How the CFO can drive transformation

How the CFO can drive transformation

Business challenges are accelerating. 

There is increasing economic uncertainty and volatility, changing consumer expectations and stakeholder demands, as well as focused digital disruptors. 

Jonathan Smare, Finance Lead, Enterprise Transformation at AWS, gave us his account of Amazon’s story and how to build a modern digital enterprise.

Change and challenges

Market disruption is already happening, with Accenture reporting that 41% of companies on the S&P 500 have been replaced since 2000. 

The aforementioned business challenges are only the beginning, according to Jonathan. 

On the horizon lie equally important changes to consider:

• Artificial Intelligence and Machine Learning
• Internet of Things
• Blockchain
• Autonomous machines

These are in part the reason that Mckinsey is predicting that 75% of businesses currently listed will disappear by 2027. 

CFO’s are going to have to shift their focus towards making their organizations agile. 

Identifying new business value, driving business change, and exploring new technologies is going to become the mainstay for CFOs, alongside preparing for volatility. 

Amazon Founder Jeff Bezos commented that “In today’s era of volatility, there is no other way than to reinvent. The only sustainable advantage you have over others is agility.”

The enterprise of the future

Amazon are on a mission to become ‘Earth’s most customer-centric company.’

Their methodology to achieve this mission is to build data-driven companies that consistently reinvent with their customers. 

Jonathan explained that at Amazon, innovation is experimentation. Failing fast at low cost has allowed Amazon to rapidly expand into emerging markets, create categories, and utilize cutting-edge technologies to win in the market. 

What has slowed transformation is the low frequency of change that was the norm. 20th century organizations were designed to scale with stability and predictability. 

They were focused on operational excellence, efficiency, and cost in a function structure, with a low focus on innovation and agility. 

21st-century enterprises are different beasts. 

They work under new business models consisting of revolutionized valuation models, and unique consumption models. 

Culture has also undergone huge changes. Everything must now be customer-centric, and there is innovation and constant reinvention everywhere. 

The organization models are also novel. Small cross-functional teams now dominate proceedings, with internal startups and digital outbreaks popping up within the organization. 

Organizations are now operating with full partnerships forming eco-systems, spurring on further growth and innovation. 

This has resulted in and is a product of a high frequency of change. Driving value in this space is a cutthroat business. 

The four pillars of creating value in a digital enterprise are:

• Connecting customers to services
• Accelerating buying or usage
• Improving the customer experience
• Driving operational excellence

Fast execution, utilizing insights from data, and running high-speed/low-cost experiments optimize a digital enterprise’s ability to generate value. 

Innovating at scale and creating a solid foundation for emerging technologies also make up an agile enterprise that is fit for the current environment of volatility, which looks to be here to stay. 

Leading business transformation

For Jonathan, business transformation is made up of three focus points; technology, people, and culture. 

Technology	People	Culture
Align your technology plan to your strategy  Work backwards from your strategy Focus on your differentiation  Build what differentiates you and buy what doesn’t Prioritize your transformation journeys Build partnerships and ecosystems for your long term journeys	Enable small cross functional teams with access to technology Employ innovators Look for creatives Constant and consistent executive messaging	Champion new ways of working Ensure your culture supports innovation Celebrate quick wins and recognize heroes

The CFOs role as champion and sponsor is critical to a successful business transformation. They also need to encourage a culture of innovation and failure to accelerate that process. 

As a case study, Jonathan focused on the Digital CFO. 

To increase relevance, their job was to focus on high value add and reduce investment in low value work. 

Timely, actionable insight	Agile business support	Streamlined operations
Accelerate time to insight with automation Enabling self-service and predictive analytics Data steward: create a shared single source of truth Explore asseitzation and monetization of data	Use continuous closing and re-planning to enable real time reporting Accelerate process changes and new service delivery  Accelerate time to value of M&A/divestiture/restructuring	Automate repetitive tasks to improve efficiency  Streamline processes with digital workflows  Use automated monitoring and alerts to strengthen compliance and risk management

The next steps include envisioning and ensuring alignment across the finance leadership team, and shaping teams around strategic priorities. 

In the rapidly and constantly changing world, an agile team with an innovative culture, led by a modern CFO is set to win.