Shifting Foundations: Resilience in an Unpredictable World

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MHA | Shifting Foundations: Resilience in an Unpredictable World

As part of our Tech CFO Series: Insights and Strategies for Tech Finance Leaders, David Boosey, Partner at MHA shares some of his thoughts on future disruptors and how CFOs and their businesses can be more resilient when the landscape ahead looks unpredictable.

Traditionally a CFO was often seen as an organisation’s goalkeeper, the final line of defence, keeping the business from material harm and shouting at teammates to defend more. In today's tech-driven era, we see the role of the CFO transitioning from a goalkeeper to an attacking midfielder, whilst still retaining their goalkeeping instincts and remaining vigilant of disruptions that could impact their organisations. The game has changed, and so have the expectations and risks. In this ever-evolving landscape, resilience is a critical necessity for survival and growth. CFOs in technology businesses must embrace agility, be forward-thinking, and be adaptable to navigate the strategic frontiers successfully, as the foundations shift.

Redefining Resilience in the Digital Age

COVID-19 and other global disruptions have upended traditional assumptions and models of business and finance. Suddenly, the playing field shifted, revealing the vulnerabilities of rigid structures and strategies. Resilience emerged as the linchpin for businesses striving not only to weather the storm, but also to thrive amidst uncertainty. CFOs need to be prepared for a wide range of events that could affect workforce availability, supply chains, and customer demand.?

Supply Chain Disruptions:?One of the big lessons from recent events such as the pandemic, war in Europe and the Middle East, and trade disputes between the USA and China, is the huge impact these events have on our global supply chains. We are so much more connected than we ever used to be and that means we are so much more reliant on global stability. Our supply chains are more susceptible to disruptions caused by natural disasters, geopolitical tensions, trade disputes, and transportation issues than ever before. CFOs need to consider their supply chains and potential points of weakness in a much greater depth than they ever needed to do before. There is a general trend to start building resilience and latency in those supply chains, which reduces short-term profits but minimises future shocks.

ESG: A Future-Focused Approach

We cannot talk about resilience and adaptability without mentioning what is now one of the world’s most-known acronyms, ESG (Environmental, Social, and Governance). By integrating ESG principles into our strategies and scenario planning, we not only mitigate risks but also unlock opportunities for sustainable growth.

As a CFO, if we consider the impact of our organisation’s actions on society and the environment, we can mitigate the risks arising from future changes in legislation and societal reaction to the climate crisis. This, along with other future scenario planning matters will allow us to consider new opportunities and lead our businesses along the path of sustainable growth.

MHA is a leader in supporting clients on ESG-related matters. Further information on our sustainability and ESG services can be found here: MHA | Sustainability & ESG

Are we ready to adapt to the dynamic business environment and rapid technological advancement?

We may work in Tech but are we ready to adapt to the dynamic business environment and rapid technological advancement? It’s not just our industry bringing about rapid change, this is happening across all businesses. The impact of generative artificial intelligence, the billions being pumped into general intelligence, increasingly sophisticated supply chain automation, shifting regulations on financial recording and transacting through blockchain technologies, all mean CFOs need to keep abreast of a wide range of moving parts. We need to see through the hype to what the real change to our business will be. We cannot do this alone, the topic is too vast, so we must collaborate with our peers and our advisors to understand the big picture and proactively adapt our strategies and operations to leverage new opportunities.

Tech companies have exemplified resilience

By leveraging digital technologies, data analytics, cloud computing, and cybersecurity to enhance operational efficiency, customer experience, innovation, and risk management. For example:

1. Amazon: During the COVID-19 pandemic, Amazon swiftly adapted its operations to meet surging demand while prioritising employee safety. The company leveraged data analytics to optimise supply chain management, ensuring timely deliveries despite disruptions. Additionally, its cloud computing arm, Amazon Web Services (AWS), played a crucial role in supporting remote work and enabling businesses to scale their operations seamlessly.
2. Microsoft: Microsoft's response to the pandemic highlighted its resilience and innovation. The company facilitated remote work through its collaboration platform, Teams, which saw exponential growth in user numbers. Moreover, Microsoft Azure, its cloud computing service, provided essential infrastructure for businesses transitioning to digital operations, while robust cybersecurity measures ensured data protection amidst increased cyber threats.
3. Zoom: As the demand for remote communication surged, Zoom quickly emerged as a key player in the virtual meeting space. The company's user-friendly interface and reliable video conferencing capabilities made it a preferred choice for businesses worldwide. Leveraging cloud computing and cybersecurity measures, Zoom ensured seamless and secure communication for millions of users, highlighting its resilience in adapting to evolving market needs.
4. Miro: Tackled the challenges around online collaboration by offering a platform where remote teams can come together in real-time.
5. Figma: Overcame the limitations in the design collaboration process with a cloud-based solution that allowed designers to work together more efficiently.
6. Slack: Challenged organisational communication by leveraging advanced AI and machine learning algorithms.

Companies like these demonstrate how a dynamic business environment can lead to innovation and opportunity when the entities are ready to embrace rapid technological change. However, the darker edge of all this is that as we live in an increasingly digitised world, unimagined threats emerge to our data integrity and security. Taking on the goalkeeper role, CFOs must invest time, energy and money into the protection of their data and IT systems.

The Strategic Role of the CFO

As strategic leaders and partners, CFOs play a pivotal role in navigating uncertainty and complexity. Balancing financial risks with identifying growth opportunities requires a nuanced understanding of the business landscape. Economic uncertainty, geopolitical instability, and market fluctuations can affect investor confidence, consumer spending, and business performance. CFOs must monitor market trends, assess potential risks, and adjust financial strategies to navigate volatile market conditions and safeguard the financial health of their organisations.

Frameworks for Achieving Resilience

Effective resilience strategies rely on robust frameworks and best practices. Scenario planning, stress testing, agile budgeting, dynamic forecasting, and contingency planning are indispensable tools in the CFO's arsenal. By embracing these methodologies, CFOs can anticipate challenges, seize opportunities, and pivot swiftly in response to changing circumstances.

Regulatory Changes: Regulatory changes, including tax reforms, data privacy regulations, and industry-specific regulations, can significantly impact the financial operations and compliance requirements of technology businesses. The faster the pace of change in the environment, the faster the changes in regulation are going to occur; and the more likely they are to be reactive and contain unintended consequences. This presents a lot of challenges and threats (goalkeeper) but also opportunities, not just to lead, but to develop in response to regulatory changes (attacking midfielder). CFOs should stay informed about regulatory developments, assess their implications, and ensure compliance to avoid penalties and reputational damage. As for the vast technological changes we are seeing, we cannot cope with the extent of regulatory changes alone, we must collaborate with our peers and our advisors.

Conclusion: Cultivating a Culture of Continuous Learning

I hope I have laid out some of the key areas that CFOs need to be aware of as their role in organisations continues to evolve. Many tech CFO’s businesses work in extremely dynamic environments and so these changes and volatilities are amplified. I have given some high-level ideas and approaches above, but I feel overriding all other points is that in a continuously changing, unpredictable world, that continuous learning, and improvement are critical. CFOs will benefit from creating a culture of curiosity, experimentation, and collaboration across the organisation. Resilience can only be achieved by teams embracing innovative ideas, approaches, and perspectives, working together to take advantage of the opportunities that continuous change brings. We should not be afraid to reach out to our peers and advisors to work collaboratively and face some of the bigger issues we face.

In our next instalment of the Tech CFO Series we will be discussing:

Embracing Megatrends and Weathering Turbulence