‘Critical to the finance function of the future is being able to knit the data competency, technology competency and process engineering competency together to create value’. Jeff Davies, CFO, Legal & General
The Rational Value Creator uses judgement to confront complexity. They are in constant pursuit of long-term business value, extending beyond traditional financial metrics to non-financial KPIs, acting as an independent advisor to inform business decisions.
Finance leaders have long been focused on adding value to the business, but the kind of value they are expected to add has changed. Today they are required to measure more than money. Take the example of climate change — how does finance value the intangible such as ESG and sustainability, how do they translate these goals into sustainable milestones? As Andrew Harding notes, ‘the term “chief financial officer” may even become obsolete sooner than we think — replaced by the emerging title of the “chief value officer” ’.10
... Finance leaders need to be more outcome-focused, leading on future client trends, identifying their needs, and helping the business ensure they have the right products in the right place, at the right time.
As Sandi Smith notes, ‘this isn’t just about technical skills, this requires a mindset shift to constantly be thinking about the customer, anticipating their needs and helping the business to invest in the right area’.
Many organisations we spoke to are still struggling to realise the full potential of Business Partnering, but all recognise that the role is critical in proving the value finance can bring in order to be bought into conversations earlier. Finance Business Partners need to be close enough to be trusted by the business, but distant enough to be seen as independent advisers. They should partner with the business on strategy and resource allocation, advising on controls to help identify red flags and safeguard the business. As McKinsey & Company notes, CFOs are increasingly expected to become ‘value managers’, providing functional excellence and digital expertise.11
With more data available than ever before,
... finance leaders not only need to confront complexity, but they need to become much more comfortable with ambiguity.
As noted by Bradley Duncan, CFO of ICBC Standard Bank, finance professionals are more comfortable with discipline, but they need to embrace uncertainty — they need to see it as a constant to survive. With finance leaders expected to be much more forward-looking, they need to be able to talk less in terms of absolutes, and instead report on degrees of likelihood. They need to be sense-makers. As WhartonBC notes in its blog on Leadership Capability; ‘Sense-making is the ability to respond to the unexpected and see through prolonged and constant disruption’. It involves utilising critical thinking, judgement, and inquiry to understand potential challenges and play through varying scenarios to articulate the next move in clear and certain terms.12
Trevor Suarez likens it to the layers of the onion; knowing the boundaries on either side and understanding that the likelihood is the result will be somewhere in the middle. Finance professionals must be adept at creating an elevator pitch — explaining to the board in simple terms the thought process they went through to reach the answer; what are you trying to achieve, what things are important to you in doing that and what did you discard and why? In short,
... the true power comes from bringing together storytelling and judgement to make sense of the insight and use it to inform decision-making.
10 The emergence of the chief value officer. Andrew Harding. CIMA Global. January 2021 11 Are today’s CFOs ready for tomorrow’s demands on finance? McKinsey Special Collection, The Role of the CFO, McKinsey & Company, April 2017
12 Leadership Capability: How do you create high performing leadership teams that are coherent and aligned? Wharton Business Consulting. June 2020.
Practical tips for the Rational Value Creator:
• Insist in all conversations that the narrative focuses on value. Constantly ask your team and your peers; ‘what does this mean in terms of value’ and ‘how can we use this data to drive greater value’? • To enhance your ability to use judgement, seek an understanding of and input from a wide variety of sectors and organisations. Consider how leaders in other sectors have addressed similar problems in the past and consider more factors than just the financial ones when making decisions. • The questions you apply to your data are so important. Use the question-storming technique to ensure you have not missed a great angle. • Consider the perspective of each of your key stakeholders when decision-making. What would they want? Can you reconcile the different views?