In companies where the CFO is thought of as just the “numbers” person, it is not uncommon for the CEO and others in management to propose a growth strategy and then “throw it over the fence” to the CFO to see if the numbers work. Not surprisingly, this narrow vision of the role of the CFO is most likely to occur in companies where there is lack of clarity of the strategic nature of the CFO role. This may be due to several reasons.
- The CEO may be a very strong personality who isn’t looking for buy-in or “suggestions for improvements” to his/her growth plan. This is likely a recipe for disaster.
- Alternately, the CFO may be somewhat new in their role, coupled with having a strong Accounting background. It would only be natural in that case for the person in the new CFO role to gravitate to where he/she feels most comfortable and feels he/she can make the biggest contribution to the company. That would be to “spreadsheet” the growth strategy to see what the numbers look like.
But what should be the role of the CFO be in terms of strategy?
There is a nautical term known as the azimuth that may fit here. Webster’s defines the azimuth as “the horizontal arc between a fixed point (such as true north) and the vertical plane through the object.” In layperson’s terms, it is akin to a compass providing a view as to the exact direction the company is or should be moving.
The CFO should have a strong view on that direction founded in the following:
1. A thorough understanding of all aspects of the business (not just the numbers)
2. Full comprehension of the marketplace and the direction it is taking
3. The inherent strengths of the company so that he/she can help to build on those strengths.
With the CFO embracing this expanded strategic role, he/she will become a more vocal and respected member of the management team. Others will look to the CFO role early in the strategy development process and the CFO will be able to heavily influence that strategy.
What other “big picture” initiatives do you think the CFO should be involved in? Share your thoughts in the comments below.