3 Top Opportunities for Chief Financial Officers in 2024

3 Top Opportunities for Chief Financial Officers in 2024

In our annual poll asking, ‘Which Pillar Will Be Most Critical To CFO Success?”, leadership invariably takes the top spot. The term Leadership can take on many different meanings. This one from McKinsey we find especially useful.

“Leadership is a set of behaviors used to help people align their collective direction, to execute strategic plans, and to continually renew an organization…. leadership is something you do, not something you are.” - McKinsey & Company *

This article is laser focused on how CFOs can lead their teams and businesses through three of 2024’s top opportunities.

The evolution of the Chief Financial Officer requires the role to be more strategic, more growth focused and more commercially oriented. However, none of the responsibilities associated with the ‘traditional’ CFO role, control and compliance, technical skills and stewards of the company’s financial well-being are going away. As we step into 2024, CFOs have more opportunities to change the fortunes of their companies than ever before. The challenge will be finding the time and resources to seize those opportunities while administering the important, but consuming, ‘traditional’ role of the CFO.

Here are three of the top opportunities CFOs are facing in 2024 and resources to help you capture them.

1. Adding AI and Automation Technology in Finance

As technology, especially potential applications for artificial intelligence, advance at lightning speed, keeping up is getting tougher. The growing plethora of financial applications and uses is mind numbing. These statements aren’t meant to scare you, they are meant to help you realize we are all in similar boats, and the race is just getting started. Your success will be based on how you lead in the future, not on what you have accomplished in the past.

3 Top Opportunities for Chief Financial Officers in 2024
AI and Automation Technology in Finance

Keeping up is a matter of getting started, knowing your business and curating technology that fits your business.

GET STARTED:

This is especially true for AI, and Generative AI in particular. Identify a couple simple use cases to get your team familiar with the technology. For example, creating an automated assistant to improve their work.

Be mindful of the risks regarding confidentiality, privacy and cyber security – but get started!

FOCUS ON HIGH PRIORITY BUSINESS NEEDS:

Before you take the deep dive into AI and automation a thorough understanding of your business and where investment will have the highest return is critical. Capex and Opex are scarce resources and must be linked to the company’s strategy. In this sense, AI and automation should be augmenting the strategic direction of the company, not driving it.

Ask yourself (and your team), “In what significant areas does the CFO suite support the company’s strategic direction?”

Once you have answered this question, you are ready for the next step.

CURATING TECHNOLOGY

In this step answer the following questions,

1. What is the quality of support you provide for each area identified above?

2. How would improving each way or area impact the business, ie, as a step function or incremental improvement?

3. Which areas do you believe AI or automation play a role in creating a step function improvement in the value creation finance is delivering to the business?

4. Using the list in number 3, start your research on technology options identifying.

  • The need (for example, distribute management reports by +2))
  • Fit for purpose (for example, automate invoicing and reconciliations)
  • Fit for budget (for example, under $100k or under $2k/month if subscription)

5. Support investments with an ROI argument you can defend.

Here are some resources to aid you in this process:

2. Talent Leadership and Retention

Along with the evolution of the Chief Financial Officer, the roles and requirements of the staff of CFOs have also changed. In addition to knowing technical accounting and finance principles they are now expected to collaborate across all departments, communicate more effectively, apply data and analytics for insights while keeping an eye all facets of the business. So, developing or finding and retaining the right skills is going to be a big challenge for the CFO in 2024.

“The data from CFOs align with what we are hearing from HR leaders, namely that competition for talent is expected to become fiercer over the medium term, and retaining that talent will become more challenging,” - Marko Horvat, CPA, Vice President, Research, in the Gartner for Finance practice.

3 Top Opportunities for Chief Financial Officers in 2024

Talent Leadership and Retention

GET STARTED:

Hire the right talent.

A study by Harvard Business Review helps CFOs cope up with this challenge, by providing guidelines regarding hiring top talent. These are the abilities they encourage CFOs to hire for:

  • Good communication with leaders
  • Efficient decision-making ability
  • Adaptability towards changing financial conditions
  • Empathy
  • Intrinsic motivation
  • Reliability
  • Perseverance

They add this capability for CFOs:

  • Knowing how to hire top talent.

FOCUS ON RETENTION:

After hiring top talent, the next challenge for a CFO is to retain them. This comes down to crafting a competitive compensation package, providing meaningful work with quality professional development opportunities and a culture that fits the new hire.

CFOs have to manage the above within the context of company resources, i.e. the company’s budget. This is growing into one of the biggest challenges for CFOs. Don’t use the approach of leading the company in expense reduction - that puts you in a race to the bottom. Use this approach instead. Communicate the value your team members bring to the organization and fight for the resources required to sustain that value.

CURATING RESOURCES:

Here are resources to assist you in hiring, training and retaining your most important asset, talent:

3. Improving Product and Service Pricing

The convergence of high inflation, supply chain woes, customer intimacy initiatives and the adoption of sophisticated analytics have put finance front and center in product and service pricing. Cost plus pricing may be simple, but it leaves money on the table. CFOs and their teams can have significant impact on the bottom line by using their skills and technology to improve pricing. That direction should be toward a value-based pricing model.

3 Top Opportunities for Chief Financial Officers in 2024
Improving Product and Service Pricing

GET STARTED:

“The most profitable pricing decision by far is to adopt value-based pricing (i.e. charge what a buyer is willing to pay.)

A CFO doesn’t need to know the value of the products their company sells, but they should make sure pricing and other parts of the company use value to drive business decisions.” - Mark Stiving, Ph.D., Founder at Impact Pricing LLC

FOCUS ON ANALYTICS AND CUSTOMER SEGMENATION:

With finance frequently being the hub of information and the center of excellence for analytics, it is a natural fit to have a seat at the pricing table.

“ By deeply understanding customer needs and the value they seek from your organization, CFOs can align pricing decisions accordingly. This involves analyzing various attributes, including customer, product, competition, regionality, and order specifics. Segmentation ensures that pricing outcomes reflect customer preferences and deliver the desired value.

The importance of converting qualitative attributes into quantitative measures to drive effective segmentation. By quantifying customer segmentation, CFOs can compare and analyze customer groups more objectively. This approach allows for a deeper understanding of customers’ needs and enables organizations to serve them in the most meaningful way.” - Lynn Guinn, Global Strategic Pricing Leader at Cargill

CURATING RESOURCES:

As you evaluate the impact your team is having on pricing improvements, here are some resources to grow your team’s capabilities:

This series of CFO Talks on pricing:

* https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-leadership


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