Finance chiefs have made their way to a seat at the table when it comes to the decision making process at their organizations. Between looming ESG reporting issues, navigating generative AI, and tackling human resource issues like compensation and changing workplace trends, CFOs need to be agile in their leadership styles.
“For the CFO function to contribute more effectively to the organization’s performance, they have to be able to step outside of the nuts and bolts of accounting and finance,” said Loreal Jiles, VP of research and thought leadership at the Institute for Management Accountants, in an interview.
A design thinking leadership approach — which follows the steps of empathizing with an audience, defining a problem, ideating solutions, prototyping potential answers and finally, testing what you have come up with — is the most effective way for CFOs and other members of the C-suite to tap into thoughtful leadership and become a more strategic leader of their organization, according to a recent report from the IMA.
Implementing the process
“This presents something that can be another tool in the toolkit, that most accounting and finance professionals are not traditionally taught in most business schools, but it is something that is needed across the profession because we do need to contribute to innovation,” said Jiles.
The design thinking process, whatever way the C-suite decides to implement it, can be “deployed in finance functions to refine the function’s strategic direction, in which case members of the function and the function’s internal stakeholders would be key end users to engage,” said the report.
The first step, empathizing, starts with identifying who is involved in the problem that needs to be solved. This step can also involve direct observations and conversations, according to the report. Next, comes defining, which seeks clarity and makes sense of the data collected in step one. After that comes ideating, which is the path to generating solutions to the problem. Prototyping and testing are the last two steps, which are repeated until the team reaches a solution.
The idea of design thinking is that leaders and teams can “fail fast to succeed faster,” the report said, which allows CFOs to be more agile in their positions.
“The faster the rate of change, the more adaptive organizations need to be,” the report said.
The power of familiarity
Not everyone in the finance function has to be an expert on the process, which is complex and requires a deep understanding in order for one to lead with it, but everyone in the organization can benefit from being familiar with it, said Jiles.
“Putting yourself in a stakeholder’s shoes, it sounds like a simple thing. But as we start going through some of the specific things that allow you to do that, like ideation, that takes us beyond traditional brainstorming, which is probably limiting ourselves in most instances,” she said.
The skills both taught and practiced through the design thinking process are critical for finance teams to function effectively in today’s uncertain business environment, according to Jiles.