For years, the role of the CFO has been considered one of mechanical accounting rather than creativity and pragmatic innovation. That’s changing, and companies are benefiting greatly from the transition.
The evolution of CFO from a position focused on mundane numbers to one focused on overarching financial initiatives and objectives makes sense. One need only take a closer look at the responsibilities CFOs fulfill to understand why they fit perfectly into the role of innovator.
This blog discusses the reasons why CFOs are now closely involved in the overall strategy of your company. These professionals work closely with data analysis, the latest technologies, and they have a bird’s eye view as well as a granular understanding of the internal and external characteristics of your organization.
Continue reading to learn more about how strategic CFO services can streamline your business’s strategy to improve your bottom line.
Breaking the Myth About CFOs
To understand why CFOs can be instrumental in the overall goals of your business, it’s important to dispel a myth about the position. Many people have considered the CFO as a separate role from main business units. However, they are perfectly positioned to add overall value to the organization and drive initiatives for the company.
In reality, your CFO should be the most equipped executive at your company to determine the focus for your future. With their data analysis skills, they should be able to approach your company’s strategy with a pragmatic eye.
Why Is the Strategic CFO a Perfect Position to Innovate?
Data Analysis and Pragmatism
Your CFO’s position is rooted in company data analysis, allowing them to understand emerging trends. They can look at the incoming and outgoing data your company produces and understand how your company fits within the overall scheme. The CFO is the only executive who has the exposure to these types of data. This unique exposure should position the CFO as the chief innovator within your organization.
CFOs Have a Bird’s Eye View of the Company
The CFO has to correspond with every other department within your company. They must understand the performance, risk, and underlying value of each department. A strategic CFO maintains healthy relationships with the leader from each of these departments. This close communication and collaboration should position your CFO as the chief executive of strategic initiatives.
CFOs Have a Granular View of the Company
It’s not enough for CFOs to understand the big picture at your company. Accounting for revenue and cost gives these professionals a close look at all of the various components of a company’s financial strategy. To account for granular metrics such as these, the CFO has to be aware of what’s happening on a company-wide basis. They will be able to locate every dollar lost due to inefficient practices and misallocated resources.
CFOs Understand How to Use Technology to Their Advantage
Because the CFO has to deal with massive amounts of data and they need to present this data in an easily understood manner, they incorporate multiple technologies into your corporate structure. These technologies are key to the success of your business and your overall financial strategy.
Whether they automate manual processes or uncover insights using various technologies, the CFO’s aim is innovation. For example, the CFO will be responsible for implementing technological solutions responsible for both compliance and various organizational needs.
What Traits Do Strategic CFOs Have?
CFOs who lead company innovation have several common traits. Their plans are only one component. CFOs should be able to clearly measure the value their plans bring, whether or not they are scalable, and ways to ensure company-wide adoption. Without providing clarification on the value of their goals, how they remain effective in the future at scale, and a clear way to monitor adoption, a CFO’s plans are virtually useless.
Below, we list criteria by which you can measure the success of your CFO’s financial initiatives.
Data Analysis and Strategy Creation
The first quality your CFO should have is vision. Vision is more complex than crunching numbers. Pragmatic CFOs need to be able to analyze the numbers in a broader scope. They understand how those numbers affect the overall picture of your industry. From this understanding, they set challenging goals and begin resource allocation to those projects. Without a clearly defined vision, no one in the organization can commit to the goal.
Effective CFOs don’t stop once they create their goal. They refine it as they get deeper into their vision. They test their strategy against competitors and ensure they prepare for multiple outcomes. They are not committed to the first iteration of their vision. Rather, they modify and adapt as they see elements of their strategy succeed or fail.
Once CFOs feel comfortable with the efficacy of their strategy, they will have a clear method for scaling the solutions. To scale, all of the various departments have to be on the same page, including supply chain, manufacturing, and distribution. To scale strategic initiatives, there needs to be unified directives. Each department should use similar metrics to measure success. They must also be willing to reallocate resources when the plan needs a modification.
Innovation is perhaps the most important from the CFO’s perspective. After coordinating the brainstorming, refinement, and scaling of an initiative, the strategic CFO should be able to increase the top line. Innovation, whether for products or services, gives your company leverage.
When you can increase your profit, you capture the largest multiplier of economic growth. The CFO’s strategy then, shouldn’t only surround the processes that contribute to your product or service, but rather, the products or services themselves.
How CFOs Can Mobilize the Finance Team
CFOs can’t lock themselves in an office, no matter how large the organization is. They need to be fully aware of what’s happening with various BUs. For this reason, they should understand how to mobilize the finance team on a company-wide basis. The most effective CFOs don’t do everything themselves. They teach members of the finance team how to carry out their initiatives.
Strategic CFOs Foster Innovation
Strategic CFOs aren’t concerned with who gets the credit or who has the best idea. They create a nonjudgmental location for innovation-based conversations. Company members should be able to have open conversations rooted in concrete objectives. They care about their teammates feeling heard and the environment they create reflects that value.
Strategic CFOs Make Innovation Fun
Companies that issue grave declarations and strict parameters regarding future directives lose. Strategic CFOs create an open environment for new ideas. To do that, they simplify the brainstorming process. Companies can do that by using competition styles to source new ideas. They can also use incentives, such as bonuses and company recognition.
Strategic CFOs Make Innovation Easy
Strategic CFOs simplify the testing processes for their initiatives. Because their initiatives are easier to modify, they wind up losing less money, leading to more decisive actions and decreasing the time it takes to go to market.
Conclusion- What Is the Strategic CFO’s Role In Innovation?
The CFO role has evolved greatly and it’s time to embrace the evolution of that role from one of simple numbers crunching to one of a company leader. However, it’s important to understand precisely what makes a strategic CFO innovative. Above all, these leaders have vision. But that’s not all they have. They understand how to identify metrics that support their vision and lead to refinement. They implement their strategies using easily understood methods and they foster creativity on a company-wide level.
At Fully Accountable, our outsourced CFOs are dedicated to ensuring you get the most out of your financial strategy. Our strategic CFO services can help identify clear strategies that improve your bottom line and lead to long-term innovation.
Contact us today to learn more about how our strategic CFO services can help your business.