Outlining the scope and impact of digitalization is the easier part of CFO 4.0. Devising concrete actions and methods for dealing with the change and capturing value is the hard part. Fortunately, that’s where you can make the biggest difference.
The main theme throughout our CFO 4.0 blogpost series is that the CFO function is fundamentally changing together with the environment in which it operates. Our study confirmed that Finnish CFOs themselves recognize that they are already falling behind in terms of digital maturity. This begs the question: What can CFOs do to better prepare for this change and make the transition towards CFO 4.0 as smooth as possible? In our recently published CFO 4.0 whitepaper we present three lessons for moving forward with digitalization in the CFO function: 1) Embed digitalization within your CFO strategy, 2) Think big, start small and 3) Involve people with change management.
Digitalization is often framed negatively, as something new replacing the old, but we prefer to think of it as new ways of doing old things.
The first step may seem obvious. Of course digitalization should be taken into account on a strategic level. But the key is to embed. Your CFO function should not pursue developing a separate digital strategy but rather embed digitalization within your other CFO function’s strategic objectives as an enabler and a factor. Adding one more strategy process will create more work you don’t need and embedding digitalization within your CFO strategy will ensure its natural implementation. All individual objectives are naturally impacted differently depending on the specific context, such as overall maturity level of the organization and general business environment, but the assumption should always be that digitalization impacts everything. If you think some aspect of your strategy can afford to ignore digitalization it likely means you are underestimating the impact rather than the impact being negligible.
Thinking big and starting small is about fundamentally changing the mindset of the CFO function. The culture of experimentation does not always come naturally to the traditional CFO, but it is indispensable for managing the rapid pace of change brought on by digitalization. Thinking big means imagining the potential of innovations outside the restrictions of the organization. Starting small is taking the first step in reaching that potential, still remaining detached enough to scrap the initiative if it does not live up to expectations. By limiting both the attention and resources spent on new ideas, the CFO can simultaneously explore multiple ways forward while remaining agile and responsive to changes.
Our final step deals with an often-overlooked challenge in digital transformations: change resistance. Involving people in any transformation is crucial for success, and the bigger the transformation the more significant the need for involvement. Listening to your people when formulating strategy goes a long way of gaining support for the transformation. Communication before, during and after a transformation should be frequent, accurate and in a familiar format. Online questionnaires and idea platforms are good examples of tools to deal with change, at the same time demonstrating that digitalization can also itself be used to get employees involved in the change. CFO 4.0 is ultimately a culture transformation too, making involvement of people a critical success factor.
We at BearingPoint are excited about the change that digitalization can introduce for the CFO function. The potential for all companies is huge and we are eager to help our clients successfully reach theirs. We have lots of new stuff cooking for CFO 4.0 so make sure to follow our blog and LinkedIn regularly to keep up with the latest results and analyses.