The Evolution of the CFO - Martin Pilkington, Rh Environmental Ltd.

© 2016 RH Environmental Ltd. www.rhenvironmental.co.uk
The Evolution of the CFO
23rd
June 2016
Martin Pilkington
Finance Director
RH Environmental Ltd

.
CFO
Macro Evolutionary Drivers
The economic cycle : Boom or Doom pending?

.
CFO
Macro Evolutionary Drivers
The speed of technological change: Papal Inauguration 2005-13

.
The Origin of the Species..
Does nature or nurture define a CFO?
Audit
Fin Acctg
Treasury
Tax
Budgeting
Commercial
M&A
Strategy
Leader
Consulting
Corporate development
CFO
Business Partner/Sales/Pricing
Division controller
Tax structures/Capex
Audit foundation + Fin Accountant
• Global / SME experience
• X sector/function experience
• Portfolio management
• Treasury management
• Insource/outsource
• Technology insights
• Value creation
• Process engineering
• Leadership
• Deal experience
• HR knowledge
• People skills
• Delegation
• Communication skills

.
What stage of CFO evolution to target?
An IT based perspective
Standardize Procedures
Capitalize and optimize through
IT systems
Automate and Predict using
real time analytics
Automated self service
finance model
}
Automating tasks
Frees the CFO to
initiate and
participate
Does not replace
the X Factor of
strategic
decision making
But do you have
the X factor or is it
self driven IT based
extinction?
Source:Unit4

.
The evolutionary ladder
Scorekeepers
•Source : IBM CFO study 2010 and IBM CFO insights
from the Global C Suite Study 2014** of 576 CFOs
Disciplined Operators
Constrained Advisers
Value Integrators
Performance Accelerator**
Homer Cartoon Source:
http://www.thecollapsedwavefunction.com
/2012/08/arguments-against-evolution.html

.
Politics of transformation to value
driver
• Understand and drive change in the business
->Performance targets and strategic goals
• Build relationships based on mutual benefits
->Work with key power brokers
• Network with key influencers
• Build strong recognized track record of success
• Be the ‘vizier’ not the crown prince
->Indispensible but not a ‘threat’ refers to ‘Shogun’
by James Clavell

.
Divisional Portfolio
As a source of financial political power
• Insert your choice of Divisional FD/Controller into each division
• Give them the ability to foster a BP relationship with the Divisional Head(Delegation)
• Make them invaluable to the Divisional Head by giving them your ear(approval process)
• Hold their career cards in your hands
• You have a ready made intelligence network and point of leverage…..

.
Key genes in the evolutionary code
The evolving CFO understands value creation is about the future not the past
The future CFO:
•Understands the value drivers and processes of the business
•Masters the portfolio and initiates entries and exits
•Has commercial acumen and a track record of success
•Masters politics and communication skills
•Provides leadership and hires competent staff to perform key tasks
•Makes balanced decisions
•Can network and build relationships
•Has and displays integrity
•Has business insight into digital technology/business trends
•Embodies wide career experience – global/sectors/functions
•Has financial ability and knowledge as a tool, not the only tool
•Automates processes and digitizes to focus on high added value

.
The risk of an extinction event….
Could CFOs drop off the Board?
• COO absorbs CFO role
• MBAs / Strategists downgrade accountants
• The Corporate robot and the march of AI
->Digitization as an extinction event

.
Evolution in progress……
25% of FTSE 100 CEOs are qualified accountants*
•The 2015 annual Robert Half FTSE 100 CEO Tracker found that more than half of Britain's top
bosses have a financial background, while one in four CEOs are qualified chartered accountants.
•By comparison, 21% come from careers in retail/hospitality,
17% in engineering/natural resources, 14% in marketing and 11% in technology..
•"Professionals with an education or background in finance are highly sought after by organizations
and demand continues to outweigh supply in today's job market.
•The climb to the top job can take different paths, but specific industry experience has proven to be
a key consideration for businesses when appointing their chief executive.
•Combining strong functional and technical knowledge with a deep understanding of the industry
and competitive landscape is a sound strategy for motivated professionals looking to advance their
careers,” R Sheridan from Robert Half added.
*Source : Finance Director 19/5/2015
http://www.financialdirector.co.uk/financial-director/news/2409128/quarter-of-ftse-100-bosses-are-qualified-accountants

A Back to the Future role
model….?
Henry VII strengthened the power of the
monarchy by using traditional methods of
government to tighten royal administration
and increase revenues
(reportedly including a daily examination
of accounts).
Henry had Tudor genetics and could
claim ancestry back to King Arthur’s
family and right back to Brutus…..
SOURCE:
http://www.royal.gov.uk/HistoryoftheMonarchy/KingsandQueen
sofEngland/TheTudors/HenryVII.aspx
Government LEADER AND AMATEUR
ACCOUNTANT
…the Winter King…..

Three CFO takeaways !
1.Those executives who drive (value creation) will survive
2. Keep your eyes on the road ahead and on the rear view mirror
3.Financial expertise is the engine but business insight delivers the X
factor

The Evolution of the CFO - Martin Pilkington, Rh Environmental Ltd.

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The Evolution of the CFO - Martin Pilkington, Rh Environmental Ltd.