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Brain Circuits
Three ways in which CFOs can drive digital transformation
Sabine Abfalter, CFO of Austria’s Raiffeisen Bank International, explores how finance leaders can support digital transformation to help make organizations more resilient and forward-looking.
1. Know where to focus and when to walk away
When it comes to digital, recognizing where not to invest is just as critical as identifying the right target areas to invest in. Alongside this, organizations should identify partners in the value chain that can move faster or deliver more effectively.
CFOs should:
- Recognize when an investment isn’t going to pay off as hoped and be ruthless about pulling the plug.
- Test what works early, rather than killing off initiatives after they fail.
- Use relevant data to assess whether an investment is working before attempting to scale.
2. Bridge strategy and execution
CFOs have traditionally been seen as financial gatekeepers, scrutinizing investments and rejecting those that do not meet strict ROI criteria. Today, they must retain financial discipline while ensuring it does not constrain innovation. A key challenge is to ensure that the strategic vision translates into effective execution.
CFOs should:
- Ensure alignment between strategic vision and operational execution.
- Gather comprehensive context-relevant information.
- Establish a clear hierarchy of priorities.
3. Shift from fixed budgets to agile financial planning
In today’s rapidly evolving digital landscape, rigid annual budgets may no longer be the best approach. Instead, businesses should develop more dynamic, flexible planning models that support more responsive decision-making.
CFOs should:
- Adopt an empowering approach to enable faster, more effective decision-making.
- Develop sharper responses to new opportunities and risks.
- Structure incentives to drive desired behaviors rather than restrict or contradict them.
Leadership in digital strategy is not just about financial stewardship – it requires orchestrating alignment.
Checklist
Ask yourself the following questions to check that you are on the right path in your digital transformation:
- Are we staging short cycles of experimentation?
- Do we have a high volume of high-quality experiments?
- Are we sharing learning and insights?
- Are the people who are driving innovation closest to our customers?
- Are we empowering teams to invest independently and make decisions at the lowest appropriate level?
Key takeaway
Leadership in digital strategy is not just about financial stewardship – it requires orchestrating alignment across different parts and levels of the business, inspiring teams, and keeping the most worthwhile innovation efforts on course while resisting distractions.
Further reading:
The CFO as an architect of change: Designing banking’s digital transformation
Sustainability has stopped being a differentiator: Here’s how CFOs can stay ahead
How to succeed as an enterprise co-pilot: Three priorities for the modern CFO
How successful transformation differentiates CFOs in a data-driven world
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Further reading:
Thinking Fast and Slow by Daniel Kahneman
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Log in here to join in the conversation with the I by IMD community. Your subscription grants you access to the quarterly magazine plus daily articles, videos, podcasts and learning exercises.