The enormous global changes of the past decade have led to a volatile, uncertain, complex and ambiguous (VUCA) environment. Hence, the CFO’s responsibility has become more critical to hedge his or her organisation from external macro-economic factors, industry moves and pressure on profitability, among others.
In this new role, CFOs are creating enormous value for the various stakeholders within and outside their organisations by providing guidance on matters of strategy, ensuring and enforcing regulatory compliance, anticipating operational impacts of business decisions and mitigating risks. They are enablers of organisational change, positioned at the absolute centre with complete control on the financial aspects of the business, as well as being abreast of the technical aspects for future-readiness.
For the 21st Century CFO, it is critical to:
• Know Your Environment
• Be a Valued Financial Expert
• Manage Your Relationships
• Ensure Adherence to Policies and Standards
• Flex Your Mind
• Lead Your Team
• Manage All Core Financial Activities
• Be a Credible Business Leader
• Influence Business Direction
• Support Key Business Initiatives
Expected to be a business generalist, risk management expert and business intelligence source, the new-age CFO is called upon to catalyse organisational transformation and act as a strategic partner to the CEO. There is no denying that the rapid pace of the current business and economic climate necessitated this change, where the CFO had to look beyond just putting in cost-control and risk-management measures. The changing dynamics of the market have led to challenging situations, especially financial, which require major innovation and tremendous amount of hard work, thus making the CFO extremely crucial to an organisation’s survival and success.
The good work done by the CFO is eclipsed by the performance of the company. With such a broad range of responsibilities, modern CFOs have quietly transitioned into the role of being the CEO’s ‘go-to’ person in all matters concerning the business.
In my view, being in the finance function enables you to have a bird’s eye view of the business. It is in a unique position to support or lead the creation of sustainable success for the business and influence the strategy of the organisation.
It is important that organisations and their CFOs are able to change and adapt to the demanding world around them to succeed, although many businesses feel uneasy at the prospect of change. The top challenge remains preserving and sustaining revenue growth in existing and new markets, while grappling with low consumer demand and high borrowing costs. The CFO will need to up his/her game in a wide range of growth-related activities, while balancing long-term growth with short-term investor pressures. Apart from this, cost-management and talent-retention would be the other challenges for the CFO to address.
In order to stay ahead of competition, CFOs must do the following:
• Focus on value-added activities that can differentiate and drive the business forward
• Apply emerging technologies to drive the next generation of efficiencies in the business
• Achieve service-quality excellence through automation or outsourcing wherever possible
• Monitor market opportunities and make investments that allow the organisation to take advantage of emerging demand
• Equip the organisation with the agility to accept and implement a continual flood of new regulatory, control and reporting requirements
New skill-set acquired with the changing role of CFO
The CFO has always been seen as the controller, but I believe that a CFO actually contributes to more than 80% of the roles in the company and must have various skill-sets to help the business operate in a dynamic environment. As a CFO, it is necessary to establish systems and processes at every level where revenue and expenses are involved, besides identifying the right platforms and tools that will help monitor growth, achieve transparency and support data-mining.
Resource-mobilisation, merger and acquisition, corporate finance, compliance and risk-management are areas that give a CFO a bird’s eye view of the business. It is essential to have in-depth knowledge and understanding of the business, its financial status and regulatory and tax requirements. It is also extremely essential to forecast, plan and analyse the company's growth chart at every stage. Financial leaders play a vital role in the creation of long-term sustainable value. The finance function is in a unique position to support or lead the creation of sustainable success for the business and influence the strategy of the organisation.
CFOs, today, also don the role of the chief brand custodian, who is passionately involved in the success of the brand and is as involved as the CMO in reinforcing the brand in his/her words and actions.
