The CFO: The Transformation Driver?
Managing Director for the consulting practice in the products industry at Accenture, Paul Prendergast, discusses the challenges businesses are facing due to changing consumer expectations, preferences and behaviours and ways to solve them.
We have seen huge disruption across a range of industries, with no signs of slowing down. For the big consumer brands, the relentless pace of change is creating higher consumer expectations and rapidly levelling competitive playing field on an epic scale.
Consumers are firmly in the driving seat. They’re using digital platforms to buy directly from manufacturers, bypassing traditional retail. Their preference for convenience is making subscription models ever more prevalent. Above all, they expect their consumer goods brands to provide the products, services, and experiences that meet their individual needs at just the right moment.
And the smaller players are giving them exactly what they want but turning "business as usual" on its head and creating new models on agile operating structures that engage in a larger ecosystem and accelerate innovation to satisfy growing consumer demand for low cost, personalised products and services.
The winners will be those who can achieve an incredible amount of organisational agility – something that many just don’t have yet. It also calls for a rethink of the entire value chain, all the way from developing new concepts, through manufacturing, to the store shelf and beyond.
Companies searching for growth must solve these challenges, injecting agility across the business, leveraging a wider ecosystem of partners, and delivering relevance at scale for a marketplace of millions of individuals.
CFOs in the driving seat
Chief Financial Officers are uniquely positioned to help drive this journey forward. They have a crucial role in driving the efficiencies in the core business. They have the necessary insights to build the business case for change, targeting operational improvements and the use of new digital technologies to unlock value and drive more profitable growth.
Accenture’s research shows that CFOs understand the need for speed and agility today, with over half those surveyed (58 percent) saying they’re working towards real-time analysis of business performance. Interestingly, that’s expected to rise to a massive 89 percent in three years’ time.
CFOs also see their role changing. They’re now just as likely to view themselves as “value champions” and “transformation drivers” as their more traditional business functions. For instance, 81 percent of surveyed CFOs say targeting areas of new value across the business is a major focus, while 78 percent say they lead efforts to drive business-wide operational transformations and efficiencies through digital technology.
New roles, new skillsets
Delivering relevance at scale means adapting the consumer goods supply chain for new levels of personalisation and multiple sales channels. Given the challenges of doing this alone, most brands will need to leverage a much wider ecosystem of partners across the value chain. And here CFOs have a vital role to play. They can bring a data-driven approach to selecting partners, while ensuring this complex endeavor remains focused on the value-adding outcomes the business is targeting.
We are seeing more CFOs actively taking a lead on data governance. They understand the value of data and see it as a strategic business asset, with 84 percent of finance departments taking responsibility for their organization’s data governance (higher than in any other industry surveyed). In fact, “inconsistent, inaccurate and inaccessible data” is viewed as the greatest challenge facing today’s consumer goods CFOs according to Accenture Research.
These new requirements are changing the CFO skills profile. CFOs themselves say that anticipating and managing risk, long-term strategic thinking, and insight into new technologies are now their most important capabilities. And they know the broader finance function needs to change too, with the ability to innovate now the most sought-after capability for junior finance staff.
Five actions every CFO should be taking today
So, what are the immediate priorities for consumer goods CFOs as they drive relevance at scale for their brands? There are five actions every CFO should be taking today:
Digitalise finance – then the company. Finance is an ideal testing ground for digital technology, automation, and AI. CFOs should be using their experience and lessons learned to drive a digital transformation across the business.
Harness data for insights. CFOs know the value of data visibility and should champion the use of real-time analytics and insights across the C-suite and beyond.
Develop the future finance workforce. CFOs should be planning holistically for their future talent needs, including promoting the greater use of AI and other innovative digital technologies.
Drive a deep transformation of operations. CFOs should be considering zero-based budgeting as a means of creating spend visibility, driving the efficiencies that can fund a pivot to new growth.
Be the architect of value. CFOs should be influencing decisions about ecosystem partner organisations, ensuring every move is focused on delivering ultimate value for the business.
Above all, CFOs need to put themselves at the center of business decision making as their companies pivot to the operating models that deliver consumer relevance at scale and capture new growth opportunities in a highly complex and uncertain marketplace.
Stripe backs Step - the digital bank for teens
The Series C round raised US$100m in capital from a number of backers, including Coatue, TikTok star Charli D’Amelio, actor Jared Leto, and Will Smith’s Dreamers VC, for the enterprise.
Step provides a free FDIC-insured bank account and Visa card to teenagers. The accounts are backed by Evolve Bank and there is no subscription charge for its usage. Users don’t pay for their accounts and there are also no overdraft fees.
The mobile banking app enables parents to set controls and limits on spending and encourage responsible finances. According to data released by the company, 88% of the platform’s users say this is their first bank account.
To date, Step has seen great success in the marketplace. The company has raised more than $175m from investors and now has 1.5m users.
Stripe, which was founded by Irish brothers Patrick and John Collison, previously led Step’s $22.5m Series A round in 2019.
Step's Series B funding round also brought in $50m, and has a distinctly celeb-tinged reputation with investors including Justin Timberlake and the pop duo The Chainsmokers.
Users get access to a free, FDIC-backed bank account, a spending card and P2P payments platform to send and receive money instantly.
CJ MacDonald, chief executive of Step, said the company is aiming to improve the financial futures of the next generation. “Step is the only banking platform that enables teens to start building a positive credit history before they turn 18 and does not charge fees of any kind.
He has previously spoken about the importance of financial literacy for young people. “Money is just one of those things where I think the more educated and equipped you are early, the better decisions you can make down the road,” he told . “And you can also prevent yourself from making costly mistakes. I mean, the average American doesn't have $400 in emergency savings and pays $350 a year in banking fees. If we can help this next generation just ultimately be smarter and more educated as it pertains to money, I think we'll all be better off.”
Kyle Doherty, managing director at General Catalyst and Step board member, explained, “Gen Z is flocking to modern financial solutions that can be easily embedded within their digital lives and Step has a unique model for how to do this right.”
The news follows on from Stripe’s recent announcement that it plans to acquire TaxJar. The fintech, which builds software for online businesses that automates the reporting and filing of sales taxes, will most likely be integrated with Stripe’s billing services.
Currently, No terms have been disclosed but the Boston start-up had raised more than $60m from investors including Insight Partners.
Stripe chief financial officer Dhivya Suryadevara said of the move, “With TaxJar, we will help millions of internet businesses running on Stripe with their sales tax and make it easier for them to sell internationally.”