In previous editions of this survey, CFOs have been far more conservative than their non-CFO counterparts. Historically, they have been more focused on maintaining a robust balance sheet and taking a wait-and-see attitude toward investment.
Not so in this survey. Overall, the data indicates that the gap between CFOs and non-CFOs may be closing, suggesting that CFOs are assuming a more strategic role within the organization. This is consistent with our findings in Partnering for performance, Part 5: the CFO and CEO, which indicates that 76% of CFOs report greater involvement in corporate strategy in the last three years, driven by a focus on growth.
We are seeing that CFOs may be taking their foot off the brake a little bit as they shift their focus to include strategic planning in addition to their traditional finance role. They are looking beyond profit and loss, and balance sheets in favor of more forward-looking indicators for decision-making.
And their outlook in this regard is mostly positive — 33% of CFOs see the global economy strongly improving (versus 22% of CFOs six months ago). That’s not to say they don’t see the challenges emerging from the slowdown in China, sub-par growth in the Eurozone and challenges in Japan. They do, which is why many CFOs are looking outside of their local markets for growth. However, it seems they are more optimistic than some analysts and economists have been recently.
What is your perspective on the state of the global economy today?
CFOs also recognize that in a low-growth environment, and with their organizations already running as lean as possible, they can’t afford to stand still. They need the agility to address disruption to their current business model so that they can compete with challengers from within and outside their industry.
Low growth challenges the core of the business. As a result, although the core business remains the primary focus for nearly a third of CFO respondents (versus 23% of non-CFOs), more than two-thirds are concentrating on innovation — increasing R&D, exploiting technology to develop new products, and expanding into new geographies.
What is the primary focus of your company’s organic growth over the next 12 months?
In another departure from their traditional stance, CFOs are also feeling more bullish about M&A, with 60% (versus 50% six months ago) indicating that their organization is actively pursuing deals in the next 12 months, driven largely by strong improvements in deal fundamentals.
Do you expect to actively pursue acquisitions in the next 12 months?