Scientists understand evolution as more than just the ‘survival of the fittest’. Aberrations or oddities that develop without rhyme or reason can prove useful to an organism and ultimately become the norm.
Of course, this evolution takes place over millions of years.This is where more agile technologies play a significant part, opening the door to planned trial & error. This in turn gives rise to ‘strategic evolution’, a development path built on choices about what is best for the business in the long term rather than on immediate changes that may be detrimental further down the line.
A business has to evolve at speed. It has to test new ways of working and gauge the viability of new services quickly so it can continue adapting in the right direction
The CFO has a pivotal role to play in bringing strategy to progress. Their oversight of the company’s financial situation, their role as custodian of the business’ technology assets, and their understanding of the wider market environment in which the company operates puts them in the ideal position to drive “smart” risk-taking in the pursuit of overall improvement.
We’ve written before about how failure is an acceptable – and necessary - part of modern business development. As long as experimentation is managed within an ethic of failing fast, there should be little holding companies back from testing and developing new ideas.
In his TED talk famed entrepreneur Astro Teller talks about how Google X’s primary goal in product development is to seek out failure. Placing such a heavy emphasis on failure isn’t feasible for most companies, but the ethos of stress-testing all new ideas is one which every business can and should subscribe to.
The pursuit of strategic evolution also requires that businesses understand and respond to their wider environment, just as living creatures do.
The advantage for companies is that they can gain the predictive analytics capabilities to better anticipate what the future will bring. Again, it falls to the CFO to keep abreast of regulatory, geopolitical and economic factors and consult the business on how best to navigate change.
In other words the CFO needs to be a corporate magpie, scanning the landscape both inside and outside the business for opportunities and risks, interpreting these, and ensuring that the most beneficial prospects for strategic evolution are pursued.
All risks are not equal, however, and some conditions are more conducive to risk-taking than others. The obvious examples are economic uncertainty, contraction or recession in markets. When this happens the corporate magpie may keep a watching brief but choose to put new pursuits on hold until circumstances are more favorable.
A Deloitte survey of UK CFOs suggests we are currently in a time of reduced appetite for risk. Just 25% of CFOs who responded believe now is a good time to take risks, much less than the 51 percent of last year. With the UK recently dipping back into recession many companies may indeed be approaching major change with trepidation.
However, even in times of economic uncertainty there are opportunities to test new ideas in the pursuit of strategic evolution. For instance, the business can identify high and poorly performing services or market segments and take appropriate action to work better.
Strategic evolution is a continuous process, but not necessarily a steady one. With a more complete view of the people and processes across the organization, and of the market around them, the savvy CFO will know when to press down on the accelerator and when to cruise along more gradually.
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