Economics & Finances

Why Financial Executives Must Take a Leading Role in Artificial Intelligence Adoption for their Businesses

10 Minutes read

CFOs must prepare to lead in the transformative impact of AI on finance.

We recently held a webinar titled "Artificial Intelligence for Financial Executives" where you can find a recording and a poll showing very high alignment with the role CFOs/Financial Executives need to play.

In his March 2023 GatesNotes post, Bill Gates said, "The development of AI is as fundamental as the creation of the microprocessor, the personal computer, the Internet, and the mobile phone. It will change the way people work, learn, travel, get health care, and communicate with each other. Entire industries will reorient around it. Businesses will distinguish themselves by how well they use it."

Do you remember when?

Can you even remember when the internet, smartphones, communication, travel, and learning apps were not ubiquitous? Think back, 10, 20, 30 years. It seems incomprehensible, doesn’t it? How did we get anything done back then? We have such short memories... and they are about to get shorter!

Azeem Azhar predicts an exponential acceleration of disruptive change, which will transform the fundamentals of everything again. In his book, "The Exponential Age: How Accelerating Technology is Transforming Business, Politics, and Society," he refers to moments of radical change within a system as a "phase transition." He writes, "When liquid water turns to steam, it is the same chemical, yet its behavior is radically different. Societies, too, can undergo phase changes."

We are going through another phase of transition, and this time it likely won't take 30 years, or 20 years, or perhaps even 10 years!

CFO as the #1 co-pilot for Artificial Intelligence

In a prior blog titled "Why is REF so committed to Financial Executive Forums and what is the ROI: Return on Investment?" I made the case for why the CFO must be Co-Pilot #1 for the CEO in a business.

I needed more than just a financial executive leading a "vertical" function. I needed an executive co-pilot to thought-partner the "horizontal" challenge of innovation, going to market with new offerings, and winning new business—all while balancing the risks and rewards of translating strategy and execution into traction on our desired trajectory of profitable growth, with the required organizational agility!

This role becomes even more critical in the era of Artificial Intelligence we are heading into, with all the risks and rewards that might flow from that. Why CFOs Should Have Artificial Intelligence on Their Minds.

Productivity Payback

Some of you may already be deploying specialist AI applications for narrow use cases, dealing with the deep complexities of your business. Some of your designers and creatives may already be utilizing ChatGPT from OpenAI and other Generative AI applications to enhance their work products.

Soon, AI usage will become ubiquitous, especially with Microsoft, a significant investor in OpenAI/ChatGPT, releasing "Co-Pilot" into its Microsoft 365 office suite. Microsoft states, "Humans are hard-wired to dream, to create, to innovate. But today, we spend too much time consumed by the drudgery of work, on tasks that zap our time, creativity, and energy. To reconnect to the soul of our work, we don’t just need a better way of doing the same things. We need a whole new way to work. Today, we are bringing the power of next-generation AI to work. Introducing Microsoft 365 Copilot — your copilot for work."

The challenge ahead lies in effectively navigating these advancements to achieve positive productivity impacts and build capabilities.

Arbiter of Investment and Return-On-Investment

CFOs and senior financial executives have always been the arbiters of investments, seeking the return-on-investments to materialize as theorized in the business case, to build capabilities that create value (The CFO’s Role in Capability Building).

You have always been integral to managing the innovation funnel of your business, through a financial lens of investment and return-on-investment. Now, more than ever, this role will be crucial when considering Artificial Intelligence investments, for which your innovation funnel must be prepared. The key lies in finding the balance between not investing too little too late and not investing too much too soon—progressively accumulating a 1.0/3.0/3.0 snowball effect.

Artificial intelligence innovator and expert Manuj Aggarwal urges CFOs and senior financial executives to:

  • See AI as your super intelligent co-pilot financial executive, capable of multiplying your impact by a factor of 10.
  • In particular, AI can assist in asking better questions, framing better answers, and weaving those into telling better stories.
  • Be ready for the onslaught of AI ideas raining into your innovation funnel from all parts of your organization—the best way to learn about AI is to start using AI.

Career CFO, Board Member, and REF partner in San Diego, Mark Neilson urges CFOs and senior financial executives to:

  • Imagine what your life could be like when you have leveraged AI to handle a significant portion of the drudgery in your day-to-day, week-to-week, and month-to-month workload.
  • This allows you to focus even more on working "on" your business and role and less "in" your business and role.
  • This applies not just within your functional vertical but horizontally across your entire business.

