In his latest article, AICPA & CIMA’s associate technical director Peter Spence argues that a new era has ushered in new ways of working, which means finance leaders should be re-thinking how they approach their work
I have often made the point that the nature of the finance team’s work is changing. The environment they operate in is becoming more complex and technological innovations are changing old ways of working.
There are, in essence, two ways of reacting to this. One is to hunker down and try to avoid the challenge. The other is to embrace change and complexity and look for opportunities in the new environment. The second option is clearly the right one, but do finance leaders everywhere really choose it as a default? I’m not convinced.
The reason for my scepticism is that embracing the challenge is the harder option and it requires a conscious decision to accept uncertainty and complexity. Another way of putting this is that it requires leaders to actively choose to adopt a mindset that may go against their initial instincts.
Many of you will be familiar with the work of Carol Dweck, and her book The New Psychology of Success. In it she defined the ‘growth mindset’ This is a belief that you can develop the habits and thinking patterns that are conducive to success. The way to achieve this is perseverance, especially in the face of challenges. People with a growth mindset take on feedback, while those with what she describes as a ‘fixed mindset’ ignore feedback and avoid challenges.
The mindset you adopt is not an inherent quality. You can choose to push yourself, accept the challenge and seek the opportunities the modern business world offers. If you do this, as I urge you to do, there are several avenues for a finance leader to explore. AICPA & CIMA, where I work, has looked at this in-depth and identified six ‘transformative skills’ where adopting the right mindset can help you take on the challenges of our age.
Organisational success hinges on getting strategy right, so it pays those in leadership teams to interrogate the way they approach it. A strategic mindset means adopting a systematic approach to devising strategies, encompassing analysis of the environment an organisation operates in and its capabilities. You also need to think about how feedback loops are built into these strategies so that they are evaluated in a constructive manner.
Sustainability is an increasingly important part of the work of a finance department. Building sustainable resilience into organisations is more than a compliance exercise. It means adopting a sustainability mindset and analysing processes from beginning to end to identify where work needs to be done.
We are lucky to be living through a revolution in digital innovation. Old ways of doing things will be disrupted, but those who lean into the changes, adopt a digital mindset and exploit the new possibilities will do well. It is a clear-cut example of the benefits of adopting a growth mindset.
Having a culture that encourages the full participation of everyone on the team is a real competitive advantage. Organisations that reflect the diversity of their marketplace will serve their customers more effectively. That is why adopting a diversity, equity and inclusion mindset, which takes on the challenge of recruiting, retaining, and successfully managing a diverse workforce is so important.
A key part of the growth mindset is taking on challenges. In business that often means thinking creatively about new solutions or ways of doing things. It is a myth that this is an innate skill which cannot be learnt. If you adopt a creative mindset, you will find there are processes which can improve idea generation, both from you and from your team. Doing so will give you a competitive advantage.
The technological possibilities of our age throw up new ethical dilemmas. Take the example of large language models like Chat GPT as an example. Interpreting the output of these models requires us to apply the ethical principles of professional competence and due care to make sure they are not producing inaccurate, misleading or false information. Adopting an ethical mindset means using a systematic way of thinking about these issues using a threats and safeguards approach.
The common thread between these six mindsets is that the challenges of our age, from the digital revolution to the need to build a sustainable future, are great, but if we adopt the right mindset and take on this challenge, we can build a bright future for our organisations.