Three Ways Finance Can Create Value in an Uncertain Market

Digital transformation provides new options for finance professionals to add even more value to their enterprises. 

Whether it’s combining finance and enterprise data in new ways, building cross-functional partnerships by evolving service offerings, or reinvigorating finance talent, there are lots of opportunities to create value in this unsettled business environment.

In an uncertain market, finance has a critical role to play in creating value for a business.

Firstly, finance can analyze and manage risks to identify potential opportunities for growth. By taking calculated risks, businesses can capitalize on market changes and gain a competitive advantage.

Secondly, finance can provide insights and data-driven recommendations to guide strategic decision-making. With accurate financial information, businesses can make informed decisions that positively impact their bottom line.

Lastly, finance can optimize financial resources by identifying areas where cost savings can be made and resources can be redirected to achieve the organization's goals. By doing so, finance can improve the financial health and sustainability of the business in the long run.

I was honored to speak at the webinar hosted by Argyle and Workday. I was joined by Juliet Grabowski at Boston Consulting Group (BCG), Cathy Dondzila at Newrez LLC, and Scott Moyer at Workday We explored three value creation imperatives for finance teams: Insights, adaptability, and talent. Our panelists shared practical advice for turning data into actionable insights, methods to adapt to uncertain markets to become a true partner to the business, and ways to acquire and retain finance talent in the current job market.

The role of CFOs in today’s complex and uncertain world is crucial, as they can help other finance professionals navigate the challenges of value creation. External factors such as the pandemic, supply chain issues, inflation, global conflicts, and rising interest rates are making the CFO’s job more difficult. The sheer volume of data demands for a faster way of processing information, and emerging technologies like AI and ML require talents with the right expertise. To move from tracking shareholder value to creating it, CFOs can focus on three major levers: insights, adaptability, and talent.

Juliet shares her point of view on the three imperatives. CFOs are focusing on achieving more flexible and dynamic forecasting, planning and talent management.  They are reimagining how they plan and forecast and are focusing on developing processes that make their organizations more responsive and adaptive to uncertainties. CFOs are also focusing on talent, recognizing how important people and capabilities are to financial planning in uncertain times. There is a need for finance professionals who understand business drivers and can engage dynamically with internal stakeholders about tradeoffs, consequences, and long-term benefits. Transactional work is going away as value generation and business partnership become strategic imperatives. Companies must anticipate the finance capabilities they need down the road, embed those skills into job descriptions and performance management mechanisms, and implement a robust program for developing finance talent over the long term.

Cathy provides an overview of NewRez’s business model. She discusses how changes in interest rates impact her business and how her team is able to respond to those changes as part of their transformation in finance to make them more adaptable to business conditions. She also talks about their new ability to balance at the segment level and reduce “equity drag”. Kudos to Workday.

As we shift our discussion to the pain points finance faces with their data in rigid, disparate systems, I discuss the 3Ds that are keeping the CFOs up: Data quality and accuracy; Delivery speed; and Data governance. We provided practical advice on turning data into actionable insights, including improving finance literacy and cross-functional collaboration.

We then discuss adaptability and how it is paramount to getting information and ultimately gathering insights into profitability. Our conversations revolve around the challenges and transformations in finance, specifically in relation to market volatility, interest rates, and the impact on business. Cathy discusses how her team partners with software vendors and their own IT team to bring innovation into finance and how they have seen their partnership across the business evolve with that finance transformation. I introduce the 4C model, which focuses on culture, cybersecurity, competency, and communication. To create value in uncertain market, finance needs to shift its culture from tracking value to creating value, protect financial data to ensure compliance with regulatory requirements, develop competencies beyond traditional accounting and finance to better understand business needs, and explain the contexts of the data to stakeholders and guide them adapt to the scenario planning process. 

Cathy shares her experiences with M&A and the challenges that come with it. We discuss the need for automation, real-time visibility, and transformation in finance. We also touch on the importance of collaboration between finance and IT to drive innovation. The conversation ends with a discussion on the agile way of working and how roles and responsibilities are changing in finance.

The last section of the discussion is about how to create value in a business by having the right people in addition to the right technology. We discuss the importance of change management and acknowledge the differences between generations in the workforce. We also discuss how finance teams can shift from being value trackers to value creators and the importance of people analytics in creating a culture of value creation. We touch on talent management during times of transition and the need to attract and retain top finance talent with different skills and capabilities. We discuss best practices for communicating with the workforce effectively and how technology can enable that. 

My takeaways are: There are three levers that modern CFOs can use to shift their finance teams from tracking value to creating value. These levers include accessing insights from the right data at the right time, implementing flexible and secure processes that can adapt to change, and cultivating talent within finance to become true business partners to the rest of the organization. By leveraging these levers, CFOs can help their teams become more agile and proactive in creating value for the organization.