Part 3 in the “CFOs Rethink Business” series
The digital economy offers a wealth of opportunity for business leaders to add and create value. However, technology is no longer a luxury or “nice to have” capital expenditure that can solely set enterprises apart from the competition. Success in today’s technology-driven economy, as Mark Cuban and Elon Musk have recently noted, will be determined by the level of creativity strategic leaders bring to the field. Understanding where technology is best leveraged – and where it isn’t – is critical for modern corporate leadership and an intelligent finance organization.
Every corporate executive today is working to adapt quickly and anticipate customer demands. After all, for the average consumer, brand loyalty is driven by these qualities, which directly tie back to the customer experience. What does this mean for the CFO, whose role has traditionally been measured in terms of controllership and compliance?
CFOs become agents of change
A recent white paper by the Aspen Institute found that these two traditional metrics are no longer defining qualities of effective financial leaders. The most critical skills for success for CFOs today are general management (27%) and creative strategy (26%). This finding emphasizes the shift in roles CFOs are expected to fill in today’s digital landscape. Long seen for their role in tracking performance and efficiency, CFOs are now charged with top-to-bottom strategy, and as catalysts for transformation and growth.
As such, CFOs must recognize their roles as agents of change charged with driving technological transformation across their companies. Now, I’ll be the first to note that CFOs thrive on details, numbers, stone-cold rationality, and words like “stewardship” and “compliance.” But to succeed in today’s digital economy, CFOs must recognize that creative thinking (and a healthy dose of risk-taking) will be the defining factor in helping to lead their respective organizations through digital transformation journeys.
Shifting technology from a capital to an operational expense
First and foremost, this shift in mindset calls for CFOs to change the way they are thinking about technology as a tool for business growth. The Aspen Institute study confirmed that customer brand loyalty is determined by the speed, foresight, and service companies can deliver to them on a moment’s notice. Technology like the Internet of Things has profoundly reshaped how companies can interact with their customers. For the CFO, this means IoT has uncovered opportunities for companies to focus their resources, transform their traditional offerings, and generate new and enhanced revenue streams – but only with the right approach.
For example, we’ve seen athletic apparel companies successfully augment their offerings to go beyond single point-of-sale transactions to deliver ongoing, personalized experiences to customers that can be monetized. Think about fitness trackers and how the data from those wearable devices can help inform a runner about options when they’re ready to purchase new sneakers. On the surface, these shifts open additional revenue streams that go beyond the brick-and-mortar experience; but they also point to a larger truth about how CFOs must view technology to succeed today.
Innovation in IoT, machine learning, and data analytics is reshaping how and where companies must focus their resources in order to drive more profit. CFOs are often in the vanguard of helping their businesses think creatively about how they can leverage these advancements to do so. It takes an iterative, always-on approach to analyzing and adjusting the technology investments your firm is making – not a one-time capital expenditure.
Mitch Paull, a partner at EY, hit the nail on the head in his characterization of CFOs as the executive “often in one of the best positions to help [their] company see and do things in new ways.” This includes the creative thinking that goes into determining the best applications for technology in helping companies drive greater revenue.
CFO keys for success
What will success look like for CFOs? Digitally fluent CFOs will be defined by several qualities, including:
- The ability to maintain responsible investments and stewardship as a part of their traditional role expectations while remaining up-to-date on the latest advancements in technology.
- Commitment to using data in real time to make intelligent decisions and break down silos within the organization.
- A knack for identifying and investing in the right technology to not only generate internal efficiencies but to improve responsiveness to consumers who have come to expect lightning-quick support and define their brand loyalty by this quality.
- Foresight in determining how technology investments can help drive new business – whether it’s through the transformation of billing models or accentuated servicing.
- A fundamental shift in thinking when it comes to how CFOs view technology as an opportunity and greater alignment across the C-suite. After all, the value of new products and services enabled by digital technology and spearheaded by CFOs of the future will stem from viewing them as an ecosystem.
To achieve success, CFOs must not only maintain their firm’s current financial standing but serve as change agents, as well. They need the foresight to incorporate technology effectively and the wisdom to reframe technology from being a nice-to-have capital expenditure to an operational expense. That requires a healthy level of creative thinking in order to maximize its potential. As more companies look to incorporate technology to expand their existing product and service portfolios or enter new industries entirely (see: Amazon), these transformations will go up in smoke without an effective CFO at the helm.
Join the Aspen Institute and SAP for a C-level roundtable conversation
The Aspen Institute and SAP invite you for an intimate, C-level roundtable conversation, exploring how companies succeed in today’s evolving digital economy. You’ll hear from peer leaders and strategists—from the Fortune 100 to the bestseller lists—about companies who are leading the way in digital transformation. To join us, register here.
In the next blog in this series, Tammy Coley, chief strategy officer at BlackLine, takes a look at the importance for CFOs of thinking creatively as agents of change and leaders at the center of innovation.