In the given economic scenario, financial and operational forecasting can help avoid losses or reduce them largely. But this state of preparedness cannot be built overnight. As the Group Chief Financial Officer and Chief Strategy Officer of Blue Dart, I follow a very simple thumb rule – start a month / quarter / year by assuming that it will be the most difficult one. This enables better planning and ensuring prudent measures. It is not what you do, but how you plan strategy that makes you a winner.
At Blue Dart, cost-saving measures are applied at a more holistic level. The obvious strategies we implement are cost-optimisation and rationalisation and revenue-increase from new products, introducing new value-added features and penetrating new markets. We are sure that even if we curtail costs, it cannot be at the cost of service quality, as customers become choosy about spending and want more from less.
CFO: The Risk-Taker
Today’s CFO has an expansive financial perspective with a view of the “big picture”. That is why risk – with its bearing on all aspects of an organisation – must be viewed through the CFO’s lens. By monitoring the economic impact of risk, CFOs are most adept at managing resource-allocation and scenario-planning. CFOs must use risk-management to improve the predictability of results, optimise resources, protect organisational assets and enable growth. Seizing business opportunities is often heavily dependent on the CFO’s ability to identify, assess and manage risks.
Risk-management demands top-tier attention for three primary reasons:
The pace of business complexity is so brisk that it’s outpacing the sophistication of risk-management, leaving businesses vulnerable.
The risk implications of unfavourable media are tremendous and its impact on the business is immediate.
The correlation between risk-management and bottom-line performance is strong and direct.
With inflation rising, there is no denying that cost pressures have been increasing. Though the express industry is highly dependent on the economy, our financial results have been good. Blue Dart performed reasonably well on all fronts and capitalised on its strong brand equity and focused growth plans, customer loyalty, service quality and strong workings with group companies.
Over the years, Blue Dart, as a brand, has evolved to become synonymous with reliability and trustworthiness in delivering shipments across the length and breadth of India. It has always made a conscious effort to create a bond with its customers and has, today, become synonymous with value, quality, speed, efficiency, responsiveness and service excellence. These are the reasons why customers trust Blue Dart with their consignments, which has resulted in Blue Dart wining the ‘Business Superbrand’ for the tenth time in a row in 2017.
Enterprise Risk Management (ERM)
As the enterprise landscape becomes more complex, customers more demanding and computing devices more abundant and powerful, the need for business resiliency is of critical importance. Resilience has helped Blue Dart adapt and recover from any unplanned impact to the business environment by managing risk and implementing contingency and continuity planning.
Blue Dart developed its disaster recovery plan to ensure a documented, detailed and tested blueprint for directing the recovery process in the event of a man-made or natural disaster. In general, a “disaster” is defined as any event that causes sufficient interruption of computer operations to move those operations to an off-site recovery location.
Disaster recovery plans are designed to restore a company’s applications, data and physical network within established critical timeframes that minimise the impact on the business, with respect to lost revenue and operational interference. Furthermore, disaster recovery planning is also critical to ensure compliance with mandatory business regulations.
My aim is to identify and recognise those future CFOs that demonstrate outstanding potential and leadership capabilities combined with a record of excellence and integrity. There is an enormous need for organisations to formalise succession-planning and talent-development processes in order to cultivate a healthy pipeline of future finance leaders. Blue Dart knows the value of second-line development and succession-planning. Our leaders strictly follow this philosophy and approach and at all levels communicate, engage and guide our people in achieving their goals and ambitions.
I have always considered myself a "scalable" professional, always willing to learn and re-learn. Disruption is the new normal. So, I would like to be a person who constantly stays ahead of the curve, is on the cusp of innovation always and indulges in the finer aspects of life with great work-life balance.
My motto has been “Stop Doing Nothing”. I love to engage myself in new, unexplored activities that lead to personal milestones of happiness for me and people in my immediate surroundings, family, friends and colleagues. Increasing our personal happiness quotient, believe me, is the best thing one can do to improve health, performance and contribute to the organisation and society.
About the author:
Yogesh Dhingra is Group CFO & Chief Strategy Officer, Blue Dart