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It’s been a wild summer, what with stock market volatility (to put it mildly), concerns over interest rates and the state of the economy, and upheaval in the presidential race. Set that against the backdrop of AI, wars, supply-chain slowdowns, and climate-related disasters and you’ve got what some historians call a “polycrisis”: a state of affairs when multiple threats or disruptions happen at the same time. (More colorful terms spring to mind, though our editors won’t let us use them.)
In this environment, the challenge CFOs face is maintaining their organizations’ focus on the long term while facing short-term crises, and distinguishing what’s truly relevant from the “noise,” according to Myles Corson, global and Americas strategy and markets leader at EY. Corson shared his thoughts with CFO Brew on how finance leaders can best navigate the polycrisis.
Use your vision as a navigational tool: CFOs, Corson said, need to have a clear vision for their companies that can act as a “compass” guiding them through difficult times. Such a vision, he said, can help them “to make informed decisions in a proactive way about how [things] line up with longer-term strategy, versus reacting to events.” It can also help you prove to external stakeholders “that you’re staying true to the path you’ve previously communicated” and to enable staff to “interpret and react appropriately to events as they occur,” he added.
Don’t let uncertainty keep you from making big bets: Sometimes, Corson said, companies hold off on making long-term investments in the face of short-term events, opting instead for “shorter-term, incremental projects.” But this strategy, he feels, can be overly cautious. “If you’re not able to make big bets because of this uncertainty, is that detracting from your ability to achieve your long-term goals?” he asks, noting that “incrementalism” might not be the best approach to issues such as AI and sustainability.
Finance needs to pivot even further towards strategy: To form a solid long-term vision for your organization, you need to “take a step back from the day to day” and think more strategically, Corson said. That’s an area where CFOs can become more prominent.
EY’s DNA of the CFO research has shown that CFOs very much want to be more strategic, Corson said, “and yet a lot of the ways they operate and behave are still very much anchored in value protection” and cost and efficiency, he said. Pivoting more towards strategy will benefit finance functions in the long run, he believes, as many organizations are seeing “diminishing, marginal, or incremental returns from cost savings” as their competitors are also pursuing cost optimization.
Instead, he said, finance functions should shift towards “enabling value creation,” for instance, by identifying opportunities for top-line growth or performing analysis on what customers need and want. CFOs, Corson said, “need to be prepared to make the case for an investment in finance to be able to enable that value creation for the organization,” he said.