“It often requires more courage to dare to do right than to fear to do wrong” Abraham Lincoln
The business world is changing at a fast pace; genesis of changes can come from anywhere. The changes are not linear, but are driven by the grit and determination of smart entrepreneurs that challenge the conventional industry boundaries. Who would expect that Uber would challenge the regulated taxi industry? Or that Apple could change the way we “consume” music? Or even how Amazon would challenge the grocery industry? GE was an icon of perfection, but now it’s at a verge of breaking its businesses. The modern CFO should be able to “see” patterns of changes and be able to influence the CEO and the management team.
Here’s a secret; a modern CFO is already equipped with all technical tools in his/her tool box. Most CFOs are working on how to build effective teams (and deal with the millennial generation), managing the capital structure, and integrating acquisitions, having a consistent chart-of-accounts, building beautiful dashboards, and harnessing and exploring data across the organization to say a few things. The CFO needs to move from the comfortable and structured environment of “debits” and “credits” to the unstructured business of cross inflexion points and transform.
"Every decision made has facts and well groomed PowerPoint slides. So why so many mistakes made and/or opportunity costs are not acknowledged by learning about emerging trends?"
You have a full agenda, work crazy hours and are raising a family; but you need to do more! You need to develop the virtues to be a “CFO+”
In this journey, there are only two constraints for the CFO+: time and talent. If the company has a sound business model/ customer base; the needs for capital is less of an issue. The modern CFO has to be more efficient with time.
The CFO has to be prepared. Like a navy seal, to discern and understand the impact of pivotal decisions: a) outsourcing functions; b) acquiring/ divesting; or c) hiring candidates. The CFO has a unique role in the company; they have access to all the data across the company. This allows them to assess the leading indicators and track patterns. You are called to enhance the shareholder value by enabling factual and unbiased decision making.
Every decision made has facts and “well groomed” PowerPoint slides. So why so many mistakes made and/or opportunity costs are not acknowledge by learning about emerging trends? Also, why do we allow so much corporate restructuring to correct past mistakes? I believe this is because at times there is a “fear” of asking tough questions, high levels of bias in the decision making, and a lack of contingency planning. The CFO needs to build strong resilience and fortitude to raise their hand and ask the tough questions during the thirty seconds while the decision process is still under considerations.
The CFO needs to partner with the C-suite, the CEO, and the Board to drive better decisions and help eliminate bias in decision making processes. The intent is not to be paralyzed by analysis, but instead agile in reading the market conditions and business reality.
There are four broad areas the CFO needs to focus on: to be able to develop the virtues:
• Be current with recent trends within and across the marketplace. The CFO needs to create a 30-minute daily ritual to read innovative books and follow what industry leaders are doing and thinking. This will allow a keen understanding of patterns of change and disruption.
• It is “ok” to make mistakes. Keep a journal of your decisions along with assumptions and outcomes, especially when you make a mistake. Once you read your journal, you will begin to notice bias patterns of others and your own. The purpose of this exercise, in addition of being a daily self-reflection, is to neutralize most of the biases.
• Build effective teams and stop non value-added tasks–by empowering and building effective teams; it will empower your team to grow and will allow the CFO to focus on the strategic and critical tactical issues. Steve Jobs once said that it “doesn’t make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do”. Once again, there should not be “fear” to say “No” to non-value added tasks. Time is critical to every member in the CFO office.
• Systemic view and suitability of the business - Great ideas don’t necessarily have to come from the board-room or C-suite; the entire ecosystem within the company can have the fortitude to raise breakthrough ideas. The CFO builds bridges within and across the company. Great ideas can come from folks on the production floor, lawyers, or even accountants. People want to be heard and be respected. Get out of your office and talk to people.
These virtues will allow the CFO to be more self-aware, be immersed with the business trends, understand the “art & science” of a decision making, and most importantly understand the consequences of very thought out decisions that didn’t achieve the expected results.
The CFO’s professional journey will end one day. But, they will not be remembered by the several monthly closes or BOD packs. They will instead be remembered by being honest, competent and implementing breakthrough ideas.