CFO career journey

The evolving role of the Japanese CFO

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We believe that the importance of the Japanese CFO as chief strategist to the CEO is high because of the need to fight for profitability in an uncertain business environment. However, it is often the case that the majority of CFOs are unable to fulfill this role.

The main three obstacles they face include:

1. Lack of knowledge or experience in the business

To provide the CEO with advice on flexible resource allocation, it is vital that the CFO understands above all the future of the business, its processes (development, purchasing, manufacturing, sales, marketing, etc.), product specifications and relative strengths and weaknesses versus its competitors.

2. Lack of information about business divisions and lack of authority to participate in business operations

To support the CEO’s strategic decision-making and achieve the consolidated group’s financial targets, it is vital that operating information be transparent and freely accessible to the CFO. Relevant operating information is wide ranging and consists not only of consolidated financial figures segmented by business line, region, product line or customer, but also includes the results of business intelligence and analysis.

3. Inefficiency of accounting and finance operations

The accounting and finance division has a number of traditional financial duties: accounting duties such as disclosure and cash flow management. While these must still be performed, the CFO must also fulfill the new role of chief strategist to the CEO. The extent to which the CFO can carry out these dual roles with limited operational resources is a difficult problem.

Proposed solutions to these issues

Based on our survey responses, the following solutions would help the CFO fulfill the role of chief strategist to the CFO.

  • Transform the perception and position of the CFO
  • Cultivate the next generation of business-savvy CFOs
  • Increase transparency of operational information
  • Streamline accounting and finance functions on a consolidated basis

This article was excerpted from The role of the Japanese CFO in a globalizing world.