Navigating The Path Of Strategic Financial Leadership And Innovation

The Chief Financial Officer (CFO) holds a crucial position within any organisation, acting as the primary executive and overseeing the financial decisions and strategies that underpin the company’s overall prosperity. They provide financial expertise and insights to support strategic decision-making across various business functions. 

Decoding Strategic Financial Leadership:

Vikas Wadhawan, CFO REA India & Business Head-PropTiger.com discussed the critical aspects of strategic financial leadership. Citing Disney’s investment in Disney+ as an example, he emphasised aligning financial goals with the long-term objectives of the organisation. He stressed the importance of commercial acumen beyond financial analysis, highlighting the need to understand trends and external factors. 

“Get your financial strategies aligned to the overall long-term strategies of the business, and be a little bit more patient and not be too focused on short-term goals,” he added.

Additionally, Wadhawan emphasised the significance of communication and collaboration, both internally and externally. He shared examples of internal initiatives, like a group investment forum, and his active participation in hackathons to stay informed about potential investments.

“As a CFO or finance leader, one of the most critical responsibilities is resource allocation. It’s not only essential to make these decisions but also crucial to ensure alignment among other stakeholders,” he said.

Long Term vs. Short Term:

Mayank Holani, CFO, Indian Synthetic Rubber (A JV of Indian Oil & TSRC Taiwan) emphasised the need for clear priorities in both the short and long term. He stresses the importance of measuring progress and holding individuals accountable. Mayank shares an example from his experience, highlighting the repercussions of failing to manage divestment processes effectively. He underscores the significance of balancing risk management and effective communication with stakeholders, both internal and external.

“We need to focus in terms of balancing the long-term and short-term. Both have their own importance, and you can’t leave one for the other,” he said. 

In today’s fast-paced world, balancing short-term and long-term goals is crucial, especially for businesses. Wadhawan noted that quarterly reporting is necessary, but so is investing in innovation for the future. He talked about an internal framework called CET, which stands for core, extend, and transform. Core represents current operations, extend is about expanding the business, and transform involves long-term investments, even if success metrics are uncertain.

“The need to discern between different projects to avoid sacrificing crucial long-term endeavours is essential for sustained growth, especially during challenging times, to prevent detrimental impacts on the business,” he added.

Siddhartha Khaitan, Group CFO, Supply Chain & IT Head, Esme Consumer highlighted the crucial balance between short-term and long-term goals in organisational leadership. He emphasised the need to deliver results immediately upon joining a company while also planning for future success through strategic decisions like resource allocation and business direction changes. Acknowledging the importance of long-term value creation, Khaitan valued the pressure of maintaining positive quarterly results, especially for listed companies. 

“You need to deliver today is the first fundamental rule. But you also need to deliver for tomorrow, and to deliver for tomorrow, you need to undertake either a resource allocation, a change in business direction, or any other strategic decision-making to ensure that you are always thinking long-term,” he said.

Innovation Heads Up: 

Khaitan talked about the importance of long-term decision-making and innovation in business strategy. He stressed that innovation should encompass product, process, and technology enhancements to stay competitive. He also highlighted the need to align innovation strategies with long-term organisational goals to ensure meaningful contributions to growth and profitability. 

He contrasts different approaches to innovation, such as manufacturing-based versus e-commerce strategies, highlighting how companies tailor their innovation efforts to suit their specific long-term goals and market conditions.

“We need to build scale. We need to build sustainability. We need to build the right compliance environment. These all required investments. It all required foresight about where we wanted to reach, and that’s exactly how we ended up reaching there,” he said.

Upma Goel, CFO, Piramal Enterprises underscored the crucial role of innovation in long-term business strategy, emphasising its necessity for survival in today’s disruptive environment. She highlighted that innovation should be ingrained in regular spending and not confined to the finance function alone, but embraced by the entire organization. She also discussed the evolving role of finance professionals in embracing technological advancements like AI and ML, emphasising the need for upskilling and a shift towards a more strategic, business-oriented mindset. 

“Innovation is a core value for any business. Companies are actually carving out some of their spending on R&D for sustainable growth. And we’re talking about how to align our innovations and all our R&D towards that long-term objective,” she added.