It’s 2:00 a.m. How is the typical CFO of a large company sleeping? Probably not so well.
It’s by now a cliché, but true nonetheless: disruptive change is all around us, upending the rules with blinding speed. And that’s causing huge challenges for big, well-established enterprises whose leaders are feeling intense pressure to figure out what they need to do to succeed in this new normal. CFOs know that finding innovative ways to create new value requires disrupting their own business. But they also know that they have markets, customers, and revenue streams to protect, which means that maintaining controls, efficiencies, and stability within organizations are still critical. How can they achieve these two seemingly contrasting goals?
The answer: agility
When we talk about an agile organization, we mean one that’s able to respond quickly to opportunities and minimize the negative impact of threats and challenges. But it’s not just about speed. Agility also involves using the organization’s trove of information to uncover new sources of value – and doing it all efficiently to control costs.
The fact is that an agile business is far better positioned to flourish in today’s economy. Agility enables large companies to thrive on uncertainty; they can move more quickly than they have in the past, while maintaining and building on their current strengths.
Agility in action
We are working with one company that offers a good example. The organization is in the process of completing a major technology-enabled transformation that’s been underway for many years. Typically, when such an initiative is finished, a company will wrap up its work and then focus on realizing the return on its investments in time, money, and effort before even thinking about what comes next.
But not this company. Rather than simply declaring victory, it has created a team that’s already working on the next generation of transformation that the technology can drive – even before finishing this one. This “radical” decision generated quite bit of controversy within the company. But the company’s leaders recognized that they are responsible for ensuring that their technology can support the enterprise in flexing with what’s ahead.
How does a company become more agile?
It starts at the top. Leadership must set the tone for a culture of experimentation, because trying new things is vital to the health of the enterprise. “Failing fast” and then moving on quickly is now required to be competitive.
This is key to infusing the startup mentality needed for a company to consider how it can capitalize on change and new technologies. Whether that’s manifest in a “skunk works” operation, a formal innovation hub, an ad hoc team charged with challenging existing practices, or some other capabilities, every organization has to be willing to take some risks and make a leap.
One of the most important people driving this change is the CFO, who’s in an interesting spot. CFOs need to figure out not only what “being agile” means for the finance function, but also how the broader enterprise can leverage new technologies and make the greatest use of all the data it generates and collects. CFOs should be at the center of the discussion because they can provide valuable direction on where, strategically, the company should be investing, as well as the expected ROI. Decision-making can accelerate when a CFO can validate the positive impacts of the proposed changes on business processes, workflows, and the profit and loss.
The time to act is now
History is full of companies that failed to adjust their business to changing market forces – and paid the price. Some simply never saw the changes coming until it was too late. Many others did, but lacked the strategic and operational agility to minimize the threats and capitalize on new opportunities. They were too busy protecting the existing business, since its days were numbered.
Today, change comes even more quickly and unpredictably than ever before. With so many powerful technologies available – blockchain, the Internet of Things, the cloud, intelligent automation, robotics – all it takes is one nimble competitor or one startup to figure out a new and innovative way to use them, leaving unprepared incumbents on the outside looking in.
And that’s why agility has become arguably the most critical attribute a company needs to remain competitive and relevant.
For more on why agility is critical to today’s enterprise, listen to “Agile Business for the Digital Age: Ready for the New Normal?” with SAP’s Matt Jennings and EY’s Tony Klimas. To learn more about how to bring agility to the finance function, listen to the replay of the Agile Business Finance webcast.
The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.