The COVID-19 crisis has added urgency to the pace of change that has been under way in the finance function for several years.
The goal for business now is recovery and growth, particularly for those companies that have been deeply affected by recent events. In addition to chief financial officers (CFOs), chief data officers have joined the ranks of business executives – along with chief digital officers and chief customer officers – in building the sustainable business of the future.
Your CFO still knows his or her way around a balance sheet and probably has an unhealthy enthusiasm for a spreadsheet, but the successful CFO has become much more…multi-talented.
So, who is this modern CFO? And for those of us in the role, what are the priorities we need to focus on to ensure we are key to delivering critical business growth? It’s different for every business, but from my perspective there are several things that stand out.
More pictures...
The reality is that numbers are just our route to information – they are passive, and we need to interpret them and use them to tell a compelling story about our business.
My role is to guide decisions – and to do that effectively, I need insight. That means being able to understand the bigger picture, taking into account the market in which we operate, the economy, and emerging trends and technologies. And that is before looking at all the myriad of internal factors – from product, service and operations to employment and customer practices.
You simply can’t get a clear understanding of all these factors purely from numbers. As the CFO, I need to move beyond data towards insight that not only I can use to inform decisions, but that I can share across the business in an engaging way in order to guide and support other teams. No one team is responsible for growth, so no one team should have exclusive access to the insight that will help the company hit its KPIs at every level.
I want it now
Insight is critical, but it’s only truly insight if it is timely and continuous. As a business, we have to be as agile as possible to respond to customer and market demands – and out-of-date information simply won’t cut it.
Like the majority of software businesses, my company uses an agile development model rather than the more traditional method of annual or bi-annual product launches. The reason is simple. Like us, our clients need access to new ways to improve their business now. And, following the old adage that perfection is the enemy of the good, it’s now accepted that excellent – as opposed to perfect – solutions are acceptable as long as a) they are fast and b) any issues are resolved quickly. We meet clients’ needs better and they can succeed faster.
Today’s CFO needs to follow this lead. Gather as much insight as we can, as accurately as we can, and then make the decisions that we believe will have the greatest positive impact at that moment in time.
Our decisions will not be perfect. It’s important to not think of this as failure. OK, it’s not what we want to happen, but success requires an element of risk and as long as we mitigate that risk with as much insight as possible, it’s not failure. We learn, adapt and move on. The trick is to do it quickly. Again, this comes back to insight. If we make a decision and it is not leading to the successful outcome we envisaged, we need to know quickly and be smart enough to pivot to a new path.
Rather than ‘failing fast’ which is a popular phrase (and a good one, I admit), I prefer to think of this as ‘knowledgeable speed’. That’s because we’re making immediate informed, data-driven choices to maximise our chances of long-term ROI. This means the modern CFO role is now much more aligned to strategic business development than to fiscal calendars and quarterly reports. Of course, financial and accounting processes and procedures will always be adhered to, but they are part of our reporting suite and no longer an end goal in themselves.
Listen to the voices around you
Hard data turned into insight is a relatively straightforward proposition (note that is not the same thing as being easy to achieve!). But what this lacks is input about ‘softer’ areas related to our most critical assets – people, or more specifically, employees and customers. Any CFO not listening to them is missing out on a huge amount of insight.
Used in the right way, input gathered from these two groups can be the catalyst for business transformation. Not only can it help to predict changing behaviours and inform new strategic direction, but a continual, two-way dialogue with both customers and employees ensures that they are on board with change as it happens.
Make no mistake. This is not just a ‘touchy-feely’ approach to management, but a real driver of success, since change driven by everyone is much more likely to lead to long-term results than initiatives led by an individual’s ‘vision’.
This is equally applicable to B2C and B2B organisations. Whether your customers are consumers or businesses across your supply chain, measuring, reacting to and improving the experience you deliver to them is a key battleground for competitive differentiation.
By the same token, the experience you deliver to – and the feedback you gather from – your employees is just as important regardless of the industry you operate in, the hierarchical structure of your teams, and the geographical or departmental spread of your departments.
Your customers know your business
Taking a systematic approach to capturing customer experience across your organisation is a highly cost-effective way to drive business improvement that not only affects the customer, but also impacts processes, efficiency and profitability. That’s why we see companies who place emphasis on the value of clear journey mapping, consistent customer metrics, real-time reporting and individual case management succeed in the most competitive markets.
Here, gathering customer intelligence across multiple touchpoints is vital, offering the ability to deliver action-driven insight to business leaders. Strategic dashboards, with drill-down data capabilities, provide a proven mechanism for identifying the big issues affecting your customers. This allows your board to focus on business actions that will drive the most improvement and success across key metrics.