You can hear more from Manuj, Mark, and myself in our Expert Insights webinar entitled "Artificial Intelligence for Financial Executives":

During the webinar, we polled participants, and there was a very high alignment with the role CFOs/Financial Executives need to play.

Collectively, we urge you to decide to become students of AI. Your future depends upon it more than you realize. Reflect on the past 30 to 35 years when the internet was just emerging on the fringe of your radar scope. Consider all the internet-related investments you have been responsible for—Websites, Apps, Cloud Platforms, Collaboration Tools, Enterprise Systems, and much more, all of which rely upon the internet to function. Similarly, the importance of AI will grow rapidly, but it won't take 35 years, maybe not even 35 quarters or months. We are going through a next phase transition.

Complexity, simplicity & avoiding a Kodak moment

We have witnessed numerous instances where managing the complexities of a phase transition of exponential change proves challenging. It is easy to fall into the trap of either oversimplifying or overcomplicating the challenge and opportunity. These lessons are often learned with 20/20 hindsight when the consequences have been paid, leading to what we can call a "Kodak moment"! Despite being the pioneer of digital camera technology, Kodak failed to adapt its business model to remain at the forefront of the phase transition.

The "Kodak moment" is an overused example, similar to other companies like Blackberry and Blockbuster. It is often portrayed as a lack of intelligence within the organization, which is far from the truth. In reality, companies like Kodak had exceptionally intelligent individuals, just like you. However, they struggled to harness their collective intelligence organizationally to navigate a successful migration path.

Collective Intelligence

That is why REF is dedicated to "Leaders Powered by Collective Intelligence," celebrating 30 years in 2024 since our founding in 1994 in the USA, and now with more than 2,500 members in 20 countries, rapidly growing globally. REF is uniquely committed to providing peer forum experiences for Financial Executives to tap into each other's collective intelligence, especially in navigating the era of Artificial Intelligence.

Over recent decades, the concept of peer-advisory boards has emerged as a new category of leadership development that has gone mainstream. CEOs and executives across all functions benefit from diverse peer forums, including thousands of REF members worldwide. These experiences are typically unlike anything else they have encountered before. We observed that the financial executive pillar of leadership is underserved in terms of leadership development, particularly concerning peer forum experiences tailored to their unique role and succession potential in the business. We are determined to change that. Find out more here: Financial Executive Forums.

We are leading the way in scaling out Financial Executive Forums nationally and soon internationally. We also offer virtual options if we are not yet in your local area. REF stands out in its dedication to serving this underserved pillar of leadership. Why is REF so committed to Financial Executive Forums and what is the ROI: Return on Investment?

Are you ready to take on a leading role in developing an intelligence advantage for your company? The future belongs to those who develop an Intelligence Advantage, combining Artificial Intelligence with Human Intelligence to achieve Collective Intelligence. As Artificial Intelligence becomes more crucial in business, Human Intelligence will also become more crucial—a counter-intuitive key insight for you to remain on the leading edge.

CFOs and other Financial Executives have always been at the heart of wise investments, delivering a strong return on investment (ROI) through the productivity breakthroughs that technology can offer. Financial executives must proactively assume a leading role in harnessing the AI revolution. Are you ready?

Additional Resources

  • “The #1 co-pilot I needed was my CFO or senior financial executive. I needed more than just a financial executive leading a “vertical” function. I needed an executive co-pilot to thought-partner the “horizontal” challenge of innovation, going to market with new offerings and winning new business. All while balancing the risks and rewards of translating strategy and execution into traction on our desired trajectory of profitable growth, all with the organizational agility required!”  
  • “53% of CFOs say they plan to accelerate digital transformation using data analytics, AI, automation and cloud solutions”
  • “Smart CFOs now have to give serious thought to artificial intelligence (AI). The technology, which enables computers to be taught to analyze data, identify patterns, and predict outcomes, has evolved from aspirational to mainstream, opening a potential knowledge gap among some finance leaders.”
  • “Organizations developing new skills for the next normal must determine exactly how and where to invest in them. The finance leader is uniquely suited to provide the necessary combination of insights.”