CFOs beyond the balance sheet: steering strategy and innovation

“The CFOs of tomorrow understand the importance of a well-defined strategy coupled with strong execution to win in a fierce market landscape,” says David Herbert, EY Americas Finance Transformation Strategy and Vision Leader. “I think it’s because they understand tech, they get data, and most importantly, they see the value of people: they’re able to join all of these pieces together in a way that disrupts traditional thinking and drives business value and TSR.”

Don’t stop thinking about tomorrow

Recent EY research, in collaboration with the University of Oxford, underscores the need for a proactive, forward-thinking approach to organizational transformations. The joint study revealed that 85% of senior leaders have participated in several significant company changes during the last five years. However, two-thirds of these leaders acknowledge that at least one fell short of expectations, due to flat-footed planning, execution delays and a reluctance to leverage game-changing technologies.

An informed, proactive approach to creating a financial strategy and vision can help organizations create transformational value in three distinct ways: First, CFOs can enhance performance by equipping team members with the skills, technology and data needed to set themselves apart. Second, by using automation to enhance the use, governance and analytics of enterprise-wide information, CFOs can reallocate resource time and attention to strategic projects. And finally, all these increased efficiencies can unleash opportunities for future financial innovation.

Put people first

As the DNA of finance leadership evolves, finance teams are well positioned to refine their skills, emerging as vital players in business success. CFOs can help businesses make smarter, faster, more profitable decisions by building teams that are not only analytically and technologically proficient but that also include critical thinkers – those who understand how to shape and influence business value.

To do so, CFOs should listen to feedback, understand sources of concerns, and address issues in an emotionally supportive and constructive way. The EY/Oxford research suggests that providing emotional support improved the average likelihood of transformation success by nearly 20%. The study also found that the potential for a successful transformation increased by a factor of 2.6 when the workforce understood the leader’s strategy and vision, so clear two-way communication is key.

“By embracing this new role, CFOs can position their departments as critical contributors to the company’s strategic direction,” says Herbert. “Finance is poised for a transformative leap forward, where harnessing the right talent can shape the future of business.”

Data and automation are yesterday’s news, today’s imperative

One key area where CFOs are moving forward is in the implementation of emerging technologies. In the EY/Oxford study, nearly half (48%) of respondents in successful transformations said that their organization had invested in the right technologies to meet their vision.

Artificial intelligence (AI) and machine learning are becoming the rule rather than the exception. These technologies can not only manage data and automate routine tasks but can also provide deeper and faster insights, allowing finance teams to respond more swiftly to market changes.

AI-powered capabilities are crucial, as CFOs need a clear understanding of how best to use data – not just financial data, but also broader business metrics and external data sources. The intersection of financial and nonfinancial information serves as a source for new and compelling insights and creates a robust framework for critical decision-making, precise budgeting, accurate forecasting and strategic resource allocation.

“If you think about the business structure, there’s an HR group for talent management. There’s a procurement group that makes purchasing decisions. There’s a manufacturing group that builds your products. There’s a marketing group that drives sales to customers,” says Herbert. “Finance uniquely integrates all these functional domains, holding a privileged position to drive value.”

A culture of creative courage

Agile innovation has become the fuel for most transformations. New data sources and technology will remain on the shelf and unused without disruptive thinkers who are empowered and rewarded for driving changes in ways of working. For decades, finance organizations have been encouraged to maintain process discipline, performing work by the metronome and without error. Culture and mindsets will need to change to free innovation.

“Advances in automation bring an almost unprecedented opportunity for finance professionals to drive business impact in new ways,” says Deirdre Ryan, EY Global Finance Transformation Leader. “It is possible to find the balance between the day-to-day and the ideas, insights and capabilities that will move organizations forward.”

The CFOs of tomorrow will benefit from fostering a culture of creative courage to realize opportunities that a “don’t fail” mindset might miss. But visionary leadership, strategic communication and firm direction remain paramount to success.

Visionary finance strategy will be realized by people and technology

The CFO role is verging on a watershed moment. To be successful, CFOs must be willing to challenge the status quo and embrace a strategic, innovative and data-powered approach to finance. They should be adept at managing relationships across the C-suite and be seen as enablers of business success, rather than just gatekeepers of financial resources.

A clearly communicated strategy and vision that everyone can believe in will inspire workers to go the extra mile. The EY/Oxford study revealed that nearly half (47%) of respondents in a high-performing transformation said the vision was clear and compelling.

The successful CFO of the future can lead toward the North Star with talent, automation, and the power of data and innovation. As businesses navigate complexity, the CFO’s role will continue to advance in importance, making it indispensable to the success of any organization.