Looking at finance departments across all industries, very clear trends stand out on the strategies the best CFOs are adopting. Here’s an analysis of ten specific strategies.
1) Effectively balancing cost control with growth
Historically, CFOs shine in times of trouble, when companies need to cut costs, improve efficiencies and conserve cash. When companies are in growth mode, the finance leader has sometimes been seen as the “Mr. or Ms. No” of the organisation – prone to vetoing new ventures. The best CFOs strike a balance, bringing a disciplined approach to pursuing innovation and working to ensure the company takes on the right mix of risk.
2) Taking an active approach to planning
The best CFOs are translating business strategies into finance strategies with an active approach to planning. To be effective, they need a deep understanding of the business from both financial and operational data, they need to collaborate across functions and plan and adapt with speed and agility.
3) Be part of a small, core group that truly runs the business
The value of the CFO advising the team strategy is best summarised by Ian Tyler, CEO of Balfour Beatty: “There’s a difference between a good CFO and a great one. One of the corporate myths is that CEOs run companies. They don’t. Within any company there is a small group of people who make the decisions, and to be part of that team is a question of reality, not status. As a CFO, you have to be resolving the balances in the business.”
4) The best CFOs embrace a culture of analytics
CFOs are turning to modern financial technology to create a culture of analytics. Big data has enormous potential to give companies the real-time critical information – and the best finance leaders have been quick to embrace that potential.
5) Leading the charge in adopting new processes and tools
As a company evolves, tools and processes must evolve with it – especially as concepts such a big data become more widely accepted and used. Although some functions may resist change, CFOs can’t afford to be technophobes. They must lead the charge so that the organisation avoids falling behind and losing its competitive advantage.
Read on for points seven to ten.