A safe pair of hands. A reality-checker. Someone who swerves risk (rather than embracing it). The role of Chief Financial Officer (CFO) has traditionally been bound up with careful calculation, and reminding other departments to look before they leap. At least, that’s the stereotype that may come to mind.
More often than not, it’s CEOs who are associated with a company’s success or failure, given their visibility in the public eye. They’re seen as dreamers, lateral thinkers and risk-takers. And, when risks pay off, they are the ones who enjoy the limelight – with CFOs relegated to a supporting role. Possessing sound financial sense is part and parcel of being a CFO. But look closely at our generation’s most notable examples, and it’s clear that the role of CFOs is changing.
Take Anthony Noto, CFO of Twitter, who played a major part in driving the social-media platform’s marketing strategy to boost user numbers – and helped achieve a 58% year-on-year increase in profits a year after joining. Or Amy Hood, CFO for Microsoft (also Executive Vice President), who helped the tech brand rapidly advance to become a trillion-dollar company thanks to a strategy that saw it transition into the largest cloud-computing company in the world. It’s clear that today’s top CFOs are blue-sky thinkers, bold strategists and risk-takers (albeit calculated ones). And all the while, they’re balancing this with the need to make measured, sensible decisions.
Rather than evolving to become something else, CFO responsibilities have simply grown in number. The same essentials still apply – companies need an individual who’s a strong negotiator, who will tightly monitor spending, and who implements up-to-date revenue-collection strategies. As we teeter on the brink of a global recession, it may seem that these fiscally conservative CFO duties may be of even higher priority for companies. But interestingly, compared with previous economic recessions, rather than simply striving to survive, research suggests that in 2020, CFOs have a role to play in helping their company come out even stronger on the other side. And to achieve this, a dynamic, growth-orientated mindset is essential.
As well as clamping down and cutting back for tough times in the short term, CFOs are required to simultaneously advise on which avenues should be pursued and invested in for long-term growth. It’s as if global industry has been forced to become more comfortable with uncertainty. Rather than freezing and waiting it out, we’ve come to accept that a fluctuating economy is likely to be the new normal for the foreseeable, as geopolitical complexities increase. It’s important to push forwards despite the risks at play when future vision for the company is in mind.
So, rather than appointing someone who’s simply good with numbers, today’s companies need CFOs who can see both sides of the coin. Somebody with the analytical mind to crunch down on short-term spending, but the vision and creativity to come up with bold strategies for future growth. Essentially, the CFO in 2020 is required to be a hybrid between a CFO and a CEO.
At the same time, it’s important that today’s CFOs uphold their penchant for emotion-free, fact-based decision-making. A recent study from KMPG found that more than half (67%) of CEOs trust intuition over data-driven insights. Rather than adopting the same mindset entirely, CFOs of today should maintain their preoccupation with the tangible. While they can afford to play a more central role in advising on a company’s growth in different areas of the business – such as marketing or operations – they should never lose sight of the value they bring in counteracting the “gut feelings” of the CEO. CFOs are increasingly stepping into the limelight as drivers of growth, but this shouldn’t mean they eschew fiscal restraint and caution. It simply means that forward-thinking companies are increasingly recognising the role that their finance professionals have in conceiving game-changing, data-driven strategies that lead their teams to success.
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