When I think of what’s top of mind for me as a CFO in 2018, one word comes to mind—change. I see more change happening than ever before in my 30+ years in finance across the political, economic, and regulatory landscape. Now more than ever CFOs and their teams must be able to quickly adapt and respond to change as it happens.
This year could bring significant legislative policy changes driven by the current administration related to immigration and healthcare, and of course, we will also see the impact of the recent passage of the tax reform bill.
At the same time, companies face some of the most significant financial regulatory changes in decades. The new revenue recognition standards—ASC 606/IFRS 15—take effect for most public companies this year, and could have broad implications, including potentially impacting financial statements. Also coming down the pike are new lease accounting standards, set to take effect for public companies in 2019. Adopting these changes requires a great deal of preparation and work, and will be a top priority for finance organizations.
CFOs are often in a position to not just embrace but also drive change because of the unique business and financial perspectives we bring to the table.
CFOs and their teams must be able to help their organizations navigate all of the broad-sweeping changes on the horizon. So how do we do that? The key is both organizational and individual agility.
I define agility in several different ways. First, it’s about having a flexible and open mindset. Leadership must be willing to adjust and readjust, and this is especially true for CFOs. We’re often in a position to not just embrace but also drive change because of the unique business and financial perspectives we bring to the table. For example, our teams should take a leading role when our companies are assessing potential business changes, by modeling out those changes, determining the impact to the company, and talking to investors about our vision and the potential impact. Furthermore, finance leaders must actively encourage and nurture this open mindset on their teams, not only through intentional hiring and open discussion about what is expected but most importantly through leading by example.
One area where agility is especially critical is in the budgeting and forecasting process. The business environment is constantly changing, and traditional planning approaches such as static annual budgets no longer make sense. Planning must reflect the pace of business today, and be a continuous and collaborative process that gives organizations the flexibility to react to changes and scale up and down in areas based on business outcomes. This can make a big difference when it comes to reducing risks and taking advantage of new opportunities.
But for continuous planning to work, it must be embraced by the entire organization, not just finance. All areas of the business must be prepared to quickly change direction mid-stream and adjust hiring plans and spend levels as required.
Finally, having agile technology and systems play a big part in being able to adapt to change—whether it’s modifying business processes to support regulatory changes, setting up new entities for expansion, or getting the data and insights you need to adjust plans. Without these capabilities, too much time is spent on manual efforts and administrative tasks that make it difficult to move quickly and be strategic.
While constant change can be daunting and difficult, it can also be an opportunity to improve, grow, and evolve into something better. Having the ability to adapt and respond—whether it’s your mindset, the way you plan, or the technology you use—will help ready you and your organization for the road ahead, wherever it may lead.