Strategy

CFOs' Strategic Future: 2014 FEI Summit Day Two Wrap


by FEI Daily Staff

The role of technology in influencing how companies operate, the growing strategic role of senior financial executives, and the importance of getting involved in the regulatory and legislative process were among the highlights of the first day of the 2014 FEI Summit Leadership Conference.

The Future of Finance is Now

The future of the finance function will be based on the “common language of finance but mixed with local culture,” said Mike Walsh, CEO of innovation research lab Tomorrow and the kick-off keynote speaker at Financial Executive International’s 2014 Summit Leadership Conference in Washington D.C.

Crucial to financial executives discovering the next generation of finance is first discovering the correct way to develop young professionals entering the workforce, Walsh said.

“They key question many of you will have to answer is how will you develop the next generation of talent in your organizations?,” he explained, adding that the attributes of a new crop of finance professionals entering the job marketplace today include the need for “constant feedback” and a thirst to develop “computational” thinking.

 

Walsh encouraged Summit participants to set up “youth labs” within the finance function in order to recruit the next generation as “alpha users” and as a way developing talent within the organization.

 

“Your company is a platform, and culture is the operating system,” Walsh argued.

As for current financial leaders, Walsh said that we are living in the decade of the “strategic CFO” and finance now plays a indispensable role in not only determining the financial future of a company but also supporting the innovation that creates growth.

“Right now there is $1.64 trillion held on corporate balance sheets, and that really represents a fundamental lack of imagination regarding how to take advantage of future innovation,” Walsh said. “In this type of environment, a financial leader can make or break innovation.”

Xerox’s Ursula Burns Endorses the CEO/CFO “Partnership”

Ursla Burns, chairman and CEO of Xerox Corp., described the critical role an effective CFO can play in developing and implementing the organization’s strategies.

“It would be impossible to do my job without my business partners, and sitting beside me is my CFO,” Burns said. “I talk to her more than any other staff member.”

Burns says the advisory role of a CFO should extend beyond the financial aspects to include a broad view of the business and its goals.

“It’s not the books and records – that’s important, but that’s like hygiene,” Burns said. “It’s the choices we can make when we invest our capital. We have human capital, financial capital and reputational capital, and that partnership is important.”

 

Burns said the CFO’s role is changing from a focus on finance and compliance to helping the company establish its strategic goals and identify the potential implications.

 

“What the CEO needs is well-informed options,” she said. “I know [business is] risky, but more importantly than telling me where the risk is, tell me how we can mitigate that risk. I know where the opportunities are, but I need options. The biggest thing a CFO can do is understand the business from the point of view the CEO does [and consider] shareholders, customers and employees. The CFO has to use the same set of lenses and be a partner to the CEO.”

Addressing the conference’s theme about the importance of innovation, Burns described how Xerox’s had long benefitted from its history of technical and business process expertise. The company has helped customers deal with complex challenges since it was formed in 1906, and Burns said those skills are more important in the digital revolution.

“How we run our company, and how our clients run their companies, are going to go through massive transformations,” Burns said. “The thing that’s holding that back is people’s willingness to do it rather than the technical capabilities…staying in front of that is a really big deal.”

Getting Your Voice Heard

David Hirschman, president and CEO of the U.S. Chamber Center for Capital Markets Competitiveness and senior vice president of the U.S. Chamber of Commerce, urged Summit attendees to get involved in the regulatory and political process to advocate for their companies’ interests.

He cited as examples several regulatory initiatives in the Dodd-Frank reform package enacted after the 2008 financial crisis that could restrict companies’ ability to manage and raise capital cost-effectively. Hirschman said many of the Dodd-Frank changes, and current proposals, were developed without considering the implications for U.S. businesses. “All of us benefit from clear rules and the ability to take prudent risks,” Hirschman said. “CFOs want diversity of choice.”

He said the challenge of regulatory advocacy is hampered by political divisiveness in the nation’s capital, making it especially important for grass-roots interests to add their voice to an often-contentious debate.

Hirschman said it’s important for financial executives to participate in the political process, and to avoid assuming that regulators or legislators understand what their companies do. He said it’s a common mistake for business leaders to think lobbyists will be able to advocate their interests alone, or to wait until the last minute to get involved with sensitive issues.

“Don’t assume that someone will speak for you” Hirschman said. “Lawmakers say they want and need to hear from you.”

He said financial executives can make a difference by writing letters, talking with their legislators about legislative or regulatory proposals, and getting involved with groups such as FEI or the Chamber. He said without constituent input, legislators assume an issue isn’t important to them.

“You don’t have to be an expert lobbyist to participate in this process and have an impact,” he said. “Our goal, working with FEI is to help you have a voice and educate others.”