Despite the fact that the global business landscape continues to change rapidly and become more challenging in many ways, there has never been a better time to be a chief financial officer.
Four major disruptive changes in the past several years have coalesced to create an environment in which CFOs can be all they can be – conceivably, more than thought they could be (in that role). I say to those currently living the role, good choice! And to those graduating college right now with leadership ambition, the CFO path provides the opportunity to develop skills and gain experience that can take your career to even higher places.
The first disruption is the shift to what I call the “instant information” economy. The entire globe is interconnected now and advanced software applications allow businesses to do things that were not possible until now. This has enabled and given rise to numerous new business models, news cycles, and financial market behaviors. Many industries have been disrupted by the internet and the instantaneous availability of information, in the way that Amazon disrupted the selling of books and media, Uber is upending the taxi business, and LinkedIn is wreaking havoc on the employee “search” business.
Financial markets react – and often overreact – immediately to new information, which is putting greater pressure on executives to be better prepared to respond. All business leaders, but CFOs in particular, must be keenly aware of the ways that “instant information” can affect businesses, brands, and market value.
The second big change is actually an outgrowth of that “interconnectedness” of the world. The rising threat of attacks on our businesses’ networks and the increasing need for advanced security technology to detect and prevent them is a high priority across the global business community.
As one of Ciena’s security consultants told me, there are only two types of companies in the world: those who have detected network penetrations by hackers or malware, and those who have been penetrated but have not detected it. The amount of money my company spends on network security is a huge multiple of the amount we spent only five years ago. And, that number will almost certainly continue to increase. The financial implications put this squarely in the CFO’s court – it’s not just the CIO’s issue to contend with anymore.
“As one of Ciena’s security consultants told me, there are only two types of companies in the world: those who have detected network penetrations by hackers or malware, and those who have been penetrated but have not detected it.”
The third disruption is the accelerating globalization of business – though furthered by some of the technology advancements chronicled above whereby company location has, in effect, become moot. Where I am most focused in this area is on the arrival of competitors outside of the United Sates and notably China’s emergence as an economic and business superpower.
In 2010, the Chinese government issued a document that identified seven strategic emerging industries with specific targets for the percentage of GDP that each would represent by 2015 and 2020. They have aggressively executed on this plan, and they have been very successful in at least two of them already, including telecommunications. From a standing start at the turn of the century, Huawei has become the largest networking company in the world, and one of Ciena’s toughest competitors.
And, finally, the increase in shareholder activism has begun to put significant pressure on public company management teams. Since 2010, the dollar amount of equity funds devoted to activism has grown at an average annual rate of 22%; the number of activist “interventions” has grown by 10% per year; and the number of public company board seats held after activist attacks has doubled. The ”instant information” I referenced earlier allows activists to move quickly and use social media to gain allies at exponential rates.
These significant changes are making it incumbent upon the finance chief to be involved in all aspects of the company’s operations. Many management gurus have forecasted the rise of the “strategic CFO” — a leader with an external rather than an internal orientation, one who thinks forward rather than backward, and one who focuses on the business first, then the financials, rather than the opposite. Every one of the four disruptions provides opportunity for the CFO to be a leader in other than purely financial matters — to actively contribute to business issues that might historically reside with CEO, COO, and leading technology functions (CTO & CIO).
For those multi-skilled, highly ambitious college graduates that favor finance, but are attracted by the opportunity to run a company, a career as a CFO has never offered a more practical pathway to build executive-level muscles and infinite career possibilities
Jim Moylan is a long-time CFO and current CFO of networking company Ciena.