The Evolving Role of Finance: From Controllers to Co-Pilots in a Dynamic Business Landscape

In today’s fast-paced business environment, marked by turbulence and unceasing change, the role of finance has never been more pivotal. Companies are drowning in data, attempting to decipher complex market shifts while grappling with cost and inflation pressures. In this context, organizations are increasingly looking to finance teams to provide the analytical brainpower that will help them make better business decisions.

Traditional planning, decision-making, and spending patterns have been completely upended in the last couple of years, opening a much broader potential spread between plans and what could actually happen. Faced with unexpected market shifts, company leaders often jump swiftly to shut down spending across the board, unilateral measures that stop both nonstrategic and strategic initiatives. This just as rapidly leads businesses to lose momentum and struggle to execute. This reactive stance has put finance leadership into a controller’s role rather than a strategic partner to the business.

It also has created waste and inefficiency within organizations. The symptoms? Hoarding of budgets and resources, short-term thinking, and a glaring absence of progress on critical priorities. To change this value-destroying cycle, companies need a paradigm shift: adopting a dynamic operating rhythm. Agility and rapid responsiveness to market oscillations are the order of the day.

So, what does this mean for finance teams?

Both challenge and opportunity. The challenge is to bring something to the table that will accelerate growth. The opportunity is to influence and drive impact as a co-pilot in creating value.

Shifting from a mindset of business controlling looking backward to business co-piloting looking forward requires a finance team to build credibility across the organization by being in tune with the business, how it creates value today and how that may evolve, how markets are shifting, how consumer/customer behavior is changing, and how to support the business to make better decisions based on its strategies.

These capabilities need to be paired with the ability to engage, break down complexity, and influence others. This is where finance teams are focusing more and more. Even if functions such as FP&A are by nature driven by numbers and models, the finance team needs to complement that with capabilities to speak the language of the business, understand how the ecosystem is evolving, and bring team members’ insights and expertise to the table.

Decision-making is a pivotal opportunity for finance teams to evolve as co-pilots. They need to have more input into decisions, whether operational or strategic, to ensure that the business is tapping the full set of insights and implications finance has to offer. Specifically, the finance team can add immense value in helping the organization model choices and trade-offs and build the muscle of evaluating and planning for multiple possible futures.

As co-pilot, the finance team has the imperative to help the business become more agile in its ability to flex spending, resources, and investment focus depending on shifts in the market and in business priorities. In an environment where budgets are not infinite (actually, quite the opposite), the best co-piloting finance team will enable business by engaging with stakeholders to drive effective prioritization, supporting the most strategic initiatives. The finance organization needs to support and influence that process and equip the rest of the company to become more adept at operating this way. This is a strong opportunity for those in finance to influence and educate by sitting down with people and helping them model out the implications and impacts of decisions on the business, as well as understand the trade-offs and implications of each approach.

 What should you do to enable your finance team to make the shift?  

1. Equip your finance leaders to be business partners.
   Provide the skills, tools, and capability to influence, model alternatives, and communicate strategic and financial trade-offs. For example, we partnered with an international dairy group to support the development of its leaders to more effectively steer the business toward meeting its growth and profitability goals. This involved working with finance leaders to strengthen their ability to provide input and optionality to critical decisions and working with other functional leaders to strengthen their understanding of the key drivers of the business and how they can impact them through the decisions they make in their roles.
2. Leverage both the right brain and left brain.
   Provide rigorous analysis and communicate it in a way that complements and advances decision-making. For example, we worked with a global, fast moving consumer goods organization on an initiative to deliver better business understanding and better storytelling within its finance teams to drive stronger partnerships with the business. This approach brought together different elements, such as how the business creates value, how to leverage data to create insights and communicate those effectively, and how to build empathy with internal customers to ask better questions and be stronger partners.
3. Take ownership of helping the rest of the organization understand the basics of finance.
   Provide the organization with education on the fundamentals of the business model, how the business creates value, and how KPIs are impacted through their decisions. This enables those making critical business decisions to understand the trade-offs and implications of their choices and adapt as the business and market evolve.
   For example, a leading software company’s CFO and finance leadership team partnered with us to use simulations across every level and function of the business to educate employees about the fundamentals of the SaaS model and how their choices impact customers, other parts of the business, and critical KPIs. This led to an aligned understanding across the business that speeds and improves decision-making.

It’s at this intersection — finance teams understanding and influencing the business, and the business understanding finance and the business model — that organizations are finding ways to more efficiently execute their strategies and remain nimble in doing so.

Written by Ignacio Vaccaro.
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