285. CFO 4.0 Revisited: The essential mindsets you need to be successful in your new CFO role with Ash Noah

0:00Welcome to CFO 4.0, the future of finance. The CFO role is changing rapidly, moving from cost controller to strategic visionary. And with every change comes opportunity. We are here to help you take advantage of this transition to win at work, drive your career forwards and lead with confidence. Join Hannah Munro, Managing Director of ITAS, a financial transformation consultancy, as she interviews key experts to give you real-world advice and guidance on how to transform your processes, people and data. Welcome to CFO 4.0, the future of finance.

0:47So hello everybody and welcome to this episode of CFO 4.0. With me today I'm very excited to announce we have Ash Noah. So Ash is the BP and Managing Director of Learning Education and Development at the combined forces of CIMA and AICPA. So welcome Ash, it's fantastic to have you on the show. Thanks very much, it's great to be here Hannah and these are indeed exciting times. They are indeed. So tell us a little bit about yourself, Ash. How did you end up in your role you're in at the moment? So what my role currently is about designing, developing, and delivering the CEMA professional qualification, which is also called the Chartered Global Management Accounting Qualification, the CGMA.

1:34I am a former CFO. I was the CFO for a logistics express parcel delivery business, which has since been bought out by FedEx. And so that gives you some context. I've lived and worked in 11 different countries across all the continents, except the Arctic and the Antarctica. And so that's given me a really great journey of, you know, kangaroo hopping from Australia all the way now in the US via Singapore, London, Brazil, and a few other locations in the Middle East. So it's been an interesting journey with TNT, as we were called, and TNT Express. And I was in the US when AICPA and CIMA came together, actually.

2:32And the opportunity to go and meet other CFOs and fly the CIMA flag and make them aware of this fantastic designation was something that really was attractive to me because I wanted to pay back to the profession and pay back to the association, which really helped propel my own career. And so I ended up starting off with the association, promoting the qualification with other CFOs. And now I've ended up in actually designing and delivering that qualification. So the research examination, the content development for the qualification is by domain. And it must be quite an exciting time, I guess, as the CFO role does become more global.

3:25The world, even though physically it's quite the same, seems to be getting a bit smaller. So is the skill set the same when working globally, or is there a different skill that's needed across the globe? So there are some things that are not changing, and there are some things that are changing significantly. What really brings a CFO fundamentally to the table are the technical skill sets around really understanding business accounting, really understanding business finance, and being able to make sure there's a process of governance and control over the entire end-to-end reporting, making sure the reports are accurate, etc.

4:11So that's really what one could call table stakes. And that hasn't changed. What also hasn't changed from my time 10 years ago when I came out of the practice of being a CFO till now, at that point in time, we were still talking about business partnering, being able to collaborate, being able to communicate, really being able to join the dots across the business for decision making, etc. Those things haven't changed. But what has really changed is the need for those type of skills today is extremely heightened. And there are a number of reasons which I guess we should go into as we go into this podcast and talk about what is really driving the changes in these mindsets.

5:05and the acceleration for the need for these type of skills. Absolutely. And I think that's a great next question for me to ask, to be fair. So over to you, Ash. What is it that you have seen and CFOs that you'll speak to are telling you about some of the shifts that we're seeing at the moment in terms of skills and mindset? All right. So let let me just start off with some of the background, high-level landscape that's changed and what is driving the need for this new mindset and skill sets. So firstly, we are living in a VUCA world, and that's volatile, uncertain, complex, and ambiguous. And every one of those attributes, volatility, the uncertainty, the complexity, and the ambiguity has been accelerating tremendously.

6:03Bucha is a military term where you go into situations and you have to adapt really quickly to the unfolding events. And that's really accelerated, as you know, with COVID and even pre-COVID, the acceleration was significant. So the levels of risk are really high. The demands of the stakeholders are multiple, complex, conflicting, and often need to be reconciled. And there's rapidly changing business models where businesses are going out, as in not being able to sustain themselves because other business models come in that have leveraged technology and the old way of doing business is outdated.

