The Modern CFO

Raymond Lau

The role of CFO has evolved.

At Zynga, I had the privilege of working with and learning from some of the most forwarding thinking CFOs in our industry, including Dave Wehner (now CFO of Facebook) and Mark Vranesh (now CFO of App Annie).

CFOs today no longer just manage the traditional finance functions like reporting, treasury, tax, and investor relations. The Modern CFO is a strategic partner to the CEO. She engages in minutely detailed data analysis, drives the sales process, and acts as the lead executor of the company's business model and overall strategic direction.

If I had to guess, this fundamental shift in redefinition of the role is rooted from the data-driven approach of Product Management. Product measures every interaction and every change to monitor user engagement and monetization. This data-driven approach has permeated through the rest of the organization, from sales to marketing, and now, finance.

Why is this a big deal? Because Finance now holds the key to some of the most critical business decisions:

  • How much to invest in marketing and advertising?
  • What's the ROI and payback period?
  • How many people can I hire this year?
  • How long does the sales team take to ramp up?
  • And many many more...

These questions need to be answered by detailed data analyses in order to derive meaningful actionable insights.

Unlike the majority of CFOs in the prior generation who came from accounting or treasury backgrounds, the Modern CFO now specializes in financial planning and analysis (FP&A). In fact, FP&A may be the most important skill set for this generation of finance leaders.

For instance, it might be OK to spend $1.50 to acquire $1 of new business if the customer life-time value supports this kind of investment. But it may not be okay if the payback period is too long before the cash hits the bank. It's a tough balance. Many ridicule Uber's 1-billion dollar annual investment in China as they wage wars against Didi Kuaidi, but I have no doubt their analysis justified this level of significant investment for future growth.

As business decisions are increasingly being driven by data, the role of CFO will only become increasingly more important in modern businesses across all industries. The critical understandings of business strategy, finance, and data analytics has charted a new wave of CFOs.

The new age has arrived.

Raymond Lau

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