CFO Chapter 5: Strategic Learning
Creativity is no longer exclusive to the departments of marketing and design. It is now also applicable to that of finance. This was demonstrated clearly when the world of business got turned on its head during the pandemic, forcing companies to find new ways to make money. However, even now the finance function is continually turned to for inspiration.
As CFOs come to terms with shouldering the responsibility of informing business direction, they must invest in their strategic leadership skills. These will assist them in not only providing transformative insights but also in effectively communicating them so that they come to fruition as intended.
In the latest CFO Chapter we will therefore focus on what strategic learning CFOs should commit to and what role they will play in driving their businesses forward.
Strategic Starting Points
A strategic leader is something which CFOs are now expected to be. Already a highly influential leader within any business, they are by default halfway there. However, by practicing strategic thinking as well, they can become a rarified CFO.
Taking the decision to evolve into, or become more of a strategic financial leader therefore requires a lot of personal initiative. Fortunately, it is very clear what the starting point is – a shift in mindset.
To make this change a lot has to be considered. CFOs should begin by asking themselves:
- Why do they want to operate strategically? (To influence beyond the finance function, to improve their career, to make other departments more financially minded, etc.)
- What sort of strategic leader do they seek to be? (A provider of data, a storyteller, a unifier between departments, etc.)
- What will their route be to becoming strategically adept? (Adopting data tools, hiring new colleagues who share their vision, committing to further education, etc.)
Ultimately, answering these questions will lay the foundation of a CFO’s strategic masterplan. As strategy is all about having and implementing a clear vision, only once these questions are answered can they move forward.
Being strategic has strong connotations of being efficient. In other words, working smarter, not harder. To deliver their strategic visions, CFOs must therefore practice what they preach. This means that after deciding upon their vision, they must strategise their own operations before they influence others.
Working in the land of numbers, CFOs’ first port of call to improve their own productivity will be regarding data management. In any contemporary business this is to be expected considering the increasing volume of data which is being created every single second. However, only 21% of CFOs have access to the data they need, when they need it – a big hindrance to being a strategic financial leader.
With volumes of data only getting greater by the day, automation is a must for finance teams seeking to tame their data. Consolidating data into one platform via APIs is one thing but ensuring data integrity is another. Fortunately, automated reconciliation tools like Aurum – which boasts over 600 APIs – does both. Impressively, its automation operates in seconds, using its 99% matching rate to automatically flag any data exceptions to finance professionals, resulting in the integrity of a business’ data being assured.
CFOs who can extract, transform and load all of their data via automation, reconcile it, and receive data insights through bespoke dashboards will be in a far more advantageous position than their peers when it comes to being strategic. The stand out benefit is having access to valid, real-time data whenever they need it. However, further benefits include saving their team time and aiding their company in remaining compliant with regulations, both of which enable more resources to be focused on strategic actions. When it comes to streamlining financial operations in a bid to foster strategic output, the benefits of tools like Aurum are therefore clear.
Whilst consolidation of everything into one platform to develop a holistic overview and accrue accurate insights is a great start, insights alone should never be the end game for a strategic CFO. Heads of finance must also translate their understandings into strategies which they can share with others throughout their company.
Optimising data handling to ensure that the insights which can drive transformational change are accessible is one thing, ensuring that they fulfil their potential is another. Formerly, CFOs might have thought their input ended at the point of delivering numbers; however, the purpose of a CFO becoming a strategic leader is to guide all areas of a company forward through a financial lens.
As a result, CFOs will require a relationship with all areas within a business and the communication skills to deliver a well-suited narrative to them. The coatrack of a CFO therefore needs space for many hats.
Knowing how to collaborate with different departments is no easy feat but through practice CFOs can become a chameleon like figure which unifies a company. To do so they must strike a balance between prioritising detailed numerical insights and making them both applicable and accessible to others. This by no means signals watering down the financial prowess of a CFO’s data, it simply means being able to translate it for others. To do so, CFOs should invest their time in:
- Storytelling skills – numbers don’t make an engaging read for many people outside of finance; however, there are ways to change this. Graphs, illustrations, and infographics are all well-known ways to transform numbers into easily digestible nuggets of visual information. CFOs presenting with these assets will find it far easier to get their message across.
- Leadership Podcasts – to narrate their data story to peers, CFOs can’t be solely reliant on visual props. They must also be able to converse in the language of their peers. Fortunately, over the last few years, podcasts have become increasingly popular and so too have those targeted towards leaders. Why? Because they act as the perfect medium to hear how other leaders speak whilst also learning from them. For financial professionals in particular, CFO Thought Leader is a particularly good one to tune into – it will help them understand other departments better and become accustomed to how they communicate.
- Promote innovation – financial professionals might well have initial access to data which can acts as a bedrock for strategies; however, there is no rule stating that they alone should develop them. In fact, any good leader knows that to include the ideas of others is the best way to facilitate innovation. CFOs should therefore make it a priority of theirs to develop their data presentation in a way which encourages an environment for critique and creativity.
Committing to becoming a strategic CFO is a significant responsibility in itself. To make it all worthwhile, CFOs will wish to ensure that their insights deliver on their promise by materialising into real benefits for their business.
The final piece of strategic learning which CFOs should therefore undertake is around directing the implementation of their plans. Once more this will require high levels of collaboration with other departments. In this instance, it is important to note that whatever department is involved, they are the ones who will be the expert in the strategy.
Nevertheless, CFOs should not feel as if they have to relinquish complete control over their strategy. In fact, as a strategy is implemented, it becomes even more important that CFOs remain completely involved with their vision. This is for a variety of reasons:
- Data is never stagnant. As strategies rollout, the data informing them might change. Whilst others in an organisation might be responsible for delivering a strategy, finance teams will always be those who have the skillset to continually monitor and update their peers on real-time data insights.
- As emphasised previously, bridging the gap between financial activities and those in other departments takes a lot of practice and nous. It is therefore always best to be mindful that interpretation of strategy could go astray when financial operations hand it over to others. CFOs should therefore be mindful of this and continue to observe strategy implementation in case it needs redirecting.
- Despite being the brain-child of CFOs and signed off by them, strategies are created with strict measures in place, including a budget. For those within businesses which a strategy is set to benefit, they might become more focussed on what they are set to achieve, and less concerned by how much money it requires. CFOs should therefore always be on hand to manage their strategies!
The above is easier said than done. Whilst financial leaders might be used to managing their operations, they typically aren’t accustomed to overseeing others. Also, whoever they are collaborating are unlikely to be used to having such a strong external influence working with them. As a result, CFOs must be mindful of how they seek to interact during the implementation of strategy. Each scenario will be different due to the task at hand and the personal involved; however, some involvement is always better than none.
A continual learning curve
Graduating from a CFO to a strategic CFO is an extraordinary leap; however, it is only the beginning. Moving beyond finance into the realms of business strategy to become a centre point between company departments exposes financial professionals to a variety of factors.
The most important lesson for any CFO therefore is that once they have become a strategic leader, their learning will never stop. Ultimately, whilst numbers might move within certain rules, when they get transformed into strategy their management takes on a completely different form. For any CFO improving their strategy skills, we hope that you enjoy the journey.
In the next installation of the CFO Chapters, we will be looking at Remote Work and its continuation long after the pandemic. With this "new" way of working not being so new now, it is a consideration of an every increasing amount of CFOs. You can find out more about this chapter plus the others which will feature in 2023 by clicking here.