Digital transformation driven by data analytics has become the answer to the question of how best to build a foundation for change. As organizational leaders seek a successful path through this century’s competitive landscape, they have focused on the role of technology to alter the organization with new problem solving tools and process improvement. And they hope data, well used, can bring them the answers they need and the outcomes they seek.
CEOs are looking to arrive at a place where digital interactions driven by activated data deliver the highly-desired goal of individualized promotion, unique sales terms, and highly customized customer service. In addition, organizational leaders are attracted by the less publicized but equally desirable financial goals of cost reduction and profit margin improvement.
Using fewer people to deliver better service, reducing risk, and providing greater personalization to the customer, at a lower per-transaction cost, is the 21st century’s holy grail.
But to do these things, to use data to promote transformation, leaders must not limit their efforts to technology. They need also ask how their roles must adapt, their behaviors change, and the tools they employ be turned toward promoting fundamental change in thinking, not just completing tasks more efficiently.
In the article The Changing Role of the 21st Century CEO we argued for CEOs to look to change their roles and behavior, and to encourage data-driven dialogues and nurture dialogue-driven leaders on their teams if they hoped to transform their organizations. We believe CEOs need to focus on “learning and service” to promote change. As well, they need to reinvent planning and decision-making, and harness the efforts of people across the organization to promote holistic change through shared learning and understanding. These initiatives need to start at the top, with the CEO, but they must migrate through the next levels of the organization, beginning with the key roles of C-Level people such as the CFO.
CFOs must adapt 20th Century processes and adopt 21st Century Roles
Today’s CFOs are challenged to bring 20th Century processes, systems, thinking and practice into the 21st Century’s data-driven organizations. But to do so CFOs, like CEOs, must adopt new ways of working and participating in the broader organization. CFOs have been tasked with more and more duties and responsibilities in recent years and must find a way to both successfully adapt and adopt.
Today’s CFOs are expected to be business generalists, risk management experts and business intelligence sources. They are expected to provide instant replies to just about any question that the CEO or Board asks about business performance. And they are expected to do this while continuing to perform the jobs they’ve held all these many years: recording transactions, managing budgets, getting the accounts balanced, preparing statements, and more.
But if CFOs are going to succeed in the coming years, they are going to have to adapt their behavior and adopt new skills and tools.
In effect, CFOs need to:
- Move from financial gate keepers to servant-leaders by “teaching and leading” and not just “recording and reporting”
- Look to add prescriptive tasks and tools to their descriptive ones, aiding strategy
- Build financial know-how into decision-making throughout the organization by providing the tools, processes, know-how and culture to spread knowledge throughout the organization
Along with these efforts, CFOs will need to:
- Fight against unproductive complexity within the organization by encouraging clarity, simplicity, transparency and accountability
- Focus on “high-value” work and processes that aid decision-making throughout the organization
- Integrate data management with tools that allow financial reporting from a single source, allowing senior management and the board to focus on the bigger performance picture.
- Identify and promote a small number (6 or 7) key financial measures to be used at each level, and
- Promote the importance of “one truth” and deliver the reality of single source financial reporting.
By working to adapt and grow their role, to move from knowledge holders to change agents and strategic contributors, CFOs can also perform the enormously valuable task of promoting that “one truth” that will eliminate information manipulation and mischaracterization that leads to higher-level managers seeing and hearing versions of the truth that may well stand in the way of the transformation the organization needs.