Your employees drive your business
If your customers are the barometer of how well your organisation is serving your market, then your employees are the mercury driving this measurement. Employees can no longer be considered a business cost, but a critical asset that bridges the gap between strategy and reality. They are your front line, and your best resource for ideas generation and improvement, having first-hand experience of how well your customer service, internal processes and operational systems work.
But your employees’ value goes much deeper than this. Employee experience programmes are becoming a firm fixture for the C-suite because, with better ways to analyse business metrics, leadership teams are learning that engaged, positive and motivated staff are critical to bottom-line success. Evidence now firmly demonstrates that unhappy or disengaged employees are a huge problem for businesses, not only in terms of corporate culture but also in terms of cost. They are less productive and have higher churn rates, which results in greater recruitment costs. Conversely, happy, engaged employees provide better customer experiences, which helps retain customers and spread positive word of mouth.
As a result, we’re seeing organisations expand beyond traditional annual employee surveys into more sophisticated employee engagement or ‘voice of the employee’ programmes. Not only does this enable companies to better engage their employees, it ultimately provides a huge boost to customers – and, by natural extension, to profitability.
It’s not enough to pay lip service
There is no shortage of businesses making claims about customer – and employee-centricity. But simply putting a few customer-friendly words on your website and creating an internal comms social network for your employees to share their thoughts is not enough. You need to actually take action. Just as important, you then need to monitor the action you’ve taken, and prove its value. You can’t allow there to be anything ‘warm and fuzzy’ about the experience programmes you run. They need a solid, measurable business focus.
Key steps your organisation can take
Secure wider buy-in by talking in the language people understand
People will only get on board with these initiatives if they can understand why it’s important and how their role contributes. The good news is we’re starting to see a greater understanding of the need to consider the goals that matter to individual teams. For the C-suite, this often means talking about cold, hard financial numbers and explaining how driving change can help to achieve them.
Focus on business outcomes, not metrics
Of course, metrics are a way to measure different elements of customer and employee programmes, and to understand where changes have improved or adversely affected customer interaction with a business. This is not to suggest that we do away with metrics, but the goal of these programmes must never be to hit a particular score. To be relevant to the business, the programmes need to drive decision-making that improves business outcomes.
Share real-life stories that drive change
Numbers can never tell the whole story. We need real stories that demonstrate what success looks like. This means getting leaders and team members to understand the implications of the decisions we make as a business on people. This goes deeper than simply sharing good news on the company intranet. It requires leaders to think like an evangelist and to embed a process of enabling individuals to see things happening differently and to want to get involved.
Understand the inextricable link between employees and customers
Employees and customers are separate entities, but they are deeply embedded with each other. Engaged employees not only drive more engaged customers, but also provide great insight into what is working and what is not – often deeper and more actionable than the feedback from customers themselves. Understanding the employee experience is very much like understanding the customer experience, and we’re seeing an increasing number of businesses aligning their employee and customer programmes to provide a more holistic business monitoring capability.
Inspire cultural change at every level
Often, driving business transformation requires a shift in cultural mindset across an entire organisation, not just its front-line employees or marketing teams. To change a culture, we need to get people to start doing things differently. It requires a pragmatic approach, helping everyone to understand what being customer-centric means in their individual role.
What does this mean for the modern CFO?
The modern CFO is in a remarkable situation. We are uniquely positioned to enable an organisation to capitalise on what are still seen as rather niche areas – customer experience and the voice of the employee.
Why is that? We know the foundations of our business better than almost anyone else (better than the CEO in some companies, I suspect!). There is no element of the financials and business strategy that we don’t breathe, day and night. But what we can do now is to take that foundation and begin to build on it with richer insights.
In part, this means operational data, though that’s nothing new. What really excites me is the opportunity to bring a much deeper understanding of customers and employees into our decision-making processes. For example, often our employees, particularly those on the front line, have a very clear view on processes and issues that aren’t working for customers. But to those of us not speaking to customers on a daily basis, they remain a mystery.
Providing a clear, effective framework for employees to report these back into the business can have a tremendous impact. Escalate this by rolling up multiple smaller issues, and this can begin to inform business strategy and investment decisions.
I strongly encourage any CFO to start looking at how to make the most of the voices of the customer and employee to augment your existing data. Some of that data will not come in neat spreadsheet form, but it is much easier to analyse, manipulate and act upon than you might think. And its richness is extraordinary.
As a CFO, I need to drive financial success in an agile, ever-changing industry. Numbers won’t cut it. Understanding everything about my business is now the minimal requirement for staying ahead. And, in the current challenging environment, ‘everything’ is only getting bigger.
About the author
Halvor Stokke is CFO of Confirmit, a provider of technology to market research and customer experience professionals.
Related resources
More support on business
Read our articles, eBooks, reports and guides on leadership.
Leadership hubeBooks on human resources