Today's hypercompetitive markets demand more from all business leaders, but the CFO role in particular has undergone an evolution to encompass many more responsibilities than in years prior.
According to strategy+business, CFOs have become more than just a principal source of financial acumen and keeper of organizations' fiscal integrity, as their role traditionally required. Now, the CFO is responsible for the organization's strategic initiatives — someone who guides the organization's decisions on when to invest, assesses which opportunities lend the most value, and, notably, must know when to say no.
"You help the company turn down many activities so that the few most important can thrive. The deciding factor is strategic value," the article reads.
CFOs' strategically oriented position makes them a voice of reason in determining what investments will and will not benefit organizations, and for enabling change and collaboration. The following five points describe today's strategic CFO.
1. The CFO is a catalyst for change. According to the article, today's CFO is more of a leader than a supporter. The CFO is uniquely positioned in the company to offer high-level strategic overview to the CEO with a direct understanding of everyday operations.
"Moreover, unlike most other change agents, CFOs wield the power of the purse. The more strategically they use this leverage, the more the entire company prospers," the article states.
CFOs' strategic position means they might be saying no more than people want to hear, but their main goal is to ultimately shift to a productive yes. CFOs point out problems, but they also help devise solutions.
2. The CFO has nuanced understanding of the company's value chain. The CFO and financial team are situated to help business leaders see how different parts of the organization work together to enact the company's general strategic profile, according to the article. CFOs are required develop an unbiased, full view of the supply chain — all the way from customer needs to office operations, suppliers and even their competitors' positioning — and use these insights to design specific initiatives.
"Finance can also reinforce the idea that coherent strategic choices and cross-functional collaboration will ultimately lead to a consistent rise in stock price and shareholder value," according to the article.
3. The CFO understands the outside world. CFOs define the metrics the track performance and measure success. These metrics describe the trends, risks and opportunities a company faces, as well as an understanding of the world beyond the company, the article says.
The strategically focused CFO can guide the organization to focus on a few key business drivers that will help it fulfill its value plans.
According to the article, "Leading CFOs develop industry-specific and company-specific metrics that better orient behavior toward customer value, link the business planning cycle to developing better capabilities, or encourage the prudent use of assets and other resources."
4. The CFO has a strong attention to talent. According to the article, strategic CFOs invest a lot of time and energy into recruiting, formal training, mentoring and personal coaching for members of their team. They emphasize a commitment to the personal success of each individual and take ownership of their development because growing a strong finance team is a crucial precursor to an organization's success.
5. The CFO promotes a strong culture. Strategic CFOs use the influence of their title to serve as a backbone for the organization and encourage resiliency in the face of change. According to the article, these CFOs help develop a culture where people instinctually invest only in the most valuable projects the organization.
According to the article, "To instill a high-performance culture, the most effective CFOs set an example of the right kind of leadership. They use all the planning and performance management processes of the enterprise — strategy development, annual budgeting, resource allocation, investment planning and periodic performance reviews — as opportunities to set and reinforce behaviors consistent with the company's stated strategy and performance expectations."
The successful CFO carefully maintains the company's internal conscience, the article says, ensuring everything it pursues is motivated by the goal of creating lasting value. To do this, the CFO has to be a figure of integrity and have a strong presence in the organization, meaning they must be strong communicators and promote transparency.