6:49and to be able to sustain and grow and continue to be in business, one has to continually change those business models. So those are the four major factors that are really driving the need for this new skill set, the new mindset. Just to recap, VUCA world, high level of risks, demands, multiple demands of multiple stakeholders, and the rapid changing business models. So that's kind of the high-level landscape of the why. Why do we need these new skill sets? Now, going into the actual mindsets, I'd start with what is finance charged with? Fundamentally, finance and accounting and CFOs are charged with governance and business guidance.

7:42the telling part is that we've especially since sarbanes oxley etc we have pretty much delivered what the business needs in terms of governance and so research shows us there's about a 10 % gap between what finance needs to deliver in terms of governance and what business expects them to deliver. So 90 % of the times we are hitting that right. When it comes to business guidance, the gap is 60 plus percent, which means it's just 40 % of the needs that we are meeting in terms of what the business requires. And so that is the big gap which all CFOs are trying to address. A lot of the transformation, a lot of the business transformation is trying to address that guidance gap.

8:37And Hannah, that gap continues to increase because of the factors I'm talking about, the acceleration in Buka and the higher risks, et cetera, and the change in business model. And as that tends to accelerate, you'll find the gap continues to grow. And so there is a new skill set, there is a new mindset that is required to really close that guidance gap. Does that make sense? Oh, absolutely. And if we think about the pace of change that we've experienced over the last 12 months, that's a huge, not only have we got that massive gap to catch up on, but like you say, those circumstances are becoming even more volatile and ever-changing.

9:19So what's the solution to that? How do we start that catch-up process? Yeah, so I'll drill into some of the aspects of the transformation that CFOs are undertaking within their function, not just to transform their function, but also to transform their people. And everyone actually runs to technology first to address the gap. And that's fine. The first port of call is let's get our technology right. But it's those that really address the competencies of their teams and really equipping them with the right mindsets and skill sets are the ones that will truly be able to transform. And so the transformation is, again, when you look at the four major areas of operation for a CFO, finance is best at going and getting the right information, the relevant information.

10:18taking that information, analyzing it, producing insights, and then using those insights to create influence and then really have a strategic impact on the business and create value. So that's kind of the overarching cycle that each CFO is engaged in. Most finance functions spend a lot of time in information and insight and don't have as much time to spend on influencing and impacting and creating value. Now, as technology adoption has increased, it has given finance more time to engage in that influence and impact boxes. And automation has enabled them to spend less time on gathering the information, gathering the data, and gathering the insights.

11:11But what we're finding is there are some key skill sets and mindsets that will address the move towards the influence and impact. So fundamentally, finance needs to understand the business and the business model. And so having a value creation mindset that helps finance and the CFOs to understand their business model is absolutely the starting point in terms of having this value creation mindset. To have a value creation mindset, one needs to understand that value is now today, again, research shows 90 % of the value of an enterprise is intangible. So it's not really in the balance sheet. And so if you want to participate in value creation, one needs to go and understand what is driving intangible value.

12:09And that can be understood through the business model as to how you define value, how you deliver that value, how you capture that value, and how you sustain that value. So understanding your business model really enables a CFO to engage with the business, not just from a point of view of engaging in costs and profits. so that's that's kind of where usually cfos operate in in the element of the business model but it should really start with understanding the customer value proposition understanding the processes that enable the business to change the raw materials or the inputs to goods and services to understand the relationships that the business engages in with suppliers with customers with supply chain, et cetera, to transform the raw materials to the finished goods.

13:09And then there's the cost and revenue, which is a key part of the business model. But really, we need to focus on the other three elements. And then beyond that, the CFOs to create value and have this value creation mindset should be able to understand and engage in building the right culture in the organization. And the culture that is really, in these times, critical is adopting a disruptive culture in terms of you're ready to disrupt your own offerings, you're ready to disrupt the industry, and you create innovation that enables that disruption. And again, the CFO needs to be able to participate in that and also have this mindset of providing your enterprise with a digital platform.

14:05And so now we're going towards the whole automation and technology mindset so that the enterprise can not only be a digitally connected enterprise internally, but is able to engage with external platforms to deliver new services, new value propositions, new ways of doing business with the customer. And so these are kind of the fundamental shifts in mindsets, the value creation mindset, the technology mindset. And then there are some more specific ones, which I want to get into. But before I do that, maybe you want to drill down into anything I said or pose another question? Yeah, absolutely. And I think it's an interesting piece around the value creation.

14:55So we think of a CFO, perhaps one that's new into role, both in a new company and in maybe new into the CFO role. Getting hold of that business model piece and understanding the intangible is quite a challenge, I guess, if you've not worked in that organization. So what would you recommend in terms of how do we embed that piece into that first sort of 90 days as a CFO? What should they be doing to get there? Spend a significant amount of time with the business outside of the CFO's office. I have a favorite saying because I come from the logistics transportation business. You need to go kick the tires and smell the diesel.

15:43If you don't do that, you're not really understanding the end-to-end value proposition. Why is the customer using you? What is different about your services? Why is the customer ready to pay for value-added services? So truly understanding your business operations. If you want to be a business partner and you want to be a value partner, you really need to be able to understand the entire business. And for a CFO who's not grown up within that business, it's a greater challenge. If you come through that business and you come through and grown through the ranks, it actually is sometimes significantly easier because you understand all the moving parts.

16:28A CFO has a vantage point in terms of, you know, has a front seat, is able to see across the organization because finance really touches every part of the organization. And so before one settles in and gets too comfortable in their CFO's chair, I would suggest get on the road, go around. If you have production facilities, visit them. If you have research and development facilities and product development facilities, you need to understand how the marketing engine works and how the revenue engine works and what are your key products and what are your key services. is, and you have to understand that entire landscape to really understand how to create value.

17:15So in the first 90 days, I would have visited the key locations, the key production sites, service delivery sites, and I've spent time with each of those leaders. I talked about the business guidance gap. I would start with asking the question, is finance giving you what you need to conduct your business operations. Ask the sales and marketing organization, are they getting what they need to make the decisions? And so every part of collaborating across functions is easier said than done. Unless you really understand what each of the functions needs from a finance support and finance business partner perspective, it's really difficult to then close that guidance gap.

18:05So those are the areas where I would focus on as I went in. Other than, you know, I don't want to say ignore the governance side. The governance side is absolutely critical, making sure you have clean audits and you have a very solid balance sheet in terms of all the reconciliations and controls are in place. And you have internal controls over financial reporting and all of that is a given. But the aspect of understanding the business in order to provide business guidance is absolutely critical to start off with. And it's an interesting point, isn't it? And I would actually say that even if you are in that role, that same process still applies.

18:49Because there is something about looking at all of those operations with the eye of a CFO rather than within finance. because if you've not had the chance to do that within that finance controller role, there's a real opportunity to make sure what you think you've understood from within that finance team is also what is actually happening out there with your stakeholders. Exactly right. So, Emma, you mentioned a few other mindsets. So we've very much been talking about that value creation mindset. And you referred earlier to a few others that you think are important for any new CFO. Okay, so tell us a little bit more about those.

19:28What do those look like? Right. Let's talk about switching gears from value creation mindset to a mindset that really adopts automation technology. And then related to that is analytic mindset in terms of leveraging data. the explosion in the amount of data that is available within the organization and achieving efficiencies within the finance processes and having this technology mindset they're all kind of interrelated finance really needs to lead on what is our data model who owns that data and there is a certain portion of the data which should be owned by the CFO. And that data to decision process needs this real data analytics mindset.

20:25So it's related to value creating. It's an enabler for value creating, for value creation. But having this mindset that where can I get the most relevant data to make the decision is absolutely critical. What we saw through the pandemic, for example, all the trends that we were used to were not an indication of the future because the level of demand, the level of supply, the level of prices, everything was upended. And so if you were relying just on data that was historic, you would not be able to forecast very quickly how to respond to the unfolding situation. And so having this data analytics mindset, thinking about external sources of data, can I use proxies?

21:19Can I use flight data? You know, how many people are getting on planes and how many people are traveling? can I use traffic data to see where are people going now, you know, if retail stores are opening up in other locations? So what I'm trying to say is having an open mind to the data that's available, not just within the enterprise, but outside the enterprise, then being able to leverage that data through technology, analyze that data and really help the organization forecast better levels of demand so that they can meet the needs of the customer. That's critical in terms of having that mindset of data analytics.

