CFO Studio Magazine, 4th Quarter 2012
By Aldonna Ambler, The Growth Strategist

Here’s a technique to test if your company should just update its tactical plan or do real strategic planning: Convene the ex­ecutives and ask, “Could we triple gross revenue while only doubling operating costs?” Posing what we call the Triple/Double Option™ generates some great questions and insights. The discussion surfaces the full range of growth goals and ambition within the leadership team.

Most executives assume that the question means “triple quickly,” and the discussion will raise any concerns about ineffective or insufficient systems, limited produc­tion capacity or quality control, etc. That’s important information to hear and address through stepped-up tactical planning focused on operational improvements. The primary strategic question would be about pacing. How fast or slowly should those operational improvements be made?

Real strategic planning is clearly needed when you pose the Triple/Double Option™ and it cues the executive team to express:

• questions about whether the market is now saturated or is changing too fast;
• worry about industry consolidation;
• confusion about why customers aren’t recommending the company to others;
• frustration that the sales cycle is growing while the closing rate is shrinking;
• disagreement with or no excitement about existing strategy, priorities, plans;
• lack of confidence in leadership;
• pessimism that the company can lift up off of a stubborn plateau; and/or
• concerns about the company’s capacity to attract bright, talented employees.

CFO’s Role in Tactical Planning

A CFO typically leads the process of resource analysis and has the most access to impor­tant information. When it comes to tactical planning, even the most autocratic CEO in a family-owned, mid-sized company wants the CFO to help with resource allocation. The CFO figures out what the company can afford, if outside financing will be needed and possible, how much gross profit will be necessary, when the company will need to relocate, the timing for equity deals, departmental budgets, etc. The CFO’s most strategic contribution to tactical planning is suggesting the optimal pacing for planned improvements.

CFO’s Valuable Contribution To Strategic Planning

When real strategic planning is indicated, a capable CFO can serve as an important sounding board and advisor for other mem­bers of the executive team.

Effective CFOs help executives consider expanded options, approaches like acquisi­tions, private investors, an IPO, or franchising to lift off a stubborn plateau, compete more effectively, penetrate a new market, develop exciting products, or pick up speed. Feasibility analysis and determining optimum pacing for those strategies come soon enough.

Recently, we helped a client retain the ser­vices of an interim CFO. This client was expe­riencing behavioral symptoms (blaming, silos, passive-aggressive communication, and avoid­ance) that would sabotage any strategic plan. We used our Synthesis™ approach to strategic planning that features a teambuilding process running parallel to the strategic planning sessions. The Controller of this family-owned business was an in-law who contributed to the continuation of dysfunctional behavior. The interim CFO’s objective questions, capacity to imagine success, and expansive thinking helped the company envision growth and think how to leverage their strengths.

Optimizing, open-minded CFOs, unfor­tunately, are still not the norm. Too often, CFOs play the role of “naysayer” during strategic planning. The marketing VP starts to talk about new products or markets and the CFO is the first person to say why the company shouldn’t even consider expansion. The Chief Information Officer shares the observation that the company will need to “go to the cloud” to serve clients better and the wet-blanket CFO asks about cost too soon. Or the CFO becomes condescending when the HR director suggests more career advancement opportunities or new com­pensation formulas. Usually such pessimism develops when:

• CFOs are really Controllers and not trained to think strategically;
• their informed advice is discounted too often;
• they are overburdened with too much day-to-day accounting, or
• the CEO/CFO relationships push the CFOs into the negative role.

A company clearly increases its growth potential when the CFO addresses the causes of any negativity before the next round of planning. Having a bright, open-minded, optimizing, constructive CFO is a competi­tive advantage for any company.

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