Managing execution risks in transformations: What could possibly go wrong?

Introduction

CFOs are rarely hired to maintain the status quo. They are usually hired to help grow the company’s value, often requiring transformational efforts at value creation. But the path to value creation is typically littered with risks. CFOs who spearhead transformations should plan a route that steers around potential major obstacles to create and sustain value growth.

This article focuses on how CFOs can better manage execution risks in their value-creation efforts. As recent events have shown, unforeseen—and perhaps unforeseeable—changes in macroeconomic conditions, from a pandemic to rising inflation to geopolitical instability, can also derail value. While financial and operational hedging and diversification can help mitigate some of these broader risks, this article focuses on how CFOs can mitigate transformation risks in their companies.

To try to minimize and mitigate common execution risks, finance leaders should first identify those risks. Then they should attend to the most salient risks at different stages of the transformation life cycle. What proportion of execution risks can be pinpointed in advance? Answer: More than you might think. Based on our numerous CFO Transition Labs™, we have identified several common execution risk factors. By thoughtfully considering these issues, finance executives can better navigate snares and execute transformations.

This is particularly true for incoming CFOs, who may quickly be called upon to identify and start change initiatives. Sometimes, they are faced with righting an ongoing project that has gone wrong. In any case, driving change efforts and transformation can be inherently risky. My new book, The Leadership Accelerator: The Playbook for Transitioning into Your New Executive Role (McGraw Hill, 2023), offers insights into how finance leaders can drive transformation—acquiring the needed technology, the specialized talent, and the desired urgency—without losing operational momentum.

In this edition of CFO Insights, adapted from the book, we’ll explore how new CFOs can resist the imperative to rush into a transformation, instead taking the time upfront to assess the likely execution risks that could bedevil a change initiative before it can gain traction.

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The CFO Program brings together a multidisciplinary team of Deloitte leaders and subject-matter specialists to help CFOs stay ahead in the face of growing challenges and demands. The Program harnesses our organization’s broad capabilities to deliver forward-thinking and fresh insights for every stage of a CFO’s career—helping CFOs manage the complexities of their roles, tackle their company’s most compelling challenges, and adapt to strategic shifts in the market.

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