How the CFO can reframe finance for tomorrow

The COVID-19 pandemic is an unprecedented period of uncertainty, but it has also changed the way we think about the world. Innovative companies are pioneering new business models and accelerating digital priorities. As companies transform how they work in a post-pandemic world, CFOs have the opportunity to demonstrate their critical strategic role in reframing the future of the enterprise.

Doing so will require major shifts in how CFOs act and think. Achieving a balance between short-term results and long-term value will become a priority. CFOs will need to take the lead in embedding long-term value in corporate reporting and strategic decision-making, inspire an open finance function, and elevate emotional intelligence to build more connected C-suite teams.

Drive long-term value creation

Across the world, there is a growing acceptance that a narrow focus on short-term profit targets can come at a cost to economic growth and longer-term returns. There is an increasing consensus that organizations should focus on providing long-term value for various stakeholders, including investors, employees, customers, and their communities.

CFOs therefore need to look beyond solving major issues today or in the near term and imagine what finance could look like five years from now. The perception of finance as a risk-averse, cost-conscious team with a back-office mindset will soon be a thing of the past. Instead, the finance function should embrace a value-focused culture that is aligned with the enterprise’s purpose.

Inspire a fluid and open finance function

As the digital era takes hold, new virtual markets are emerging as platform-based giants connect buyers and sellers more seamlessly. In this hyperconnected world, how organizations create value will shift from behind the walls of the company into the network space. The finance function would become more open, working as part of an extended ecosystem and in deeper collaboration both within the organization and externally.

Many finance leaders believe that this more open future for the function will become a reality over the next five years. More than three-quarters of respondents believe that finance IT will be cloud-native rather than on-premises by 2025, and 74% believe the function will be part of a blockchain-based ecosystem.

A key part of this transformation involves embracing a broader ecosystem of decentralized partners. Partnerships allow the finance team to gain access to intellectual property and advanced technologies, and enable it to focus on higher-value activities. Yet, aside from tax, fewer than one-third of finance functions are currently working with external partners on a range of finance responsibilities, signalling a significant opportunity that remains untapped.

Elevate emotional intelligence

In a post-pandemic world, the global system is likely to be reshaped by megatrends ranging from shifting power dynamics and artificial intelligence to geopolitical uncertainty and environmental risks. The organizations that can respond to these megatrends most effectively are likely to be those with strongly connected leadership teams.

Yet, there remain opportunities for many finance leaders to strengthen relationships with their C-suite peers. For example, 52% reported limited or no collaboration with the chief human resources officer, while 44% said the same of their relationship with the chief marketing officer. This lack of connectivity is of concern, given the increased importance of driving customer insights and managing the change and people impact related to digital disruption.

To build stronger relationships with their C-suite peers, CFOs can focus on elevating emotional intelligence as one of their most important leadership attributes. This involves pinning down what makes for a constructive and valuable peer relationship, approaching discussions with an open mind, and taking the time to share challenges with other leaders. This will help CFOs speak the same language as their leadership peers and create genuine engagement within the C-suite.

The role of the CFO has seen major shifts over the last decade — and will only continue to evolve. Embracing these new ways of thinking and working will be vital for CFOs to grow their leadership influence and succeed in their role.