Innovation is a very broad concept. At its purest sense, innovation is generally referring to changing or creating more effective processes, products and ideas. It’s tweaking business models, adapting to changes in the environment and otherwise improving on existing products or services for a streamlined efficiency. It also boils down to risk-taking because innovative thinking essentially leads to creating new markets.
So why has there been a connotation attached to CFO’s as merely the money manager, and not the forward thinking innovative architect that has the ability to fuel an organizations’ growth?
Introducing the Contemporary CFO
The contemporary role of the CFO has evolved into this hybrid position that has now been seen as a go-to person within the dominant coalition of a company.It shouldn’t serve as a huge surprise, but many companies are now coming to the realization that other than the CEO, the CFO is the only other executive with a clear view of the big picture, has access to all essential data, is well versed about the business and overall operations.They are conscious on all the moving parts of an organization and with this unique birds eye view vantage point, they can recognize the overall health of the company and how to effectively forecast any growing trends and demonstrate to other corporate stakeholders that these plans are worth investing in and pursuing.
“By providing capital flexibility, delivering data-backed insight to make informed decisions, building transparency into capital-allocation decisions, and knowing when to be opportunistic, CFOs can help their companies responsibly pursue growth and innovation in a weak economy.” – Frank Friedman, Deloitte CFO.
CFO’s are now looked to create more value within a company than ever before with their innovative thinking and creative problem solving – backed by data. This exclusive position of influence propels them to the strategic table with fresh insights on how to mitigate risk and guidance on how to drive better overall performance.
CFO’s are now looked to promote innovation, while still managing risk and ensuring long-term financial goals are met– a delicate juggling act to say the least.
Employing a proactive approach
“CFOs are now expected to be more than just an accountant. They are expected to drive business fundamentals and value creation through leadership skills, strategic thinking, and the ability to work collaboratively across teams and stakeholders.” - Maria Izurieta, CFO
CFO’s can leverage their greatest skill of comprehending analytics and transforming this raw data into decision-making power. This function wouldn’t be made possible if they didn’t have a financial budgeting solution that acts as a single system to store, consolidate and manage the entire company’s data.
How CFO’s can learn to embrace an innovative mentality
This is ground zero to enable them to create the environment that stimulates innovation, which would then lead to getting a product to market in a cost effective manner.
Here are a few important aspects on why CFO’s can embrace innovation.
- They have a firm grasp on the evolving economic climate and market conditions.
- They monitor and stay current on consumer trends.
- There are significant shifts in consumer behavior and expectations happening today that are driving demand for new and different products.
In order for CFO’s to enhance their position of being a strategic architect, they first and foremost need to be able to paint a picture on the overall status of their company. It starts with finding a healthy equilibrium by balancing the spreadsheet;streamlining the entire process, shortening the budget cycles and simplifying the overall data collection.
“CFOs are increasingly looked to for strategic guidance on how to improve the financial metrics of the business.” - Maria Izurieta, CFO
Gaining access to data and financial performance metrics faster with enhanced visibility and real-time insights is imperative before looking down the road to identify opportunities to free up capital for investments. It also helps them have full transparency when the decision–making process gets expedited and when to be a bit more opportunistic from a strategic lens.
Connecting the dots
Sir Richard Branson has a perfect mantra that he uses to fuel his companies. A-B-C-D. Always be connecting the dots.
The foundation for true innovation is the ability to connect the dots. Innovation stems from the dots that others skipped over, didn’t question or connect. Therein lies the massive opportunity to create value for the organization moving forward.
It’s a delicate maneuver to push towards innovative measures while at the same time protecting the balance sheet and managing risk. As Friedman explains, having a strong balance sheet is important in order to ‘pursue our strategies while continuing to invest in our infrastructure and improve performance – all while protecting financial stability.’
CFO’s have evolved into a highly critical role than ever before. Their breadth of strategic and analytical knowledge vastly outweighs their role as merely a highly placed money manager. In order for a business to succeed in this competitive landscape, it’s imperative to stop viewing the position through a back-office lens and understand how important they are at fueling your business forward.
It will be interesting to see how many CFO’s embrace this strategic position and when to differentiate between operations and opportunity. None of these decisions would be made possible if the right amounts of tools are not added to their financial arsenal to easily aggregate and filter data.
Financial management is critical to an organization’s success. Book a free demo of Limelight and discover how easy it is to produce budgets, forecasts and reports to ensure your long-term financial goals are met and to accurately depict the overall health of your company.