As Seen in CFO Studio Magazine Q3 2016 Issue
COMPANIES MUST TACKLE HINDRANCES TO EXECUTING STRATEGY
One of the best ways to know if declared strategies are real or were just words is to look at what the CFO is doing a few months after the strategic planning retreat.
For example, when executives of a regional distribution company proclaim that they want rapid growth and strongly prefer organic growth over acquisition, their CFO would evaluate possible branch locations, address real estate and financing options, establish models for scaling new locations, and set standards for capacity utilization and profitability. The controller would oversee the budget process, serve as a resource to the purchasing department, generate standard reports, and be the primary steward over gross and net profit.
The overwhelming majority of CFOs I know can readily generate a logical list of priorities that flow from strategy. But there would clearly be a lot more highly successful companies if a similar overwhelming percentage of CFOs were actually executing those priorities. It’s amazing how many CFOs’ hands become tied when they don’t delegate to controllers the preparation of financial reports about the past or when they work for a CEO who assumes the CFO can’t do future-oriented thinking, projections, and problem-solving.
CFOs who focus on strategic priorities:
Are purposeful in their continuing education and seek compatibility between areas of interest, skills, and employment. It is awkward to be a CFO in a company that really should be considering acquisitions if you lack appropriate M&A experience.
Translate vision and strategy into action steps. Members of an executive team are more likely to support one another and follow through when each of them has declared where his or her focus should be to ensure success.
Provide a plan for the CEO that demonstrates and measures the ROI from adjusting the CFO’s focus.
Empower the controller to ensure the company’s consistent profitability and positive cash flow.
Allocate funds for training and/or coaching for the executive team. One of the reasons that executives and/or department heads make requests that distract a CFO from high-priority tasks is the fear or insecurity that a new strategy brings to the surface. If the CEO is not accessible, others may direct their questions and concerns to a bright CFO.
Don’t confuse the need to follow through with analysis paralysis. More than other executives, CFOs do not like to be wrong, but expending days and weeks developing precise numbers does not pay off for growth companies. Few growth strategies come with black/white clarity or ironclad guarantees of success. Make a wager on success by gauging the probability and making an educated bet, and meanwhile keep playing.
Review how they use their time on a quarterly basis.
If you aren’t focused enough on the top tasks that flow from strategy, address any doubts about the strategy, update your approach to professional development, and resolve barriers to delegation.