By Enzo Tolino, VP of Finance, EMEA, Oracle
Over recent weeks I’ve been looking at how the modern CFO is increasingly instrumental in many areas of business strategy and capability. I’ve explored how the finance function needs to be a driver of efficiency, as well as helping to reinforce business resilience. In this blog, I wanted to look closer at something that is getting a lot of attention recently—purpose.
Financial aspects are often a primary motivator for businesses as well as individuals, but increasingly corporate responsibility is coming to the fore. This is both to demonstrate a genuinely positive impact on wider society, and to align with consumers’ and employees’ changing priorities. This is helping business leaders get closer to consumers and employees, who want the opportunity to be part of something meaningful and are seeking to buy from, and work for, businesses that are.
I’m sure most would agree that it’s hugely important for organisations to become more purpose-driven. And I hope you will agree when I say that the CFO can help play an integral role in helping to achieve this, operationally and strategically.
Purpose-driven businesses appear to be succeeding in the face of complex change. PwC has identified that companies with a purpose-led approach can navigate short term concerns, whilst building a base for the long term. Deloitte found that purpose-oriented companies report 30% higher levels of innovation and 40% higher levels of workforce retention than their competitors. Being purpose-driven isn’t just about having credentials to be proud of; it’s becoming more and more important to the efficacy, reliance, competitiveness, profitability, and “investability” of an organisation.
I think that CFOs, with their role at the centre of everything, can support the identification of the true purpose of the business. This can mean looking beyond their traditional remit of cost reductions and improving financial performance towards extending their influence over business models, processes and partnerships. It will require an understanding that customer and market expectations are shifting, and the ability to support the organisation in meeting its requirements to society. It also raises a question: how do you help define, develop and defend what the business does and how it operates, and how can closer collaboration with CIOs, CMOs and other business leaders make the change happen?
The CFO can help ensure that real outcomes of the business are geared to this wider group of stakeholders by investing in corporate social responsibility. This could mean defining growth plans with a focus on business sustainability, or supporting voluntary and charitable initiatives. It can mean investing in innovation, such as new green energy projects or operational efficiencies that can further contribute towards environmental goals.
Or, it can mean ensuring greater equity and fairness in the supply chain, applying purpose to procurement. During our current situation, where global supply chains have been severely disrupted, this can mean an opportunity to support local and/or more ethical suppliers, which can help with resilience, as well as furthering ambitions to be a “force for good.”
During a time of crisis, I believe it is imperative for businesses to evolve their strategic vision in order to become more purpose-driven. But a crisis shouldn’t be the only catalyst for change; customers are demanding it. According to Accenture, nearly half (47%) of consumers expect brands to translate their values and promises into new and innovative products and services.
Such strategic reviews shouldn’t be a one-off, but a way to support effective business delivery in an ongoing manner. There will of course be a need to tackle short-term challenges, but they should still align with longer-term aspirations and goals. This type of balancing act requires a practical visionary, and it’s here where I think the CFO can be a driving force behind a more purpose-driven approach, evaluating the needs for both innovation and tangible gains.
Most important of all, if your business is aiming to become more purpose driven, that purpose needs to be real, relevant, and in line with your reputation and revenue. I’ve written some more thoughts around this—and the other requirements of the modern CFO—in my opinion piece, Rebalancing the Business.