In this new model, decision-makers not only have to make strategic choices more quickly but also need instant access to the right information to ensure those decisions are well-informed.

For CFOs, this means being able to make agile investment decisions but with so many potential ways to go - how can we gather fast, accurate insight to ensure we make the best choices? And, just as important - how can we understand where we’ve made the wrong decisions so we ‘fail fast’ and move on? Halvor W. Stokke, CFO of Confirmit, answers these questions.

Moving beyond numbers

Those outside the finance department often still believe that all that keeps us awake at night is numbers. Of course, the reality is that the finance function has evolved just as much as all other aspects of our organisations in recent years. Numbers are just our route to information - they are passive and only provide part of the story. They’re certainly not the objective of a CFO’s role. Or at least, they shouldn’t be.

To do my job properly, and to make the best decisions for the company as a whole, I need insight – just as any other business department does. And that means being able to understand the bigger picture of our organisation, taking into account external forces such as market trends and the competitive landscape, as well as the broader economy. There is also a host of internal factors to consider spanning product, service, operations, employment and customer practices.

But failing fast in decision-making and investment choices is actually about creating long-term success – by learning from the knowledge we gather at every decision point and adapting our future choices as a result.

This bigger picture which brings all of these elements together simply can’t be gained from numbers alone. It relies on a careful combination of insight gathered from across the business and presented in a way that tells us, based on clear evidence, how the investments and finance decisions we make will affect our strategic goals and our specific business KPIs.

Insight gathered at speed

But we don’t only need this holistic insight. We need it quickly and continuously. We need to be as agile – if not more so – than the market we serve and the competitors within it.

As a software organisation, we’re used to the fail-fast approach that’s long been associated with agile product development. We know that speed of delivery is often more important for success than first-time perfect delivery. Being agile in this way means we can continue to perfect our product while it’s already in the marketplace and deliver value to customers. It also means we’re much more likely to align with the changing needs of those customers.

The modern role of the CFO needs to follow exactly the same approach. Gather as much insight as we can, as accurately as we can, and then make the finance and investment decisions that we believe will have the greatest positive impact at that moment in time.

Our decisions may not always be perfect, but because we can be agile, we can make new decisions more quickly – offsetting the potential impact of previous wrong choices. We also gain the knowledge we need to pull investment more quickly when needed, rather than continuing to invest time, money and resource into a route of poor return.

Integrated data from across departments provides the additional benefit of linking cause and effect, giving department heads the evidence they need for future investment requests.

Failure is an option

Of course, no one wants to be associated with failure. It’s human nature to want our decisions to succeed, and the fundamental goal of a business’s senior leadership team is success and growth. But failing fast in decision-making and investment choices is actually about creating long-term success – by learning from the knowledge we gather at every decision point and adapting our future choices as a result.

Rather than failing fast, I call this ‘knowledgeable speed’. That’s because we’re making immediate informed, data-driven choices to maximise our chances of long-term ROI. This means the modern CFO role is now much more aligned to strategic business development than to fiscal calendars and quarterly reports. Of course, financial and accounting processes and procedures will always be adhered to, but they are part of our reporting suite and no longer an end goal in themselves.

Harnessing the best sources of insight

With such a focus on agility and speed, it may seem odd that we’d see investment in long-term, continuous Employee Experience and Customer Experience programmes as a critical component of an agile corporate strategy. But that’s exactly the approach we advise.

That’s not only because employees and customers are the most valuable asset for any organisation. It’s also due to the fact they are the most accurate barometer of market trends, providing the leadership team with a view on the pulse of a market in continual flux.

Used in the right way, the insight gathered from these two groups can be the catalyst for highly profitable organisational transformation. Not only can it help to predict changing behaviours and inform new strategic direction, but a continual, two-way dialogue with both customers and employees ensures that they are on board with change as it happens.

This is not just a ‘touchy-feely’ approach to management, but a real driver of success, since change driven by everyone is much more likely to lead to long-term results than initiatives led by an individual’s ‘vision’.

A cross-functional approach

It’s this approach to embracing wider business and market insight that sets forward-thinking leadership teams apart from the crowd. When CFOs work with other functions to understand the challenges and opportunities that exist around the business, it’s more likely that we’ll make informed investment decisions. The wider effect of this is that can simultaneously improve a range of KPIs and positively impact the bottom line.

For example, if we work more closely with CMOs, we’re able to create an accurate picture of how the customer experience we deliver impacts financial performance. Similarly, linking our work with HR heads gives us better insight into how employee engagement may be affecting sales, customer retention or service levels.  Individually, we can’t make this correlation as, naturally, the data we gather is departmentally siloed.

Aligning data and leadership culture

Integrated business data and insight can only work, however, if we have a closely aligned leadership team. Working cross-departmentally supports our holistic, ‘fail fast’ approach to decision-making because we all understand the fuller business picture and can better identify opportunities for change and growth – regardless of where initiatives begin.

What’s more, each department can prove their individual impact on KPIs, giving a greater understanding of the improvements or changes needed to enhance both departmental and overall business performance.

Integrated data from across departments provides the additional benefit of linking cause and effect, giving department heads the evidence they need for future investment requests.

A continual evolution

Of course, just like the industries in which we operate and the markets we serve, our own roles are continually evolving. While a CFO is still accountable for the financial health of an on organisation, we’re also contributors to a much wider range of decisions than we were five years ago.

Our roles will continue to change as the lines between ‘ownership’ become increasingly blurred. We’re no longer owners of the balance sheet, just as sales is no longer the owner of customers – that’s a responsibility that falls to every employee in a truly customer-centric business.

So, if as a CFO I need to drive financial success in an agile, ever-changing industry, understanding numbers is no longer enough. Understanding everything about my business is now the minimal requirement for staying ahead.


About the author:

Halvor W. Stokke joined Confirmit as CFO in 2017 and holds responsibility for the company’s financial stability and growth. In this position, he focuses on the long-term strategy for Confirmit, including both organic growth and all merger and acquisition opportunities.