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The Right Stuff

September 6th 2018

The future of the CFO

Disruption is all around us. Just look at what happened in politics last week, when Scott Morrison, Federal Treasurer, chief number cruncher and architect of our country’s budget, was voted in as Australia’s 30th Prime Minister. 

Mr Morrison may be exemplary at working to balance the nations books, but is he CEO material? We tend to think of CEOs as being big-picture thinkers and sense makers, people who are willing to move beyond the status quo and apply fresh “outside-in” thinking to guide an organisation – or a country – to success. 

Traditionally, CFOs are regarded as “numbers people” who measure progress and ensure compliance. They diligently manage their organisation’s finances, undertaking planning, risk mitigation, record keeping, and statutory reporting. For a long time, there has been little need for them to offer services beyond these roles.

So, it may surprise you to learn that CFOs seldom move into a CEO role. A 2015 Korn Ferry analysis of sitting CEOs in the global Forbes 2000 found that only 13 percent of CEOs moved into their position from a CFO role. In Australia, only 16 percent of CEOs in Australia ASX 100 companies were formerly CFOs. 

However, things may be changing. The data revolution presents a unique opportunity for CFOs. Organisations can now harness information to uncover new market opportunities, improve customer experiences, drive business planning, and support change and innovation. At a recent workshop we facilitated with 25 CFOs, it was evident that technology is playing an important role in the ability to make data timely, accessible, and relevant. New financial management systems leveraging the cloud, in-memory databases and visualisation are enabling the CFO and their team to move beyond mere analysis of historical financial data to accessing real-time insights about business performance. 

All this means that CFO can shift from watchdog to trusted advisor, playing a strategic role by using data and analytics to generate insights and drive growth. A big part of the future CFO role will involve communicating what data means to multiple stakeholders, many of whom don't have finance backgrounds. This means good communication, visualisation, and collaboration skills are now essential for all CFOs. 

For many CFOs today, this shift will demand a very different way of thinking, one that is much less risk-averse. CFOs will need to understand how disruption can impact on business models. They will continue to assess risks and report results with an aim to reduce costs and focus investments. Ultimately, providing insights will help them identify opportunities for innovation and inform corporate and business strategies. In this way, they can become even greater strategic partners to organisations across all three sectors.

Could Scott Morrison be an example of the CFO of the future? As a nation, we can expect him to be an agile and adaptable organisational leader who harnesses his acumen to expertly influence and drive strategic decision-making – as any CFO worth their salt would. But in the greater scheme of an increasingly data-driven commercial culture… will that be enough?

For more information contact Clarissa Mattingly at Pivot on info@pivotstrategy.com.au