CIMA’s 100th anniversary was recently celebrated at Amity Global Institute in Singapore. Dr Dimitrios Koufopoulos, Programme Director for the Global MBA, gave a key note speech highlighting the increasing importance of the role of the Chief Financial Officer (CFO) in today’s ever-changing business environment.
Behind every top CEO is a great CFO. They may get less of the limelight, but CFOs now wield enormous power, with corresponding influence over the success of their organisations. A series of changes both within companies and the external environment has led to more and more influence for CFOs. And while this can be a good thing, it also brings extra responsibilities. So how can CFOs keep up with their new demands, while exercising their power wisely?
It is vital for organisations to recognise how drastically the business environment is changing. Rapid technological revolution and continuing globalisation (despite the recent backlash) are reshaping the competitive landscape, exposing firms to new opportunities and threats.
In turn, these developments influence company strategy and internal organisational contexts. New behaviours are experimented with, changing how firms act towards their consumers and competitors and also how they treat their employees. Managers are urged to continually develop their skills in areas that span interpersonal, decisional and informational roles.
Overall, this amounts to an enormity of change. Yet there is every sign that it will continue to accelerate. It’s hard to believe that the iPhone is barely ten years old, so rapidly has it changed the priorities and abilities of consumers and companies. How close are we to the next revolutionary technology, with all its transformational impacts?
As technology continues to progress, it’s becoming clear that businesses need to be more open to embracing new methods and systems of working. These changes are so far-reaching that they must be confronted if an organisation is to remain competitive. While the complexity can be overwhelming, there are considerable benefits of fully engaging with change.
So what does this mean for CFOs? Given that their role has expanded greatly, it’s only natural that the responsibility for confronting this new competitive landscape should fall on their shoulders. Since the 1980s, CFOs have emerged from the shadows of the spreadsheets to become the undisputed deputy to the CEO. No longer just marshalling accounts and crafting budgets, CFOs now have wide-reaching powers across their organisations. While this has increased their influence, it also deepens their duties.
Changes in business culture have tipped the balance of power towards CFOs. As shareholders expanded their influence in the 1990s and 2000s, the demand for return on investment led to greater emphasis upon controlling costs and financial scrutiny. Traditionally, these were the CFO’s bread and butter. This also gave CFOs greater license to shape company strategy, a key factor in the battle to deliver greater value.
Then, the eruption of a number of high-profile business scandals led to the CFO being anointed as bastions against corruption. The CFO wasn’t just the CEO’s deputy - but now also kept watch over their behaviour.
Finally, the financial crisis of 2007-08 triggered a wave of cost-cutting that called for a still more hands-on CFO. Simultaneously, technology and data gave CFOs more insights into their organisations than ever, allowing them to peer into every corner of their company. With budgets constrained, the authority of the CFO grew - after all, nothing kills a project faster than a ‘no’ from the CFO.
In turn, this expansion in the CFOs role demanded expertise in areas not traditionally within the CFO’s remit. Risk management, business planning, and strategic thinking all became expected abilities for CFOs. But without concomitant upskilling, how can CFO’s possibly be expected to embrace all these diverse capabilities?
Regardless of what type of CFO you aspire to be - innovator, disruptor, or safeguarder - you need continuous training and enhancement of your skills. The rapid, wide-ranging disruption we’ve witnessed over the past decade is not an anomaly but a sign of things to come. That’s why education is so important. In the quest to stay not just informed but insightful about the latest developments, continuous learning is your best guide.
The University of London’s Global MBA strives to educate and provide important skills for the next generation of CFOs. Through this education, we have a direct influence on the industry, providing students with an elite-level strategic overview of business, from innovation through to corporate law and accounting. Our graduates get more than just frameworks: through the development of critical thinking skills, they emerge with the vision to lead their organisation.
By continuously learning and developing your strategic skills, you can be the CFO your organisation needs in challenging times.
Find out more about the Global MBA.