The Legacy-Makers: How Mission-Focused CFOs Build Generational Companies

More has changed for chief financial officers (CFOs) over the past five years than in the past 50.

“We’ve experienced things that we had not seen for decades, such as a global pandemic, an economic downturn, and constant geopolitical instability,” Vikas Mehta, CFO at Komodo Health, told PYMNTS.

Not to mention an ongoing digitization that has entirely reshaped the operating landscape, as well as transformed what were once presumed to be set-in-stone in-office and workplace realities.

And financial leaders have been at the forefront of navigating these systemic changes for their organizations.

So how have they done it?

Through a combination of resilience, increased digitization, and the adoption of new technology.

“We’ve seen three key trends as we navigated these choppy waters. Management teams have shown strong resilience, the ability to make quick decisions and be pragmatic in their choices. Second, the role of the CFO has become more data-driven, managing the organization not only at the highest level of the income statement and balance sheet, but also at a more technical level, driven by big data,” Mehta said.

“The third trend is leveraging new technology. With every downturn, the importance of productivity gains is high. There’s been a greater adoption of AI [artificial intelligence], machine learning and other tools at the highest level, which has been a drastic change, and I’ve been in the industry for more than 20 to 25 years,” he added.

CFOs Lead the Way in an Era of Data and Technology

Within a shifting and rapidly evolving business landscape and macro environment, finance teams can find firm footing by controlling for what’s controllable.

“If you are constantly watching those things you can’t control, then there’ll be more noise than signals, and you won’t be able to clearly drive the organization in the right way,” Mehta said.

“Something that CFOs can control for is driving a thoughtful, disciplined mindset within the company, which includes integrating the best technology and making sure that team members are empowered to do more collective, high-value work, versus more mundane tasks,” he said.

And as cutting-edge tools become more prevalent, allowing CFOs themselves to make data-driven decisions with greater precision and efficiency, finance teams can further increase their sphere of influence and earn trust by providing effective and proper guidance across the organization.

“Finance leaders have had to become savvier not only in managing internally, but also in understanding external trends and becoming [in a sense] economists who can bring big-picture views inside the organization,” Mehta said. “But the number one thing is driving through the organization that growth initiatives need to come both with a high return on investment and create sustainable value over the long-term.”

This means that CFOs need to work with the rest of management to invest in growth at the right cost in a lean, durable, and effective way.

“Never miss out on leveraging a crisis,” Mehta advised. “And what we have seen over the last few years is an opportunity to create an internal mindset for a disciplined investment approach that drives long-term value.”

Riding the Coming Wave of Technical Change

The current business operating environment has been shaped by three waves of technical innovation, and Mehta notes that he’s been “fortunate to see each one.”

“The first wave,” he said, “came from cloud computing creating a solid platform that could be leveraged. The second wave we saw was more of the SaaS [software-as-a-service] wave, with new solutions changing workflows and processes.”

What we are seeing right now, Mehta said, is a “shift toward verticalization in specific industries, and this is where Komodo Health plays.”

In 1970, Mehta said, the U.S. spent 7% of its GDP on healthcare. Last year, in 2022, American spent nearly a fifth — 18% — of its GDP on healthcare. But in spite of that spending, the R&D cycles for new therapies still remain costly and lengthy, with an average time to market of over eight years and costs that run in the billions and eventually trickle down to consumers.

But as costs have exploded, so too has healthcare data proliferated, and that is where Mehta sees the opportunity area being.

“Healthcare systems produce a zettabyte of data annually, but it all sits in silos. The change-the-game opportunity AI represents in healthcare is the ability to transform, analyze, and link these fragmented data sources into actionable timely insights,” Mehta explained.

The Rise of the Mission-Focused CFO

The Komodo Health finance chief sees the role of the CFO as a play in multiple acts, too.

“During and before the pandemic, the role was growth-focused — pulling the right levers to ensure a high clip of growth. Then through the pandemic, it was essentially the chief navigation officer: what is coming around the corner and how can we be agile. With the recent economic downturn, it became all about balancing growth and profitability,” he noted.

As for what he sees as the next evolution of the CFO role?

“I think the stage we are in now, and beyond, will be a mission-focused CFO,” he said. “Someone who can build a company that is a generational company, someone who can help the founders, all the stakeholders, the investors, employees, customers, realize the mission that the company was built around.”