The Strategic CFO

“How many businesses find their data to be a complete mess?” Christie Kelly, former CFO of JLL Real Estate questioned as she and a panel of high-profile CFOs discussed the changing landscape for financial leaders at an event held by the National Association of Corporate Directors.

In today’s world every business now seems to be in the game of being a technology business. That means that a new importance is placed on data, especially for CFOs.

“How do we transition to turn it (data) into insights, and how does that change finance to have more technology, process, and Six Sigma?” Kelly said.

The role of the CFO has evolved, due to the accelerated pace of the digital age. How? A strategic CFO drives transformational change. A CFO must not only understand a business from start to finish to provide financial excellence, but also must predict what is coming from a strategic standpoint and be ready to evolve.

The hardships that came with the last recession pushed the CFO to serve in a more strategic role. Today, CFOs need to also focus on people, strategy, and externally focused communication.

Deborah O’Connor, CFO of wholesaler and retailer True Value explains that the “CFO of 10 years ago is the Controller of today,” adding that the CFO role has gotten broader and more business oriented than it was in the past.

“A CFO needs to drive analytics and what people need to make decisions,” O’Connor said, leading into a discussion on data integrity and the importance of defining data and putting governance around it.

A strong team surrounding the CFO is key, but good talent can be hard to find. Every organization vies for the highest skill-levels when selecting leadership. But there’s more to it than tactical, or even strategic “smarts.” The financial workload is becoming increasingly complex and heavy. Team players – from controllers to treasurers to staff accountants must enable each other to succeed holistically.

Marie Groll, EVP/CFO at fitness equipment manufacturer Life Fitness, Inc., pointed to having a strong corporate controller on the team to do block and tackling which allows her to focus on analytics and change management.

Along with data and analytics, Groll said pricing and cost containment are the top two priorities for her as she looks at how to bring down manufacturing and overhead costs, while still managing cash flow and the P&L. O’Connor echoed that being bought by a private equity fund means as a CFO she is focused on how to take out cost and fuel growth.

So what should companies be looking for in a CFO?

Don’t be afraid to break the mold. A strategic CFO does not have to have background in audit and controllership. They don’t need to be a CPA. But rather, they need to embrace business, and have the passion to charge forward.

“Attitude is everything,” Groll said. “You have to find someone not afraid to lead, and I think a lot of people are.” In many cases the CFO is charged with changing minds, getting buy in from the team on thought process and overall goals.

A good CFO should be able to get out from behind a desk and understand the business drivers, lead innovation, challenge the status quo, and be a great team player.

Great CFOs cross borders as well whether private, public, private equity backed, or family owned. O’Connor said that while you might have different constituencies in each of those types of organizations, the foundation is the same: controls have to be in place, good projections must be forecasted, decisions on prioritization must be made. Most importantly, a CFO bonds very well with the CEO, empowering them to take the charge forward in a positive direction.

For companies recognizing they need change, but not knowing where to begin, interim executives or project-based CFOs are a great starting point. Interim executives are strategic by nature, often parachuting into a company when change or transformation is needed.

Forward thinking companies call on Interim CFO leadership for many different scenarios:

• Better financial controls and processes need to be put in place
• Coaching is needed for internal talent to eventually move into the next CFO position
• The full-time CFO role is vacant, but clarity is needed around the skillset that needs to be filled
• Trouble is on the horizon – declining revenues, stagnated growth, or rising competitive market forces

In scenarios where distress is present, it is very important to fundamentally reset the organization at the early stages.

“The biggest mistake company owners make is waiting, expecting next month’s or next quarter’s results to save you,” David Johnson, an expert Interim CFO says. “Organizations that find themselves in distress, in particular, find themselves in a bizarre world in which rapid growth could actually exacerbate the decline. Failure to recognize that has killed more companies than simply bad management.”