CEO & Co-founder of Trullion, AI-Powered Accounting Software that automates accounting workflows for CFOs, Controllers & Auditors.
For too long, the CFO has been thought of as a separate role from the main business units. The CFO — and the department the CFO leads — are actually perfectly placed to add tremendous value to their organization, transcend business units and drive innovation.
In fact, no one in a company is better situated than the CFO to lead innovation.
Accounting And Finance As A Cost Center
At worst, the CFO and finance department are seen as the “no” people. They reject, impose budgets and approve from on high. In general, they are seen as a cost center, a necessary department to ensure compliance.
What’s more, there is a lot of misunderstanding — indeed mystery — from non-finance employees about what this department actually does and the perceived alchemy of finance and accounting — not to mention the preparation of financial statements, which read like Greek to most people.
Once these misunderstandings are confronted, we can begin to formulate the case for the CFO to lead company innovation. The jump is not as big as you may think.
Changing The Narrative: Being An Innovation Center
This narrative can, and should, be changed. In general, the CFO was chosen due to their strategic outlook, extensive training, managerial abilities and, of course, financial skills.
With the sensitivity and visibility of the position, the CFO often has the ear of the CEO and other C-level executives as well as the board. Moreover, shareholders generally trust the CFO to have their best interests at heart.
These traits perfectly position CFOs to lead innovation.
Other departments might push for innovation within their business unit, but the CFO can drive innovation across the organization. Similarly, the CFO understands the budgetary landscape, what funding is available and what projects are imperative to pursue in order for the business to prosper into the future.
Critically, the CFO can also understand cross-departmental synergies that innovation can unlock.
As CFO Jeff Thomson notes, this is the opportunity for the CFO to move from bean-counter to bean-sprouter.
The role doesn’t change, nor need the personality. It’s just a matter of perspective.
Why The CFO Is Perfectly Placed To Lead Innovation Efforts
There are a number of reasons why the CFO is the right person to lead company innovation efforts:
The CFO is a strategic thinker.
The CFO is in a unique position to understand trends, analyze the competitive environment and see a bird’s eye view of the business. Possibly the only other person with this kind of visibility is the CEO, and they have their own pressures and day-to-day concerns to deal with.
Leveraging the strategic abilities of the CFO can drive company innovation forward.
The CFO deals with all departments.
The CFO is intimately familiar with the running of all departments, their performance and even the risks and opportunities faced by each. In many cases, the CFO has a good relationship with the heads of these departments, which can make all the difference when it comes to implementing strategic innovation initiatives.
The CFO sees every dollar spent and earned.
With all spending going through the CFO’s department, the CFO knows exactly what is happening across the organization. He or she sees trends, risks and opportunities.
For example, the CFO might notice a department or business unit that is showing increasing returns — and thus not setting off any alarm bells — but at a decreasing rate. The CFO can correlate these returns with macroeconomic trends, such as urbanization or a change in interest rates, and suggest innovation initiatives which can harness these trends to drive returns.
The CFO understands the benefits of technology and automation.
Due to the nature of the CFO’s role dealing with massive amounts of data and presenting this data in an easy-to-understand manner — not to mention the compliance element of the role — the CFO is exposed to multiple technologies and to the very concept that technology is a key ingredient in business success. From automating manual processes to highlighting trends and opportunities, technology and innovation can be a key differentiating factor.
For example, with new lease accounting standards coming into focus (ASC 842, for example), CFOs should be the ones responsible for looking into technology solutions that are compliant and meet organizational needs.
Be Seen As The CFO-Innovator
The CFO is perfectly positioned to lead company innovation. In many cases, all that it takes to make the switch from cost center to innovation center is a change of mindset and a recognition of the opportunities available.
It isn’t easy — you have massive amounts of pressure, deadlines to deal with and fires to put out — but innovation, when applied correctly, can take a lot of these pressures off in the medium and long-term.