With the recent economic downturn and the resulting global savings glut, a large number of Finance executives are being re-educated on crisis management, complex options, and building and transforming businesses. In response to these issues, many organizations are implementing or improving existing crisis management programs. However, the reality is that these executives are still trained on basic accounting skills. As a result, the organizational culture continues to be built on an “old school” approach to Finance that is not changing, even as organizational structure and technology continue to change.
How can a CFO effectively engage on the road to strategic and operational change? CFOs should not only read more, they should read less. In fact, it has been suggested that CFOs should read less about finance and read more about strategic leadership. The reality is that the more they know about Finance, the more they can communicate it to key mentors within their organization, enabling them to implement changes faster and achieve results faster.
The need for CFO change is evident in organizations such as McKinsey & Company, where a recent study indicated that only twenty percent of the managers surveyed thought that their companies had an effective balance sheet. Only thirty percent of those surveyed thought that their company was well positioned for future growth, and only twenty percent of those surveyed knew the three key finance areas – financing, investment, and operations – as it related to their own company. It is important to remember that just because a company does not see the need for change does not mean that it cannot change. A strong, vibrant, and thriving internal finance team can play an important role in ensuring that a business is prepared for change, but if a company continues to operate with the old-school accounting skills of the past, it will fail to capitalize on emerging opportunities, and risk being left behind in new and dynamic markets.
Alex Wade
