Part 4 of the “Leading Through Digital Transformation” series
Preparing a small or midsize business for a digital future is no easy task. Digital capabilities must not only align with goals, activities, people, and culture, but also take advantage of opportunities to reimagine how business is done and customers are served. Yet, limited resources, talent shortage, and a never-ending list of priorities inevitably get in the way.
Finance leaders are looking beyond these constraints, realizing that digital transformation is a competitive advantage and, more important, a mandate for long-term survival. But one question still looms in the boardroom: Does the company have what it takes to realize the CEO’s and the finance leader’s unique vision of a digital business?
According to CFO Research’s study of financial professionals from small and midsize businesses, “Embracing the Promise of a Digital Economy,” 83% cite that their brand’s future success hinges on how well it adapts to the pace of change and complexity. While this finding may confirm the need for digitized and automated processes and customer channels, it is critical to remember that digital success cannot be achieved through technology alone. It also requires a three-prong, fundamental strategy.
Strategy drives, technology enables
In small and midsize businesses, it’s not unusual for the finance leader to assume responsibility for more than one functional area. Increasingly, their daily responsibilities are intertwined with everything from HR to operations and marketing to customer service. Thanks to a close relationship across various functions, they have a front-row seat to the impact of a digital strategy – good and bad.
Because they have a significant degree of influence across the firm, finance leaders must plan, deliver, execute, and nurture a digital transformation that encompasses a strategy with three key attributes.
The size of small and midsize businesses is an inherent competitive advantage over their larger competitors. They demonstrate a level of nimbleness and agility that allows them to pivot and refocus whenever the market changes. And because every transaction counts and means the difference between paying the bills and digging deeper into debt, these firms tend to establish close, individualized relationships with their customers.
Finance leaders can determine which partners and innovations can move the business into new markets and geographies when they combine agility with data-driven insights. Firms are more willing to pilot plans while accepting responsibility and risk to allow room for trial and error – and one thing is known: The fast eat the slow. In the end, decision makers can ascertain whether a strategic move should be invested in more heavily in the future.
Small and midsize businesses are generally ahead of the game when it comes to technology. For some, it’s a way to find a niche and start their businesses. Others may view it as an opportunity to enable a small workforce to manage everything – from people and processes to products and services. And no one knows this better than finance leaders.
Despite their openness to technology, firms may find the abundance of data on every aspect of the business incredibly overwhelming, especially market changes, customer demand, shopping behavior, and business performance. They simply do not have the staff of their larger rivals to crunch and analyze every bit of data, which can be a competitive disadvantage.
To remain savvy in decision making and technology adoption, firms should rely on analytics to uncover insights. And no, a Ph.D. in analytics and data science is not needed to get it right. Instead, applications that visualize information and create easy-to-understand, interactive insights can help managers understand the full story behind that data and make the best decisions exactly in the moment that action is needed.
The leadership of small and midsize businesses tends to have more ambitious plans than some of their larger rivals. And why not? Technology has made it easier to compete at the same level as their long-established, global competitors. Plus, the ability to react, take action, and evolve at a moment’s notice gives firms an enviable edge in building the growth they want.
To understand which opportunities can drive growth, finance leaders should consider technology that enables simulation and planning through sophisticated analysis of what’s happening right now in the marketplace, industry, and customer’s buying journey. Plus, modern finance applications should include external market-driven data – such as social media, product or service reviews, and overall sentiment towards adjacent offerings – to deliver immediate, forward-looking, and actionable insights that uncover innovative opportunities for expansion and new revenue streams. And also don’t forget: If you’re successful, you’ll soon become considered a large enterprise.
Agile, savvy, and ambitious: A CFO’s path to a digital future
Without a doubt, finance leaders in small and midsize businesses have a thorough understanding of the entire company. This knowledge enables them to build a clear digital vision for a collaborative workplace culture; sophisticated, data-driven decision making; and fiscal responsibility into every action. More important, an ambitious, agile, and savvy strategy will empower finance leaders to expand their vision as changes in the digital economy accelerate and force the company to evolve.
Take UberEATS, for example. After disrupting the taxi service industry in many cities worldwide, Uber decided to search for new ways to add value to the customer experience and to offer more opportunities for drivers. Based on an analysis o f public social sentiment about takeout home delivery, the company decided to launch an app and partner with local eateries with the promise of delivering orders in minutes .
To learn how your business can realize the promise of the digital economy, check out CFO Research’s recent report “Embracing the Promise of a Digital Economy.” Be sure to check every Wednesday for new installments to our blog series “Leading Through Digital Transformation” to explore the various leadership roles in today’s growing small and midsize companies.