Dr. William Chen, CFO, Quasar Engineering and Chairman, CIMA Hong Kong
Business leaders are familiar with the managerial acronym, VUCA – short for volatility, uncertainty, complexity, and ambiguity. To navigate a VUCA world, now and in the years to come, the role of a chief financial officer (CFO) is shifting towards being an architect of business models for value creation, and an integrator of business processes. CFOs, therefore, will need to have digital, analytical, strong leadership and effective people skills.
Digital skills refer to having an understanding and knowledge on the impact of the latest technology, such as robotics and blockchain, on the finance function. A CFO is required to understand how digital technology can disrupt an organization’s business model, and identify possible future disruptions. As the pace for technological change becomes faster and faster, a CFO must possess an agile mindset. He or she should also proactively find time for lifelong learning, and leverage that learning to continuously improve in their role.
In order to become an architect of business models, a CFO must understand what the value drivers are and how value is created. They should demonstrate strong analytical skills by using advanced analytics and visualization tools to continuously increase the level and quality of insight and foresights delivered to an executive team or board of directors. The speed of technological and business developments is a critical factor which demands a CFO has strong leadership skills to build up and motivate their finance team, so that they can act and respond quickly.
Another role of the CFO is the integrator of business processes, helping to not only eliminate waste of resources but also improve the execution speed of business strategies and reaction speed for customers. It requires effective people skills for building and maintaining strategic partnerships with various functions and units within the organization.
The list, of course, doesn’t end there. CFOs in the next decade will have to deal with unprecedented levels of risk and disruptive innovation.
“To navigate a VUCA world, now and in the years to come, the role of a chief financial officer is shifting towards being an architect of business models for value creation.”
Francis Au, CFO, EKPAC Holding
In the coming 10 years, a good CFO must have the ability to nurture and attract different types of talents within the finance function. The training of staff will be increasingly difficult because changes in business operations may be very quick during the hi-tech Industry 4.0 and 5G era. The job nature of accounting may change drastically with all the bookkeeping, auditing, and report generation being done by “smarter” computers. Because of this, CFOs may find themselves leading a more diverse group of people, including tech-savvy accountants and programmers. Different skill sets would be needed to guide the computer to generate useful information.
When it comes to nurturing talent, the current staff would need to upskill as a lot of repetitive tasks would be done by machines. Creativity, critical thinking and complex problem-solving will be more important in the coming era. A successful CFO will lead and commit to long-term investment in the development of the workforce. Having in place a dynamic training programme that is agile and stays up to date with the latest developments would be necessary. It would be a challenge for the CFO to design and maintain efficient training internally, and source externally.
Another challenge would be understanding the learning abilities of current employees. Management would need to support their future development and help them adapt to the quick-changing environment. With tasks likely to be more focused on data analytics, data interpretation and problem-solving, jobs within the finance department would need to be redesigned and redefined. A good CFO will need to clearly communicate to staff the new functions and importance of the new roles while these roles undergo transformation and redevelopment.
A CFO would also need to pinpoint and make good use of the important data. The ability to use the right data analytics tools is increasingly important for generating reports, which allows a CFO to develop better strategies for the organization, and steer the boat in the right direction.
“A good CFO will need to clearly communicate to staff the new functions and importance of the new roles while these roles undergo transformation and redevelopment.”
Loretta Chan, CFO, Sappi Trading
From what I see, CFOs are getting more involved in setting strategies to drive growth, sustainability as well as the long-term success of the company, and this trend will likely continue in the future.
To me, the most important personality traits that a CFO should have, whether it’s now or in 10 years time, include being forward-looking, adaptable, curious, and a strategic leader.
We are now in a digital era, which requires CFOs to adopt an open mind, and be flexible. All companies do planning that is fixed and inflexible for a period of time. However, CFOs should take on a flexible approach to try things out and make incremental adjustments to react to the changes in the environment, while making sure the company is on the safe path forward.
They would need to embark on a journey of digital transformation. Digitization is not only driven by the increasing market and customer needs for better solutions and services. The internal workforce also expect the company to embrace digital solutions for innovation and efficiency.
CFOs must increasingly have better insights into the company’s operations, including products and customers. As a partner of the chief executive officer, a CFO should take part in shaping the company structure and changing the business model to meet market and customer demands. Proactive management and quick reactions are the keys to staying competitive in the marketplace.
People play a significant role in the organization. CFOs should be able to take the lead to appoint and invest in young people to bring fresh perspective, and a different way of thinking into the business, and to make sure that as and when people retire, the company can continue running without a shortage of skills.
Last but not least, operating in a fast changing and complex environment, CFOs will need to continue broadening their leadership capabilities. They will need to closely review and improve their skills, for example in networking, to add value to the organization.
“CFOs should take on a flexible approach to try things out and make incremental adjustments to react to the changes in the environment.”