Why CFOs should steer strategy and innovation beyond the balance sheet

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 collaborative research of respondents in successful transformations indicated that their organization had invested in the right technologies to meet their vision.

Artificial intelligence (AI) and machine learning are becoming essential tools for finance leaders. 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.

Key actions for CFOs

Even as the CFO role continues to evolve, there are key actions CFOs and their teams can take now to enhance finance strategy and vision:

• Current and future CFOs must develop a strategic roadmap that prioritizes the adoption of disruptive technology and data to navigate the shift toward touchless finance operations.
• By harnessing advanced analytics to generate deep insights, modern finance organizations will influence strategic decision-making and improve total shareholder return (TSR).
• Finance teams will be expected to continually optimize ways of working through lean innovation – a relatively new but critical skill set.
• People are, and will continue to be, the cornerstone of business success.

Note: This is the first in a series of articles about the future of finance, based on EY research and insights working with CFOs.