Reinvent yourself? Successful artists do it all the time. Think David Bowie and Lady Gaga. When companies reinvent themselves, the results can alter entire industries. Apple reinvented itself and went from being a niche player in desktop computers to the world leader in mobile phones. Amazon went from selling books to selling everything. Now, according to a new IBM CFO Study, leading CFOs and their finance organizations are reinventing themselves to keep pace with a business environment that seems to be in constant flux.
We’ve talked before about the value of “digital reinvention” or digital transformation in finance. This new research publication from the IBM Institute for Business Value, titled Elevate Your Enterprise, has found a high correlation between the ability of an organization to reinvent itself and outstanding financial performance. The paper divided today’s CFOs into three distinct groups and found that one group outperformed its peers in revenue growth, profitability and innovation.
What type of CFO are you?
The study called these three groups “Reinventors,” “Practitioners” and “Aspirationals.” The Reinventors were the standouts. CFO Reinventors were more effective in virtually all dimensions of the finance agenda, especially in performance analytics, mergers and acquisitions (M&A) and organic growth opportunities. Fully 70 percent of Reinventors said they were effective at growing revenue from their existing businesses and at identifying new organic growth opportunities.
In addition, 86 percent of Reinventors said that they have a “sure sense of the direction their industry is heading,” compared with only 69 percent of Practitioners and 47 percent of Aspirationals.
What’s behind the Reinventors’ confidence? Part of it comes from their reliance on data and advanced analytics to inform their decision making. Eight in 10 Reinventors turn to data and analytics to inform strategy — more than twice as many as the Practitioners. Reinventors also lead organizations that are “comfortable with experimentation, capable of making fast forays into innovation.” This openness to experimentation and a willingness to “fail fast” — without people risking their careers — is where the opportunities and the benefits of reinvention really come into play.
The CFO Reinventors also work to be full partners with other functions within the organization. They “cultivate continuous learning by implementing a more fluid work structure made up of cross-functional teams.”
How to become a Reinventor
What can other finance organizations do to follow the lead of the Reinventors? Here are three recommendations we selected from the IBM CFO Study.
- Digitize finance processes. Significantly more Reinventors than Practitioners or Aspirationals use digital technologies to create agile operating environments and optimize transactional processes. They “exploit new technologies (such as robotic process automation, AI and advanced analytics) to enhance processes.” And they implement digital technologies to enhance insights for financial planning and analysis (FP&A).
- Create a single version of the financial truth. CFO Reinventors have mastered the adoption of common processes, common planning platforms and enterprise-wide information standards. In fact, “78 percent of CFO Reinventors have effectively implemented enterprise-wide information standards, versus less than half of their peers — 48 percent of Practitioners and 43 percent of Aspirationals.”
- Implement strategy across the C-suite. The Reinventors collaborate extensively with their C-suite peers on strategy execution in such areas as risk management and technology investments, as well as investigating new markets and operational capabilities.
These are just three of the recommendations offered in the new IBM CFO Study. Suffice it to say that Reinventors continue to reinvent themselves, always looking for new and better ways to perform essential finance tasks, and using the best tools and techniques available to give their organizations a competitive advantage. Read the study now to learn more about how Reinventors achieve their results.
And if you’d like to really get into the nuts and bolts of realizing the most value from your analytics solutions, please join us for the second annual IBM Analytics University conference. It’s offered this year in two new cities: Stockholm (September 17–20) and Miami (October 2–5). Check out the IBM Analytics University site for more conference information.
(Header image by Marcello Casal Jr/Agência Brasil, used under a Creative Commons license.)