#43 What is the CFO’s role in Business Change?

Change is an important part of the CFO role. Change is a big part of a transaction, a business restructure or a systems implementation. The CFO is involved in leading all three. We look at each of these in this weeks podcast. The CFO's role in business change can't be underestimated, the CFO is a catalyst for change. GrowCFO's future of finance functions group meets every Tuesday over Zoom. I'm looking at Change and specifically how it relates to finance transformation on the last Tuesday of every month. The CFO's role in business change is covered as one of the core competencies of the CFO. The CFO as a catalyst of business change forms a key element of the GrowCFO competency framework. https://youtu.be/JuO2fKb5zuY The CFO's role in business change is in 3 areas The transaction, after a merger or acquisition, or before a divestment Systems project, putting new IT into finance or the wider business Driving a step change in performance, reshaping the business model The transaction As CFO you will have a major involvement in any transaction and a key part in making it happen. After the transaction you need to be involved in the business change: After a merger or acquisition you need to drive integration of the new business, particularly in the back office Before a divestment you need to make sure the bit of the business you are selling is properly decoupled, and there's no ongoing dependency for systems and processes with the parts of the business you are retaining Step change in performance The CFO is at the heart of driving business performance. As CFO, its you job to look for opportunities to improve the bottom line. The CFO's role in business change could involve you in one or more of the following: A business restructure Cost reduction, reducing the cost base of the business Driving a Zero Based Budget. To direct spend to the key business objectives you and your C Suite colleagues are committed, and eliminate spend that isn't focussed on these. You have a key role in decisions concerning pricing and product mix. You need to know which customers and products are profitable and which are not. The CFO view of the best parts of the business might be very different from the sales and marketing view. So, you need to: Understand the economic engine, not the P&L account Know which products & services drive cost. High margin might look attractive to the sales team, but if the product is low volume and there are lots of demands on customer service time then the overall contribution might be negative. Systems project You have an important role leading business change in a systems project. This might include: A Finance Transformation. Most finance functions have big scope to modernise and automate. Finance is your home turf. You need to get change right in finance to be trusted with change in the wider business. Wider business change, which will nearly always impact you and your finance team Delivering business benefits rarely comes from system changes, it more likely comes from changes relating to people and process that surround the system. People change is the hardest part. As CFO you have a vital role in people change. Leading change is all about leading people through the change process. Learning more about the CFO's role in business change If you want to deliver a successful business transformation then you need to understand how to lead change. John P Kotter outlines an 8 step process in his book Leading change The sessions I'm leading each month for GrowCFO's future of finance functions group is exploring the Kotter 8 step process. One step at each month's session. Dr Kotter cultivated the 8-Step Process for Leading Change from over four decades observations of countless leaders and organizations as they were trying to transform or execute their strategies. He identified and extracted the success factors and combined...