Over the past three to five years, it’s become evident that the role of the finance leader has considerably evolved. Not too long ago CFOs and other finance leadership were merely responsible for high-level quantitative decisions including risk and compliance – as if that wasn’t enough. Nowadays, finance leaders are expected to be strategic and analytical partners for businesses, even collaborative – painting a whole new picture of what was once a very black and white landscape.
So, how can a finance leader prepare for this new area of gray?
In short, a CFO can accomplish this by finding ways to create value – and yet, even value has a new look.
Therefore, with new business models emerging, and the CFO and other finance leadership getting pulled into more and more of the business, a new approach is imperative.
I recently came across an article on CFO.com that discusses the concept of CFOs creating new value and decided to share some of their tips along with a few of my own. Take a look at the 5 Ways CFOs Can Create New Value below.
1. Know your place.
The transformation of the CFO/finance leader has called for a new corporate climate, one mixed with numerous people, types of data and technologies from a number of avenues. This type of corporate “ecosystem” allows for a network effect that can enhance value tremendously. However, this can also add a lot of complexity at the same time. Being able to know your place within this new system and effectively manage it, will truly provide your team and the business with immense value.
2. Change up your valuation model.
The finance leader is typically charged with owning investment decisions. However, with this new corporate climate, CFOs and the like need to protect their overall profitability. The article states, “While the CFO must act as an arbiter of value using data-driven valuation models, some finance organizations are still grappling with an “us vs. them” relationship with the business.” Therefore, the finance leader must assess all aspects of the valuation including communication i.e. tone, delivery and transparency, etc. in order to be a respected influencer.
3. Recognize the strength of Culture.
Now more than ever, finance leaders are embracing the fact that culture is directly tied to the strength of the business. Therefore, as a CFO’s role continues to transform, the way a company’s culture is treated needs to evolve, as well. Having the right people with the right passion and the right mindset is key, regardless of what that looks like. Culture has a life of its own and the people who make up a winning culture are the essence of that.
4. Craft the core and the cutting edge.
While the finance leader must still accomplish the traditional aspects of its role, he or she must know how to balance undertaking the “new” values, as well. Being dynamic in your approach is important to manage the dynamic functions of the business. There’s a duality that exists now that didn’t exist a decade ago. In fact, the time allocated to a finance leader’s day has flip-flopped with the time dedicated to core functions decreasing to allow for more time to focus on business transformation initiatives.
5. Practice your principles.
As CFOs and other finance leaders look to the future of the business, there is no doubt a sense of uncertainty from the unknown of what’s to come. That’s why staying true to your own personal values, and the core values of the company, are necessary to stay the course. Keeping with the fundamentals during a time where there are so many new stratagems is good practice for the CFO who might be looking for guidance along the way.
Overall, the article concludes, “Finance leaders who take an adaptive approach to value creation — one that does not shy away from evolving processes, capabilities, technologies, culture, and talent — will be standouts.”
What are some other ways CFOs and other finance leaders can create new value for a business? Share your thoughts in the Comment section below!