22:00And related to that is automation and technology. How can I change my legacy processes? How can I re-engineer my legacy processes so that I can really apply technology that enables me to automate? So having a mindset that says, I'm going to standardize. And if I can standardize, then I can automate. And understanding what type of technologies, and there aren't that many technologies to get your head around in terms of automation. It's really the robotic process automation. And there are several players in that field. But understanding how RPA works, understanding how you can automate, because the opportunity to automate even today is significant.

22:53To have a cloud-first mentality, to have a digital-first mindset is really critical. And so this mindset is really around embracing technology, embracing automation, and leveraging data and the technologies that can really drive value creation. So again, kind of feeds back into the value creation story, but the speed of data to decision really will determine an enterprise's competitive advantage. The sooner you're able to decide and act, you might be moving ahead of competition. And there was an interesting trend. So I literally recorded another podcast this week with a tech, basically a technology digital transformation company.

23:47And they were saying one of the most interesting things is this 80-20 rule when it comes to both data and technology and that you can automate about 80 % of what you do. But it's that 20 % that holds you back from that full automation. So I loved your comment about standardization because I think that's one of the big challenges within finance is removing, you know, those complexities that I think sometimes finance absorbs on behalf of the rest of the organization. And that, you know, once you can start to get through those, I think there's a massive power in what we can do in finance. And once you start to get through, you know, all those weird and wonderful scenarios that, you know, that sales will put forwards and finance have to deal with.

24:33Absolutely. And also, Hannah, really what one should be looking at is the 21st century enterprise systems have really done a great service to businesses and to CFOs. And what they've done is they've taken best practice processes and they've actually engineered them into the technology. And so the old mindset of I define my process and then I use technology to execute that process is actually being flipped. What we need to do is we need to look at the technology, re-engineer our process so that it fits the technology. If you try and customize the current technology to your existing legacy processes, which were invented in the 20th century, we will not really get the benefits of that investment in technology.

25:32You are definitely preaching to the converted there, Ash. I'm a massive believer I am in using the tools that you have to the best of their ability because there's always a danger um that you can um you can be too specific about you want and I'd have to say I'm a massive believer in not over developing systems and building you know because then you lose the flexibility don't you in terms of that that technology shift so yeah no absolutely that's a that's a great point so for those of you listening um it's not just me that's saying that is um the the all-knowing ash from semen aicpa so that's a great point though ash to be very fair um so so from a from a mindset perspective is there any so again taking us back to you know uh those that are listening that are perhaps new into role and thinking about their first you know 90 to 100 days what else in terms of mindset should we be thinking about from a personal perspective in terms of how we approach that piece?

26:36So as trained finance professionals, we really have been trained into bringing professional skepticism. We ask all the right questions. And our training also has caused us to be very process-oriented in terms of sequential and logical process development. And sometimes that goes against us, especially when one is trying to solve problems or when one is trying to drive transformation. So in that, there's two kinds of mindsets that one needs to develop both for oneself as a CFO, but also in our teams. The two things I would really recommend embracing is understanding the workings of agile. So really looking at agile methodology and adopting, not for technology rollout, but understanding the agile way, understanding how you can test and learn and implement in small increments.

27:52And you don't have to get the whole thing right. first time. So experimentation and innovating around the first test and learn cycle, bringing people in from other groups and how you approach, that takes me to problem solving. So an agile mindset and a problem solving mindset is what I would say CFOs need to be thinking about. so i talked about the agile methodology and the other methodology is design thinking and design thinking really enables finance to break that um that that chain of logical sequential process and and try and deliver and and solve problems by really understanding the landscape by really exploring with all the partners how we could perhaps solve this problem and then building a prototype, which again goes to that test and learn type environment and really use that prototype and learn from it.

29:01So very related, but two methodologies that I would really encourage CFOs to embrace is the agile methodology and design thinking. And perhaps that kind of completes that compendium of some of these new skill sets. Yes, there is lean and there is six sigma and those type of project management and performance management and change management techniques can be brought in. But I really think for CFOs to really understand and leverage the agile and the design thinking is another mindset change that requires to help. And that's a tough shift, isn't it? If we think about, you know, where, you know, finance are expected to be the cautionary ones.

