What is value acumen and why is it an important skillset? At the core of a modern CFO's skillset lies value acumen: the ability to identify and prioritize resources and capital that are key to driving performance and value.
How do we define value? The Chief Value Officer: The important evolution of the CFO, a BDO global report prepared in consultation with nearly 100 finance leaders from across the world, concluded that there is no uniform definition of “value” as it’s highly contextual for each organization, its industry, size, and location.
Instead of a uniform definition, the report highlights some fundamentals that can be included in a model of value:
- The enablers – The facets of the organization that represent the assets used to create value, including financial, intellectual, human, social, and relationship factors.
- The converters – The process of converting enablers into value through performance management and measurement systems, including operations and processes, data, and technology.
- The recipients – Value is received by stakeholders such as investors, customers, employees, communities, and regulators. Value is cyclical so there is a process of return of value from recipients to the enablers.
To evolve as a value-centric CFO, it is crucial to track various perspectives of value and performance, extending beyond the traditional accounting viewpoint captured in the balance sheet. This includes understanding business value from society's and investors' perspectives. For the modern CFO, helping their organization achieve strategic goals that embrace economic, environmental, and social equity is a fundamental part of their evolving role.
To enhance their value acumen skillset, CFOs should venture beyond the conventional finance career path. This involves seeking mentorship, actively networking, embracing continuous learning, and gaining diverse workplace experiences. These elements are essential for performance-driven CFOs dedicated to unlocking value and driving sustained success in today's challenging business landscape.