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The dawn of the Chief Value Officer
Determining the necessary financial skills that Chief Value Officers (CFO) of the future should possess is a task for academia just as much as it is a critical mission for present industry practitioners and professional accounting bodies.
To say there is a rapid change in the accounting sector will be rhetorical; what should be of more concern, however, is how exponential, and far-reaching this change will be.
Think about it:
- will robots, artificial intelligence, machine learning, and supercomputers take over the jobs of accountants,
- will the Chief Financial Officer’s role still be necessary for business enterprises and government departments 20 years from now,
- what does the future hold for people who proudly hang their Accounting Science, Chartered Accountant (among other associate degrees and professional fellowship membership) certificates in their posh offices,
- are the future rewards commensurate to the effort applied to study accountancy today, and
- can the knowledge and skills potential accountants acquire today be useful in the accounting world tomorrow?
Don’t look for a CFO, hire value creation officers
The age of bean-counting is over!
Just like the abacus has become a relic of the past, so will the role of the traditional accountant cease to exist sooner than later.
This assertion is highly probable if the present rate of digital disruption is anything to go by.
According to the International Federation of Accountants (IFAC), Integrated thinking requires the Chief Financial Officer (CFO) and their finance team to move from accounting for the balance sheet to accounting [designed] for the business and value creation.
As Mervyn E. King SC, Chair Emeritus of the International Integrated Reporting Council put it:
“the CFO should be known as the CVO – Chief Value Officer.” She or he must be a change-maker inside the company.
While most people still think the accountant’s job is majorly to keep records of financial activities, the arrival of the Fourth Industrial Revolution says otherwise.
Thanks to ubiquitous and affordable digital technology, the availability of numerous mobile apps, software programmes, and a vast array of different tools purpose-built to reduce the effort of calculating inflows and outflows, keeping records, as well as reporting financial activities to minutes (or seconds) means that the need for a re-think of the accountant’s role has never been more urgent.
This change is required in all kinds of enterprises – from small stores to mega conglomerates, as well as government establishments too.
The time is ripe for academic institutions and professional accounting bodies to begin creating accountants who will be value-addition officers instead of technically-savvy bean-counting professionals they currently are (pun intended).
The Chief Value Officer is not an accountant; he/she creates value for the organisation
The success and rapid adaptation of the Integrated Reporting model is proof that C-Suites across the world, as well as regional and global accounting bodies, now recognise the fact that merely reporting on the numbers is no more sufficient.
Integrated Financial Reporting, conversely, takes into cognisance the fact that there are other intangible factors at play. It supports the argument which holds that striving towards a sustainable world is more important than shooting for a massive profit on the balance sheet.
Considering the present climate (and other related) calamity planet Earth is dealing with – and the possibility that the continued degradation and rapid depletion of the world’s resources will continue unabated – it behoves on the Chief Value Officer to stem the tide.
Said otherwise, a Chief Financial Officer (CFO) in 2020 must be equipped with adequate public interest training; he or she must be proactive in responding to the impending (and current changes) instead of reactionary.
Every business enterprise and government establishment should, as a matter of urgency, invest in re-training its accounting staff to get a better grasp of the interconnection between profit, people, and the planet.
In other words, financial reporting must capture the interplay going on around the company, the economy, and the environment in such a way that the Earth’s sustainability will be the primary goal of the firm (while profit comes later).
How will the CFO today become the CVO tomorrow desperately needs?
Today’s CFOs are, to be modest, crucial to the survival and progress of the local and global economy. However, tomorrow’s business environment will require a different kind of Chief Financial Officer altogether.
While the technical skills acquired from institutions of higher learning will remain relevant to tracking, recording, and reporting inflows and outflows, the CFO of tomorrow must begin equipping him/herself with the appropriate soft skills necessary to remain useful and valuable when the 4IR eventually kicks into full gear.
It all begins at the point of entry to study accounting and accounting-related courses at the tertiary level.
Institutions of higher learning must begin creating future-fit and purpose-driven modules that will not only address the acquisition of technical skills (including mastery of numeracy and computer use, among others), these institutions should start to focus on what makes the human truly humane.
This adjustment is non-negotiable, since, in any case, no human will ever be able to calculate faster than a calculator, much less an advanced computer system, or be more accurate in acquiring, sorting, recording, and storing data.
This reality means, in effect, that the mundane, everyday repetitive task an accountant is bogged down within the year 2020 will be taken over – and completed more efficiently and swiftly by machine learning-powered AI a few years from now.
Accountants should instead focus on acquiring soft and interpersonal skills like critical thinking, problem-solving, emotional intelligence, spiritual intelligence, rationality, creativity, teamwork, adaptability, and effective communication, among others.
More importantly, understanding what’s at stake is critical for the CFO of tomorrow.
The Earth is dying, and businesses/inadequate government legislation are the main culprits.
As such, having a clear understanding of how to balance the mandate to increase profit, satisfy shareholders, keep employees happy, and sustain the Earth is perhaps the most essential skill the accountant will need to possess.
