Finance drives Future
Reading time: approx. 20 min.Finance drives FutureAlternative systems, autonomous driving and connectivity in the cockpit – the automotive industry is undergoing rapid change with costs amounting to billions of dollars. With innovation on the rise, the role of CFOs is also changing as they become new drivers of transformation. So how does this new role fit into the management team? What skills do they need? Let’s take a closer look.
Perched casually on a stack of pallets, a man wearing jeans, trainers and a black shirt with the sleeves rolled up explains the value of AI for the automotive industry. This image of Lutz Meschke, Member of the Executive Board for Finance and IT at Porsche AG, perfectly illustrates the new role of the CFO within a company. The guardians of budgets and balance sheets are stepping out of the shadows where they only deal with statistics and are becoming designers of a new future of mobility. More than ever before, executive boards expect CFOs to help shape the rapid transformation within their sector and indeed become drivers of strategic decisions, innovations and investments.
Braking and Accelerating – The CFO as CPO
Braking and Accelerating – The CFO as CPO
“The old image of the CFO is fading,”says Marko Reimer, Head of the Institute for Management and Controlling at the WHU-Otto Beisheim School of Management in Vallendar am Rhein, Germany. He is researching the influence of top managers and the way their roles are distributed at managerial level. An expert in power shifts within executive boards, he has noted a clear increase in the importance of the CFO. They are much more involved in transformation processes today than they were a few years ago. “CFOs are no longer perceived simply as the person who sits in the machine room writing the annual reports and providing funds for investments. They are on a course to becoming chief transformation officers or chief performance officers.”
This greater responsibility has been apparent in the USA since the financial scandals of Enron, Worldcom and other companies. The revolutionary Sarbanes-Oxley Act was enacted as a reaction to these incidents and decreed that balance sheets and financial statements must be countersigned by the CFO as well as the CEO. This new positioning between traditional financial activities and strategic challenges also requires CFOs to now adopt a two-handed approach,meaning they must be both efficient and flexible.
“It’s about a deeper understanding of the business model,” says Reimer.“How do we contribute to success? And how can we open up new business areas?”
“New Competitors Won’t Wait”
“New Competitors Won’t Wait”
Marc Zimmermann, one of the two managing directors of management and IT consultancy MHP, sees an innovative understanding of the role of CFOs as the key to success in times of change. “CFOs must focus more on the future,” says Zimmermann, who himself is responsible for the Financial, IT and Quality divisions at MHP.
“While understandably still focusing on risks and balance sheets, CFOs can no longer just have their foot on the brake – they must also be able to go full speed.”
When undergoing transformation, the most important factor isn’t necessarily efficiency or lean management of sophisticated business models, but speed.“If you approach new topics with the old efficiency mindset, you’ll waste too much time”says Zimmermann. “New competitors are thinking about speed, first-to-market and scale. They won’t wait.” The CFO now has the difficult task of thinking about not only strict cost-effectiveness and risk minimization, but identifying new potentials and seizing opportunities as well.
It is obvious to Zimmermann that CFOs need a clear understanding of their business, their industry and the potential of new technologies.“They must adopt an entrepreneurial and networked approach within the management team and contribute to the development of new services, new products and new business areas.”
Gaining Momentum – From Shanghai to Atlanta
Gaining Momentum – From Shanghai to Atlanta
Porsche China has been based in the glass Office Tower 3 at Lujiazui Financial Plaza, Shanghai, since 2019. From these high-up headquarters in the progressive Pudong business district, CFOs are also taking on a new role. “In times of change,” says CFO Sheng Tantzscher, “we need to work closely with the CEO on the development of new business strategies and business models that are profitable in the long term and be able to quickly evaluate the financial value of new business models.” With the ongoing emergence of new competitors with new technologies, new distribution models or new digital points of contact with customers, the CFOs of existing manufacturers must take responsibility for testing their suitability.
“We need to think like entrepreneurs and explore opportunities to increase turnover,” says Tantzscher.
CFOs taking on the new role of navigator can also be found in Atlanta, a 14-hour flight from Shanghai. Thierry Kartochian, Executive Vice President of Porsche Cars North America since 2010, expiriences his job differently than he did a few years ago. “The approach has become more dynamic,” says Kartochian.
“Of course, we continue to be responsible for core finance activities such as budgeting and forecasting and ensuring the company’s liquidity and profitability, but today I see myself as a ‘trusted advisor,’ a strategic business partner for my colleagues of the Executive Committee, the Board and the entire organization.”
Data, Data, Data – The New Supreme Discipline
Data, Data, Data – The New Supreme Discipline
The role of CFO has undergone this transformation not least because of the opportunities presented by digital data analysis, artificial intelligence and predictive planning. These developments are revolutionizing the world of finance and enabling many CFOs to act as CIOs to help shape the IT structure of a company since they now have the tools to oversee transformation processes. For Thierry Kartochian in Atlanta, digitalization of the processes is already a reality. “I’ve been wearing many hats for a long time,” he says.“I play an active role in defining and implementing the IT strategy and digital transformation in the United States that is important for our future.”
Sheng Tantzscher in Shanghai is seeing the most advanced technologies such as AI, machine learning and robotic process automation become more prevalent in her role as CFO.“CFOs must be internal providers of real-time data,” says the high-flying CFO.“They need to play an important role in transforming a company into a data-driven organization.” In fact, when surveyed, CFOs were able to indicate a clear trend: By 2025, data analysis, data-based strategy advice and new digital solutions will become the supreme disciplines of top managers.
Team Spirit and Passion – A Different Leadership Culture
Team Spirit and Passion – A Different Leadership Culture
Experts and insiders agree that more complex processes and increased responsibility require stronger communication skills. “In times of transformation, it is more important than ever to work closely as a team,” says Marc Zimmermann.“CFOs must be strong communicators and work with the CEO to create a constructive climate.Plans must be discussed with others in the business before a mutual decision is made” says Zimmermann. “When undergoing transformation, there is no time for internal conflict. Competition takes place on the market – not in house.”
The new leadership role also requires CFOs to have a stronger, more passionate approach to technological innovations and digitalization. “A CFO must show confidence and be able to convey a story to the capital market,” says Reimer. “Companies are increasingly associated with faces.”However, the more a CFO takes to an open stage, the more the CFO needs a strong team of experts for support.
Studies have shown that the number of people reporting directly to the CFO is increasing. This means that CFOs must also be good team leaders and surround themselves with the most talented minds. “A CFO,” says Reimer, “must be able to lead people on a journey where the exact destination is not yet known.”
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Sven Heitkamp
Sven Heitkamp is a freelance reporter and copywriter from Leipzig. He
discovers what innovations startups are working on and explores how
large corporations work. He researches societal trends and family
histories, and writes for the Sächsische Zeitung, brand eins, Focus
Spezial, Öko-Test, Porsche Consulting magazine, and other corporate
publications.
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Finance drives Future
Braking and Accelerating – The CFO as CPO
“The old image of the CFO is fading,”
meaning they must be both efficient and flexible.
“How do we contribute to success? And how can we open up new business areas?”
“New Competitors Won’t Wait”
“While understandably still focusing on risks and balance sheets, CFOs can no longer just have their foot on the brake – they must also be able to go full speed.”
Gaining Momentum – From Shanghai to Atlanta
“We need to think like entrepreneurs and explore opportunities to increase turnover,” says Tantzscher.
“The approach has become more dynamic,” says Kartochian.
Data, Data, Data – The New Supreme Discipline
Team Spirit and Passion – A Different Leadership Culture
Discover more:
