Wharton's CFO Course Evolves with the Times

When the University of Pennsylvania's Wharton School wanted to design the first class specifically targeting the CFO role five years ago, it turned to its own executive-education students for ideas. The result was "The CFO: Becoming a Strategic Partner," now a twice-a-year staple on Wharton's open-enrollment schedule.

Little did Wharton know in early 2002 the changes in the CFO suite that lay ahead — changes that have been duly recognized by regular adjustments in the curriculum, according to John Percival, who has been at Wharton since 1971 and now serves as academic director and an adjunct professor of finance.

Stripped to its basics, the course has evolved into an intensive exploration of the finance chief in two key functions: communicating clearly the financial implications of alternatives being considered among all corporate leaders as they plan for the future or deal with emergencies, and identifying what Percival calls "the right kind of growth."

Everyone wants growth, but "it's one thing to see opportunities, and another to determine that it's the right opportunity for us," he says. "It has to be profitable growth, and must come with an understanding of what our competitive advantage would be."

And perhaps surprisingly to the Wharton educators who designed the course as the new century was beginning, it has had to include a careful examination of the division of time between this strategic finance role and the return — after Sarbox changed everything — to the accounting functions that CFOs had longed to pass down to controllers and other subordinates. All the while, the new strategic needs ballooned to include ramifications of lightning-fast globalization, shortening product life cycles, the rise of private equity, and a broader definition of risk management.

Indeed, the greatest gift for the 35 to 40 executives in each week-long "Becoming a Strategic Partner" may be more wisdom about how to adjust their work weeks to the fast pace of change in a post-Sarbanes-Oxley world, according to Percival.

"There aren't enough hours in the day, and perhaps the greatest wish of CFOs is that they could do better at allocating their time," he says. A recent survey by the Knowledge at Wharton organization, measuring how finance chiefs divide their work schedules, "validated what we, on a more ad hoc basis, are finding in the class."

The Students Teach
"In executive education we try to listen to our customers and find out what's going on. And we're looking for opportunities," says Percival, recalling the early signals emerging from Wharton's five-week-long Advanced Management program as the decades changed. "One thing that came up in those sessions was that companies were facing very important issues about the future, and there was a role for the people in the CFO seat to fill when they came to the table with the CEO."

And not just the CEO. "We had lots of conversations with senior marketing folks; there was a big problem between marketing and finance," says the professor. Marketers "were magnanimous, and realized that a lot of the problem came from their side. But they felt also that financial people weren't listening the way they could and should."

What began to develop was the need for a finance course focusing "not so much on technical things" but on what CFOs bring to the strategy table and how they present themselves. "My job as a CFO would not be to say no, but rather to make sure everybody knew what the financial implications were," he says. And among all the possible strategic themes, the most important was growth.

"That was the backdrop for the week," says Percival. "It was not to be a general management program, but it wouldn't be technical finance stuff, either. It was focusing on cooperating and communicating positively."

The new program, which today costs the company sending finance executives to Wharton's Philadelphia campus $9,200 per head, drew from some existing courses. "We picked some stuff from strategy programs we already had, and from courses like Negotiations," he says. "But you couldn’t get this in any other program as a package." Attendees are a mix of "CFOs and CFO wannabes, like controllers." They come from companies of all sizes.

From the beginning, scenario planning has been among the most popular elements of the course. "As a CFO there are some 'Yeah, but so what?' questions to deal with," Percival notes. A historical look at the railroads early in the century, for example, highlights the industry-changing threat from the automobile. "But so what? If I'm a railroad, should I get into manufacturing automobiles?" The very discussion led to choices like railroads serving to move cars from place to place, for example. "Somebody should have been talking about how we create value and how we earn our cost of capital from that."

Today's strategic issues, however, require more contemporary examples than other executive-education courses use. (Professors often like older cases because it takes years to see the consequences of various choices.) Cases now are as recent as 2005, although there's still a need to be able to discuss outcomes. "People say, Oh my God! That's what the company did? How did it work out?" says the professor. Without discussing specifics of the cases studied, Percival says they are disguised real situations — though sometimes not particularly well-disguised.

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