Most CFOs can see change coming from a mile away — but many aren’t confident their organizations will spot it in time.
Board Governance Survey takeaways:
- 80% expect their business model to change either moderately or significantly in 3 years.
- 54% of CFOs lack confidence in their organizations’ recognizing disruption early enough to enable a timely response.
- Only 15% of leaders see their organizations as true disruptors.
Why it matters: Disruptive leaders outperform because they prioritize agility, innovation and strategic foresight — areas where CFOs can lead.
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Everyone is reasonably aware that disruptive markets are the new normal. The question is, how and how quickly do we react to disruptive change?
With that in mind, consider this data as you ponder how disruption is affecting your organization: A majority of CFOs (54%) lack a high level of confidence their organizations would recognize in time that their business models were being disrupted to enable them to respond effectively. At the same time, 80% of CFOs expect their organization’s business model to change to at least a moderate extent over the next three years, with 10% believing it will change to a significant extent.
These findings — from the second annual Global Board Governance Survey, conducted by Protiviti, BoardProspects and Broadridge Financial — should catalyze a swift and thoughtful response from finance leaders. CFOs play a pivotal role in enabling their organization to operate successfully during disruptive times, whether that is as a “disruptive leader” (as defined in the survey) that radically transforms their industry and/or creates a new industry, or as a “disruption aspirant” that operates somewhat as a disruptor and is making progress at becoming more disruptive but is not recognized as a leader.
Only 15% of the over 1,800 board members and C-suite executives who responded to the survey identify their own organizations as disruptive leaders. The vast majority of respondents rated their organizations lower on the disruptive continuum — as disruption aspirants, “vulnerable disruptors” (somewhat disruptive but at risk of being disrupted), “agile followers” (at risk of being disrupted, but able to pivot and adapt on a timely basis), or “disruption laggards” (at risk of and slow to respond to disruption).
The research also analyzed what differentiates disruptive leaders from the rest of the pack. As it turns out, these capabilities and priorities are squarely in the CFO’s wheelhouse. Four key areas distinguish disruptive leaders; each represents an opportunity for finance leaders to help drive growth and success in their organizations during disruptive times.
Disruptive leaders see artificial intelligence (AI) as an opportunity.
How companies view generative (and agentic) AI qualifies as a litmus test of their propensity to disrupt. More than seven in 10 disruptive leaders see AI as enhancing their ability to disrupt, whereas 40% of disruption laggards view AI adoption by other companies as subjecting them to greater risk of being disrupted. This distinction in perspectives is insightful.
For CFOs, this means they should continue to prioritize generative AI as an opportunity to improve third-party spend oversight, sourcing management, IT rationalization and other forms of cost optimization. Finance leaders also should seek out opportunities to rev up agentic AI deployments, including solutions designed to enhance core finance processes (like order-to-cash and cash flow management), financial planning and analysis (FP&A), and governance, risk and compliance activities. As many agree that AI agents will ultimately become an integral part of the workforce, this is one train no finance leader should miss.
Disruptive leaders view technology modernization as a high-priority, high-ROI initiative.
Our research reveals that the accelerating pace of technological advancement is perceived as the greatest concern among external factors that can disrupt a company’s strategy and business model. Whether an organization leverages digital technology as a disruption opportunity or scrambles to mitigate its negative impacts on the business depends heavily on the sophistication and agility of its technology infrastructure and the team that operates that infrastructure.
CFOs have grown well-versed in the risks associated with not modernizing systems and infrastructure: process inefficiencies, increased operational costs, subpar customer experiences, recruiting and retention difficulties, an inability to deliver on business objectives, revenue losses, and declining shareholder value. Finance leaders play a vital role in ensuring the organization’s technology modernization journey delivers maximum value by identifying the modernization initiatives offering the highest ROI potential with the lowest project execution risk.
There are relevant questions to explore. For example, do we have a clear understanding of the lessons learned from our modernization investments over recent years? Are we thinking out of the box and taking the best approach to modernize, e.g., do we buy, build or deploy a hybrid approach? Do we have the right partners? Are we breaking down large investments into discrete, manageable components to reduce our risk? Are we assessing the risks of technical debt impacting our ability to innovate and compete with digitally mature companies?
Most importantly, CFOs can promote the concept of continuous modernization, which ensures systems can meet changing needs without having to rip and replace critical components. In addition, more finance groups should leverage technology modernization and enablement initiatives to support cost optimization.
The lack of an innovative culture is a major barrier to responding to disruption and becoming a disruptor.
The survey results indicate that nearly five times as many disruption laggards view “the lack of an innovative culture or talent to think creatively” as a significant barrier to becoming more disruptive compared to disruptive leaders. In recent years, CFOs have increased their contributions to culture-building. First-rate cultures diminish workforce backlash to cost-reduction measures and enhance recruiting and retention activities.
Culture-building requires buy-in among all business leaders, including the CFO, along with the alignment of cultural values and decisions at all levels of the organization. Since innovation is a prominent imperative in most corporate value statements, finance leaders should foster cultures, training and development programs, and performance measures that reward disruptive innovations, high-velocity decision-making, AI enablement, fresh ideas, contrarian perspectives, and related forms of creative thinking and collaboration.
The most disruptive companies deliver superior customer experiences.
How do disruptive leaders upend competitors and industries? They differentiate their market offerings through significant pricing or quality advantage. They also build superior infrastructure and capabilities to scale new products. Yet the disruption opportunities these companies seek out most frequently center on delivering superior customer experiences through business model innovation. CFOs can help ensure the organization prioritizes innovations related to the customer experience by infusing FP&A activities with a customer-centric approach and by collaborating with business partners as they develop their own data-driven analytics and KPIs related to the customer experience.
Final thoughts
Our research finds that the C-suite and boardroom are largely aligned in their views of disruption opportunities and threats, AI benefits and risks, technology modernization priorities, and strategic response needs. It also indicates that disruptive leaders outperform less disruptive competitors in developing innovative organizational cultures, inspiring their people to think creatively and overcoming resistance to change. In addition, they are more focused on prioritizing technology modernization initiatives, deploying AI and other advanced technologies, reducing the impact of accumulated technical debt in legacy technology infrastructure, and reimagining new business models as they sustain the relevance of their market offerings. That’s good to know, because these strategic insights should inform strategic conversations in both the C-suite and the boardroom. All told, this is yet another opportunity for finance leaders to contribute.
This article originally appeared on Forbes CFO Network.