Even though he/she is not the CEO, or as powerful as the Board, being empowered with the outlined interpersonal skills above will help the Chief Financial Officer to metamorphose into the Chief Value Officer who will guide the firm in terms of strategy and overall vision.
He/she will become the game-changer that can gently steer the ship towards progress without further hurting the planet.
Creating tomorrow’s CVO today
Since financial reporting is a core aspect of Accounting Science, today’s learners will gain more if tertiary institutions imbue in them modern (read: future-fit) models for auditing and reporting the financial health of the organisation.
Integrated reporting systems like the standard Triple Bottom Line reporting model (3BL or TBL) is the way to go.
This model can be used to report a company’s carbon footprint, water usage/conservation measures, among other related efforts to tackle the crass depletion and degradation of natural resources.
When young and aspiring accountants are forged with the skills – and passion – to understand and implement such integrated systems, the world (and business enterprises) will be better for it.
This modern perspective to reporting will, in turn, create an army of accountants that are empathetic to the world’s plight – and are consciously doing something to reverse the trend.
After all, it is not enough to adopt and implement sustainable activities, but more important to track their impacts, monitor the outputs, and evaluate the outcomes in a measurable manner.
Keying these environmental and ecological factors into accounting reporting frameworks completely changes the outlook of financial reports.
Such a change will consequently flow vertically and horizontally through the whole organisation, thereby creating a positive attitude to value creation.
Current CFOs must transmute to CVOs TODAY, not TOMORROW
If the current downward spiral the Earth is spinning towards – in terms of the depletion and degradation of natural resources – must be tamed and reversed, the thousands of CFOs in charge of financial reporting across the world must take charge NOW!
Creating a new breed of accountants with empathy and the required soft skills necessary to work hand-in-hand with technology is the right thing to do – but that is just one leg of the tripod.
The second leg will require present CFOs (men and women, mostly in their 40s-60s) to re-think their roles and upskill accordingly.
More importantly, this set of financial officers should open up their minds to new ideas and allow room for reverse-mentoring.
In other words, value addition must be communicated appropriately to/from new entrants into the profession and established experts; otherwise, it is just value (sitting idly) but not addition.
Budding accounting professionals must “get the scars on their stars” by failing forward, by enabling an environment where innovation, experimentation, and risk-taking are encouraged and not stifled.
It is no secret that young people (especially millennials) think differently and are perhaps the key to resolving the sustainability quagmire since they can learn from history and look farther into the future while, at the same time, create practical solutions right at this moment.
The final leg of the tripod is government legislation.
The moment public policy formulators and executive decision-makers start keying into the idea, sanity will return.
The challenge at the moment is for legislators and executives to formulate laws and policies that put sustainability before anything else and as well keep profit-seeking enterprises in check.
National governments enabling free-market economies should never shy away from their responsibility of keeping a watch over the activities of businesses just as they, on the other hand, strive to create an enabling and business-friendly environment at the same time.
With the appropriate Earth-friendly laws in place, business enterprises will fall in line, and the academia will take a cue, thereby creating courses that will build a generation of responsible citizens, going forward.
Conclusion: Bean counting is dead – learn new skills to create better value!*
Technology is a good thing; the 4IR (and the many possibilities it presents) will help finance and accounting professionals focus on more important things like creating value across the organisation instead of getting saddled with the mundane.
Software, mobile apps, and automation will help these professionals to make better real-time decisions and respond to market changes quickly while developing the capacity and skills to create value for the company, the public, and the environment.
Today’s CFO should be more concerned with creating value, not lost in repetitive accounting processes. Forged with spiritual and emotional intelligence, he/she will not be compliance-oriented but rather operate with an ethical mindset necessary for creating both real and intangible value across the firm.
In the end, the accountant will be the Chief Value Officer who will influence the whole process (input, output, and outcome), leading and guiding the other C-Suites appropriately.
Stop being the bean-counter – become the driver of change by creating real value towards building a better world for today’s inhabitants and the unborn coming along tomorrow!
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*Being outcome of a panel discussion on The Financial Skills Required for Future Leaders held at Regenesys Business School, Sandton City, Johannesburg on the 26 November 2019.
The Panel comprised of Industry Subject-Matter Experts, the Academia, and the Public.
The Panelists included:
- Prof Mervyn E. King SC, Patron, Good Governance Academy
- Ismail Lambat, Finance Executive, Eskom
- Prof Alex vd Watt, Professor of Practice, University of Johannesburg
- Sandile Ntsele, CFO, MTN
- Fatima Darsot, Head of Finance, Virgin Mobile
- Christian Ayiku, CFO, Ecobank
- Sean Berrington, CFO Technology, Standard Bank
- Zafar Mahomed, CFO, Cell C
- Dirk Viljoen, Group CFO, Hollard Group
- Ted Wilcox, CFO, PepsiCo
- Craig Sumption, Director of Finance, Hatch Africa
