Ex PepsiCo India Head Shiv Shivakumar on the future CFO

Summary

In this insightful speech, the speaker discusses the evolving role of CFOs, emphasizing their shift from traditional accounting roles to strategic business partners. Drawing from global examples, the speaker highlights the importance of CFOs in leading transformation, managing stakeholder relationships, and embracing technology and sustainability. Future CFOs must be versatile, combining accounting expertise with broader business acumen, including an understanding of capital management and risk. The speaker stresses that CFOs will increasingly take on leadership roles and must be fearless, visionary, and adaptable, like eagles. The speech provides a compelling outlook on how the future CFO will drive business success.

Takeaways

• 😀 CFOs are becoming broader in their skill sets, moving beyond just accounting to include strategy, sustainability, and technology.
• 😀 Future CFOs will have a combination of Chartered Accountant (CA) qualifications and MBAs, reflecting the need for both technical and business-oriented knowledge.
• 😀 There will be more women in CFO roles, as the traditionally male-dominated CFO field is gradually diversifying.
• 😀 The role of the CFO is evolving from being a 'safe pair of hands' to becoming a strategic partner, enabling business growth rather than just focusing on financial management.
• 😀 Sustainability is becoming a major focus for CFOs, with 80% of investors now seeking sustainability information from companies.
• 😀 Activist investors are a growing influence in business, and CFOs need to engage with them, rather than viewing them as adversaries.
• 😀 More CFOs are transitioning to CEO roles, especially in the UK, due to their experience in risk management and balancing cost with growth.
• 😀 While the CFO role is expanding, it is crucial for CFOs to push boundaries and not play it too safe, as safe approaches have not delivered the best shareholder returns.
• 😀 In India, many companies face a challenge of significant topline growth without corresponding value creation, making the role of the CFO even more critical.
• 😀 The future CFO must excel in capital use and allocation, stakeholder management (especially with activist investors), and harnessing technology and data to drive business forward.
• 😀 The future CFO will be strategic and transformational, with an emphasis on influencing and enabling the broader business landscape rather than focusing solely on finance.

Q & A

What key qualities are being highlighted in future CFOs?

Future CFOs are expected to have a broader skill set, including a combination of Chartered Accountancy (CA) and an MBA. They will be more business-oriented, with a focus on strategy, stakeholder management, and data analytics, moving away from traditional finance roles.

Why is the role of CFO evolving from traditional accounting to a broader strategic role?

The evolving role of the CFO is driven by the need for business leaders who are not just focused on accounting but also on driving transformation, managing risks, and contributing to strategic decisions. Future CFOs will focus more on business growth, capital allocation, and driving innovation.

What is the importance of sustainability in the future CFO role?

Sustainability is becoming increasingly important, with investors now demanding sustainability practices from companies. CFOs must integrate sustainability into business models and manage it as a key area to avoid losing premium valuations, especially in regions like Europe.

How do activist investors impact the CFO role?

Activist investors are a growing concern for CFOs. They can challenge company leadership, including CEOs and CFOs, pushing for changes. CFOs must engage with these investors, build relationships, and find common ground to manage shareholder expectations and risks effectively.

What skills are needed for CFOs to manage activist investors effectively?

CFOs must develop strong stakeholder management skills, especially with activist investors. Building relationships, understanding their demands, and finding a balanced approach to their concerns are essential for managing these investors successfully.

What does the speaker's comparison of CFOs to eagles imply?

The eagle metaphor suggests that future CFOs need vision, the ability to foresee challenges, and the courage to act independently. Eagles' fearlessness, tenacity, and ability to nurture the next generation of leaders reflect the qualities needed in future CFOs.

How do the expectations of CEOs and CHROs for CFOs differ from the CFOs' own view of their role?

CEOs and CHROs expect CFOs to be strategic partners who manage risk, drive value creation, and influence the organization. However, CFOs themselves often focus primarily on cost optimization and financial metrics, which does not align with the broader expectations of leadership.

What is the significance of the CFO's involvement in strategy and technology?

Future CFOs must play a strategic role in shaping business models, including the integration of technology and digital transformation. They need to harness data and technology to create value, moving beyond traditional financial responsibilities.

What does the data suggest about the career progression of CFOs to CEOs in the UK?

In the UK, the number of CFOs transitioning to CEO roles has increased, with 33% of current CEOs in the FTSE 100 having held a CFO role previously. This shift reflects a broader acceptance of CFOs as capable leaders in the executive suite, primarily due to their ability to manage risk.

Why are CFOs from the UK more likely to transition into CEO roles compared to other regions?

In the UK, CFOs are seen as the 'safe pair of hands' who can balance risk and growth. As turbulence and ambiguity increase in the business environment, boards are looking for leaders who have strong risk management skills, which makes CFOs strong candidates for CEO positions.