalist society, it is safe to assume that anyone with any knowledge will have to acquire new knowledge every four or five years or else become obsolete”. This is a quotation from famed economist Peter F. Drucker, and is very relevant to the world that the CFO operates in today. Some months ago, I was asked what advice I would give any aspiring student entering into the world of company finance today. It was a great question. The world we work in today is so far removed from the world when we joined maybe some 30-plus years ago.

When I started my career, there were no personal computers, cell-phones, or internet, and everything we did was written by hand, in pencil. My fist jobs as an accounting student were to check the addition in enormous spreadsheets and trial balances. This is a world far removed from that of today where we grapple with big data, cloud and Instagram.

"Be flexible, adaptable, embrace change, and hang-on for the ride"

The CFO role today has changed dramatically. The classic view of the accountant of the past was someone with armband and eyeshades sitting in a dark office, surrounded by books and ledgers, a large 10 key and has little contact with the rest of the business. Today the CFO is more connected to other departments than ever before, as much, if not more, than the CEO. CFOs are business generalists with a significant impact on the company’s strategy and risk management, as well as the financial results and are asked to give opinions and insight into a wide variety of topics. In short, the CFO tends to ‘own’ anything that does not clearly sit on someone else’s desk.

The CFO today has a unique vantage point from which to view the company from head to toe and will has influence on many business decisions. Whereas in the past it was all about the numbers and balance sheets today the CFO is expected to be a ‘value architect’ or ‘value integrator.’ I’m pretty sure that was not a concept around when I was taking my exams. Essentially though, this term translates into meaning the CFO’s role is moving toward ‘driving business growth and managing complexity while controlling costs’ as defined by Accenture. In this statement alone, you can appreciate how the role has changed. Without knowing, most people would expect that those responsibilities belonged to the CEO and not the CFO.

For the 21st century CFO, the technical accounting and business skills that got you into this position, it is no longer enough. Of the top five challenges that I see as critical today, accounting and finance are not on the list. No matter where you work I suspect that several or all of the following are areas of focus for you.

Technology and Business Intelligence

We have talked about this here before and so I will not belabor the point. But the rate of change in technology and ensuring that the technology meets the business needs are critical and complex. We must be quick to adapt to and understand the value and cost emerging technologies, and whether we need to incorporate it into the current structure. Are you on premise or cloud based, or both, and if so for what? We are asked to guide the investment and measure the return. Then, lastly, we are required to manage the data that all of these investment use and produce. This depends on the rules around data governance, perhaps our most important role from our vantage point. How do we talk about our business and use a common language which in turn dictates how we capture, store, and map our data. Definitely an art more than a science.

Talent Management

In today’s workplace, people skills are valuable as the business skills, and CFOs are only as good as the people around them. Are the skills you need tomorrow the skills you have today, and if not how are you filling the gap. The ability to attract, retain and develop talent in order to create an engaged workforce is a top priority. And today this is further complicated as the workforce is very different from a generation ago. A job, a paycheck and a pleasant work environment are not enough. The millennial worker of today is motivated by different drivers, such as flexibility and opportunity for learning. They also are concerned about what the Company stands for and its values. Although it was tough to compete for talent before, it is even tougher today.

Strategy

The current economic environment demands that CFOs take an expanded, broader role in strategic planning and decision making. CFOs need to provide critical business and economic insights to support smart decision-making. According to the High Performance Finance study from Accenture, 75 percent of companies say that the CFO’s involvement in strategic decision-making has increased over the last two years. The CFO is charged with managing the cost base and increasing business complexity while supporting investment and business growth. There are few roles today beyond the CEO that extend as far across the organization.

Regulatory & Compliance Risk

When it comes to complexity, there are more regulation and compliance requirements than ever before, and the list continues to grow. Add on the data security and PCI, and there is even more risk. No-one wants to be the headline in tomorrow’s newspaper. The role of risk manager often falls to the CFO in many organizations. Do you have a crisis management plan? Have you identified and prioritized the biggest risks?

Managing Complexity

As the business landscape changes, we continually have to look at our priorities and organizational focus and adjust as needed. Do we still need to do this? Do we have the resources we need? Do we have the right information or tools? Often the answer to at least one of these is no.

To be successful the keys to success for today’s CFO are; a) building strong connections with all levels of the organization, b) providing a clear vision and setting expectations, c) being a strong communicator, and d) being open to new ideas and opportunities.

So what advice would I give to that aspiring student? Be flexible, adaptable, embrace change, and hang-on for the ride.

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