Transformative finance: Leading with performance in an era of disruption

By Gabriela Rodriguez Ginebra

Disruption is nothing new. What marks out the current environment are the scale and speed of change, from shifting customer expectations and the impacts of new technology to the need to strengthen sustainability and social inclusion. For many businesses, the challenges are existential - nearly half (45%) of the business leaders taking part in PwC’s 27th Annual CEO Survey believe their company won’t be viable in ten years if it stays on its current path.

In the wake of this disruption, businesses are under pressure to fundamentally rethink their business models and sharpen agility and innovation. They need to drive competitive reinvention and keep pace with an increasingly complex set of scenarios and outcomes.

This in turn creates challenges for how your organisation defines, measures and manages performance. The past is likely to be a poor guide to the future. Similarly, you can no longer blindly follow a rigid 3-5 year strategic plan, not least as your assumptions could quickly be out of date. Your business needs broader metrics, sharper scenario planning and a more adaptable way of responding to market drivers and unfolding opportunities and threats.

Your business will be looking to you as a finance team to take the lead. You’re in a unique position to understand what drives stand-out performance in this dynamic environment – within your company and across competitors and adjacent sectors.

Five ways to lead performance

Finance leaders recognise the importance of their role in guiding their businesses through this disruption and change. This came through clearly in our Finance Evolution: Thriving in the next decade survey: nearly 70% of leaders believe that the generation of business insights will increase over the next five years.

The big question is how to deliver. How can you cut through the noise to identify what drives value and then mobilise the organisation to realise the potential? How can you enhance the value and credibility of your insight and advice by building trust in data, harnessing the power of new technology and bringing together the right skills and capabilities?

These challenges underline the need for reinvention within finance. Navigating today’s dynamic environment requires a blend of strategic agility, technological adeptness, and a deep understanding of both market forces and human capital. At the heart of this shift is the emergence of the CFO as the Chief Value Officer; leading with change rather than playing a supporting role; understanding the fast-evolving levers of value; and providing proactive and predictive insights to the business.

To succeed, finance needs ambition. It needs clear thinking when it comes to the next generation of tech enablement. And it needs to be agile in execution in a changing business environment. Five priorities stand out:

Understand the value drivers

Clarify the performance drivers within your business and how they help deliver your overall strategic decisions.

Economies of scale and market clout are no longer the prized strengths or formidable barriers to entry they once were. Companies must allocate resources to their most distinctive capabilities — those differentiating attributes that enable you to outperform competitors over time.

You can help your business understand today’s evolving cost levers and how to manage them more effectively. You can also provide the enhanced view of profitability across products, divisions and other key dimensions, which will facilitate better planning, performance management and incentivisation. Examples include using predictive analytics to anticipate and mitigate supply chain disruption and reduce unexpected costs. You can also use this predictive data to make more informed decisions about product pricing, along with whether to invest further or discontinue.

By focusing on these four strategies, you can enhance your organisation's input and overall performance.:

Develop a framework to assess capabilities against value creation
Improve your ability to report, plan and scenario model performance across products, customers, units, functions and entities
Build in feedback loops so you can be responsive and adaptable, rather than simply following a 3-5 year plan. That means seeking feedback, supporting this with data and acting on it quickly
Prioritise environmental, social and governance (ESG) reporting

By focusing on these four strategies, you can enhance your organisation's overall performance. A critical capability map ensures you are investing in the right areas. In turn, improved reporting and planning create a more informed basis for decision-making and feedback loops enhance responsiveness. Prioritising ESG reporting builds trust and compliance. Together, these strategies can position your organisation for sustainable success in a competitive and dynamic business environment.

Align strategy, operations and delivery on the ground

When you’re clear about your performance drivers, it’s important to align your organisation around these goals and what they specifically need to do to deliver:

Develop a clear and integrated governance cycle for your strategic planning and performance management
Articulate accountability - devolve decision-making, with clarity over what people can actually influence and decide; what to do if things change; and the boundaries which remove internal friction and competition
Identify key performance indicators (KPIs) in line with business strategy. To make sure you're focusing on the KPIs that will drive valuable outcomes, it’s important to make sure they’re specific, measurable, actionable, relevant and timely
Identify and report what matters to drive value - making use of scenario modelling to understand the fast-moving environment and identify the levers to generate agile, dynamic and advanced predictive scenarios

Make sure your data is credible

As you look to create a robust data management system, it’s important to structure core financial and non-financial data, integrate ESG data and connect internal and external performance drivers. In practice, there are four ascending steps:

Level 1: Manage and structure your core model – both financial such as your chart of accounts and non-financial such as product and customer
Level 2: Extend the model for different business units by including external data but with the ability to connect internal and external drivers.
Level 3: Build out for ESG data – this is now part of the new core
Level 4: Enable users users to build and play with data outside this core model

Develop a human-led approach to automation and artificial intelligence (AI)

As you look to make the most of systems advances, it’s important to balance human insight and intuition with new tech-enabled possibilities. The priorities include understanding the potential of emerging technologies to solve problems and strengthen capabilities, while being clear about where humans are most effective and areas where technology may need close monitoring. In practice, this comes down to four key steps:

Build an understanding of your future capabilities
Understand the business problems you are trying to solve
Make the most of what’s available in existing cloud applications, while prioritising investment in a few high value target areas
Use emerging tech for the next mile, including trial and experimentation in generative AI (GenAI)

Develop the capabilities to outperform

Your team has an opportunity to take the lead as the Efficient Operator and Real-Time Performance Analyser, benefiting from the standardisation and efficiencies offered by digital tools. This will free up more time for activities that add value, including data-driven analysis and insight. To make the most of the potential demands a shift in skills and career development:

Develop leaders and teams so that they excel in this new tech-driven, data-centric environment
Reshape your capability frameworks to incorporate Interaction with technology and data
Broaden capabilities to make the most of human skills such as influencing and negotiation
Focus on technology interaction, negotiation skills, and flexible career paths and acknowledge and develop alternative career paths

Focusing on these areas will not only equip your organisation with the necessary technical skills, but also the human skills required for effective leadership and collaboration. These strategies foster a resilient, adaptable workforce that can thrive in a tech-driven, data-centric environment, ultimately driving better business outcomes.

Seizing the opportunity

A successful future for finance calls for major reinvention. The alternative is obsolescence. Your team can lead from the front if you’re ready to rethink the purpose of finance - and put the foundational capabilities you need in place. In turn, you can help the business see and buy into the need for coherent strategic choices and cross-functional collaboration, as these will drive a consistent rise in shareholder value and the delivery of ESG goals.