How CFOs can break away from their tactical roots to become the strategic business partners CEOs need
While much has been said about the need for CFOs to become more strategic and add more value to their organizations, there is often little practical advice on the steps to take to become that strategic partner. According to a recent KPMG study, CEOs view their CFOs as critical to the business—and becoming even more so over the next three years—yet roughly one-third of these CEOs don’t feel their CFOs are up for the challenge.
What can be done to put aspiring and current CFOs on the path to delivering what their CEOs, and their boards, need? How can those CFOs perhaps ascend to the role of CEO themselves?
Last week at the CFO Symposium, hosted by Adaptive Insights and held during Adaptive Live 2016, four experts shared their insights and lessons learned on their own paths to leadership. Our panel included Murray Demo, CFO of Atlassian; Jim Johnson, CFO of Adaptive Insights; Godfrey Sullivan, chairman of Splunk; and Morris Treadway, global head of financial management and global lead for EPM Center of Excellence, KPMG.
Stop Trying to Be Perfect
When asked the key to success in the CFO role, Sullivan responded that CFOs have to be great coaches who achieve departmental priorities and partner with the CEO. But to do that he said, “You have to be self-aware of your strengths and vulnerabilities. … You have to check your ego at the door and be willing to say ‘I don’t know.’” In doing so, he says CFOs can have the ultimate conversation with their CEOs.
Demo expressed a similar sentiment, relaying the importance of balance in board presentations, and saying how his perspective on these presentations has changed now that he sits on the board side. As a CFO he recalls having his presentation “100% down” and feeling confident he could explain things. Today, he thinks it’s better for communication to be less buttoned-up. “[CFOs] must be more balanced on what’s going on in the business.”
“I don’t want a presentation of perfection,” echoed Sullivan. In fact, Sullivan doesn’t want a presentation at all during a board meeting. “It can feel like the beginning of a hostage crisis,” he quipped. “You just don’t know how long it will last.”
He instead recommends that documents be circulated a full week in advance so the board meeting can be used as a forum for discussion. He believes this creates an environment of rich dialogue with much more trust and openness. Sullivan advises CFOs to “stop performing so hard and just have a conversation.”
Know Your Business, Know Your Product
“I can tell how good a CFO is by their flight log,” said Sullivan, advising CFOs to meet with customers and really understand their needs. He went so far as to suggest that a CFO aspiring to be a CEO should spend a year on the road with customers.
All expressed the need to collaborate and understand other functions of the business. Johnson emphasized the importance of going to work with sales and understanding their needs. The best place for a finance executive who has CFO aspirations? Controller for the sales organization, he recommends. “It’s important that CFOs get out of the finance comfort zone,” he said.
For CFOs aspiring to be CEOs, Sullivan believes success will depend on how many other line functions a CFO has overseen, believing strongly in career rotation—at all levels in your career. He also stressed the importance for the CFO to “know your product strategy.”
Don’t Drink the Kool-Aid, But Don’t Wound People Either
Johnson brought up the importance of being objective and asking obvious questions. “Don’t drink the Kool-Aid with the rest of the team,” he advised.
Still, while it’s important to question plans you don’t agree with, diplomacy reigns supreme. Treadway recommends, “Don’t beat [people up]. Encourage dialogue.” He also said CFOs must personalize their guidance, helping stakeholders understand that corporate performance isn’t just a finance issue. “Explain what’s in it for the business and why [following your guidance] is important to their role,” he said.
Going a step further, Sullivan advised CFOs to praise in public and criticize in private, explaining that even if you know the numbers are wrong, it’s important to take contentious issues off-line. “Don’t wound people in public,” he said.
This is just some of the wisdom shared during last week’s CFO Symposium. We will continue to post insights and takeaways from this event in the coming weeks. Thank you to our esteemed panelists and the more than 50 CFO attendees who helped make this an informative event.
Download the CFO Indicator Q1 2016 Report for more insights, survey results, and charts based on input from the 377 global CFOs in our latest survey.