Some crystal gazing: CFO Version 3.0

No ask of the CFO has been a simple one - and nor will it be going forward.

It is five years since we launched CFO India. Given the pace of the world we inhabit, it feels like yesterday on some fronts, and like a lifetime on others. Looking ahead, I find myself staring into the future - crystal gazing - wondering what it holds in store for CFOs. What is it about anniversaries that push us to ask pertinent questions? You can ignore them as just another number – or use them to find answers and as an excuse to reflect, reconsider, recalibrate. Doing the latter, is often more meaningful. And so that is what we did - and voila - CFO Version 3.0 was born.

Before we move forward, this is also a good time to recall how we got this far.

I remember so clearly; it was 1996. The Economist Intelligence Unit published a report titled ‘The Evolving Role of Finance’ – the genesis of today’s vibrant community of CFOs in India – and perhaps the world over. The report, based on how businesses were expected to grow, spoke about the need for a CFO to become ‘strategic’, partner the CEO and ensure that they reduce time spent on the ‘mundane’ and make themselves available for more ‘important’ matters.

In some ways, this seminal piece of work has shaped the role of the CFO over the last decade. If anything, there is often a need, to pull a CFO’s attention back to what might be mundane but is absolutely critical to the safe and sane functioning of the finance function. Many senior finance professionals say that, for a CFO, the devil will always lie in the detail – ignoring this basic hygiene undermines the role, the organisation and governance at large. Andersen, Enron, and Satyam among others only go to prove the point.

Basis the 1996 report, many who have assumed CFO responsibilities only in the last decade don’t know any other way to be – for them it is about ‘strategic partnership with the CEO’. Conversations that begin with ‘the CFO needs to move beyond being a bean counter, naysayer, gatekeeper…’ etc are increasingly alien. Equally, all dimensions of ‘the strategic CFO’ seem passé – automate, move beyond transaction processing, understand what drives the business, partner the CEO, use technology, and so on. Most CFOs already do this. So what next? What will the next version - CFO 3.0 - look like?

Borrowing from the wisdom of those who have witnessed change in the responsibilities for the finance function over the years, we uncovered the ‘new mantras’ for the future. We pressure-tested these with a study of the beliefs and experiences of successful executives as well as research put forth by celebrated academics and management gurus. Finally, armed with these insights, CFO India, picked the non-negotiable top four mantras that will define CFO Version 3.0.

1. The Leadership Mantra

2. The ‘Outside-In’ Mantra

3. The Technology Mantra

4. The Integrity Mantra

 The first one is simple enough. There is no way to scale the corporate ladder without chiselling yourself into a leader. What kind of a leader can you be, and more importantly, how can you be your best – not in the world, but for the world as Dewitt Jones of the National Geographic urges us to be.

Mantra number 2 is transformational and possibly the toughest for a CFO to master. It requires a fundamental shift in your world-view – asking you to be the link between the outside world and the insides of your function – in order to “see around corners” and steer your team and the organisation in the most effective manner. We take our cue from A G Lafley, Procter and Gamble’s CEO, who wrote an HBR article titled ‘What Only the CEO Can Do’, and underlined the importance of being connected to the outside world. It offers a peek into the demands of senior leadership – something the CFO of the future must embrace. Learn more about why and how in the section dedicated to being ‘outward looking’.

At number 3 is technology. For as far as the naked eye can see, technology will continue to reshape, improve, change, and disrupt the way we do business and determine the businesses we do. A quick look at the big winners for this decade will remove any doubts about how critical it is for you to keep pace with technology and its potential impact. To navigate your organisation meaningfully, as a CFO there is no option but to understand and leverage technology for competitive advantage, but more importantly, for survival!

And last but definitely not the least, is ‘The Integrity Mantra’ – signifying your need to obsess about governance and compliance, and managing the risks to your enterprise. In a world where everything is more uncertain, CFOs must focus on identifying and controlling enterprise-wide risks, both the known and the unknown. While how you manage risk is a business decision, governance and compliance, which so far has often been a matter of choice, will become mandatory for staying in the game. Setting benchmarks for governance and adhering to them will occupy increased mindshare, time and resources. Honesty and integrity will definitely be, the difficult but best and unavoidable policy.

No ask of the CFO, so far, has been a simple one – and nor will it be going forward. But like you surpassed what was asked of you in the last decade and a half, we have no doubt that you will soon outgrow the four non-negotiable mantras and be well on your way to defining CFO Version 4.0.

As in the past, we will walk alongside…

Thank you for your friendship and encouragement over the past five years. We, too, will get by with a little help from our friends!

Warm wishes for a wonderful 2015 and welcome to version 3.0!

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