29:54And, you know, if we think historically, that shift into that problem-solving creative thinker, it could be quite challenging for those that are, you know, and while still maintaining that steady hand on the rudder and that sort of governance piece. So how do CFOs balance the development of those skills along with maintaining the trust of the organization? And because it's a bit of a balancing act in some ways. It is. And it brings us back full circle. And I think that's a nice kind of close as we go forward in terms of it's those two pillars. It's the governance and the guidance, and one needs to balance the governance because you cannot not deliver what is required on the control, compliance, the accuracy of reporting, not to be in the front page of the Financial Times for the wrong reasons, right?

30:55That is absolutely critical. And that is why CFOs are primarily charged with that governance to ensure that there's compliance with policies, regulations, etc. And one cannot take their eyes off that. So having built that foundation, having that strong foundation, one then goes further up. So I see it as a three-step process. The first step is process excellence. And the process excellence makes sure that you have the required systems and processes and controls in place. And you have engaged with automation, etc. You've got your processes spot on. that gives you the foundation to move towards kind of business intelligence.

31:50And then you're going towards that data and data analytics and data to decision, decision to execution type mode. And you're building capability in the business intelligence. And then finally, when you have that capability in terms of business intelligence, you then move towards the influence and really having business influence and that comes with the absolute solid foundation of that process excellence, the digital intelligence, and then you can really deliver that business influence and be creating value and co-creating value with the rest of the organization. And so for those that are perhaps looking either to develop into that CFO role and they perhaps listen to this and going there's a lot that I maybe need to to work on or you know some good self-analysis in there what is the pathway that you would be recommending and you know in terms of steps and support systems that they should have in place perhaps even before they they look to step into that role and as they go into that first role so I think there's a three-dimensional approach.

33:03One is you have to be absolutely deeply, you need to have that expertise, the technical expertise. That's the depth in the profession, in a professional qualification. You then need to have the width across the business, business strategy, really understanding the importance of business models, digital skills. And so that's kind of the width and the breadth that one needs to cover. And the third dimension is around really being exposed to the right experiences, not just be on a finance track, see if you can move and use that lattice approach, which is used so often in our talks in terms of, you know, the ladder just doesn't go, you know, one way.

34:00You have to shift and perhaps spend time in other parts of the business, spend time in operations, spend time in marketing and sales. If you can, try and move around the business and really get that experience. So it's experiential, having the right mentors, and being on a journey that really exposes you to a wider area of practice than just finance. Those would be the three things that I would really encourage aspiring CFOs to be focused on. And for those that are lucky enough to be stepping into their first CFO role and maybe feeling hopefully very excited, but maybe slightly nervous, What are your top tips for the first 90 days in that CFO role?

34:55So first 90 days, and again here, if you're new to that organization, understand the business, understand the business model, and really collaborate across all the functions. Understand their needs and understand how you could be a better business partner to them and serve their needs. And if you have been in the organization, within the organization for a while, and you've been promoted up to the CFO, it's really about reaching out to those that you might have, you know, stepped over to become the CFO. and it's important to retain them. It's happened to me several times and I've had to reach out to these people and assure them of the future, assure them of a vision, have a very clear strategy for your finance function, share that strategy across within your team and have visibility across the organization as to how finance will engage with the rest of the business to create value.

36:05And so communication is absolutely critical in terms of the first 90 days. Communicate your intent. Create this strategic view. Create a vision and mission for finance and get your people along. Don't neglect the human dimension. Those would be some of the key things to address in the first 90 days. Well, that is a great way to finish the podcast. Ash, thank you so much for sharing your insight and knowledge and experience. And I think for all of those listening, there's some great tips to take away, both in terms of mindset and skills and some practical sort of next steps for those first interval.

36:47So thank you so much, Ash. It's been wonderful having you on the podcast. You've been a great guest. Thank you very much. It was a delight to be here and talk to you, Hannah. Brilliant. Thank you, Ash. Thank you.

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37:56Thank you.

38:29Thank you.