For others, it means taking a defensive position that might be thought of as antistrategic, although that in itself may constitute an alternative way to be strategic. "CFOs offer balance to the management team by bringing a more conservative, risk-averse approach to business strategy," according to one director of finance. That means "explaining the likely financial and risk implications of various scenarios — sometimes forcefully," according to one CFO of a small (under $1 million) company.
For others still, "strategic" entails a dual mission: setting the agenda in collaboration with the CEO, and then building the financial infrastructure to help realize whatever vision emerges. The most common definition offered by survey respondents equates "strategic" with "visionary," and describes a CFO who "actually has real input into the direction a company is headed; what it will be doing five years from now and how it will be done," says one survey respondent.
Ultimately, the role will be defined differently at every company, and by every CEO. But board members, recruiters, and consultants say there are some common themes among those CFOs who are truly strategic business partners and those who are not. How can you get into that first camp? Consider the following:
Strategic CFOs delegate. There is no shortage of finance-related activities to chase, what with the ambitious slate of projects at the Financial Accounting Standards Board (IFRS anyone?) and the increasing challenges of obtaining credit. For any hope of having the bandwidth to consider the big picture, CFOs must first hire or train others who are strong enough to handle their roles with a minimum of intervention.
"The single most differentiated attribute of performance leaders is that they spend significantly less time with finance," giving their staff members more decision-making power than average, says Levin Somaya, senior director with the Corporate Executive Board's finance practice. And while nearly everyone delegates things like accounting, compliance, and governance, this group also delegates some nontraditional areas, including strategic planning, resource allocation, and capital-structure management.
"While many CFOs are reticent to take their hands off of certain critical tasks, this finding reinforces how crucial it is that they make time to develop a senior team that in turn frees its time for companywide leadership tasks," says Somaya. The one activity they hold closely, though, is operational reviews, so they can stay closely connected to the business itself. (See "The Next Stage," CFO, March.)
Strategic CFOs start with the business, then move toward the numbers. It's not so much what you do, some say, it's the context you put it in. Some CFOs might look into improving working capital because it's simply part of the finance function, a box they should check, says Chris Click, principal with Booz & Co., who is currently working with a company on reformulating its CFO role to be broader. Strategic CFOs, though, will get to working capital from a different angle.
"If you're preparing monthly reports for the business units, walk down to the business leader and say, 'Hey, as I looked at your results, I was thinking maybe there's a way to drive down working capital to fund the build-out of the customer-service network in the Middle East,'" or some other desirable project, says Click. This is strategic in two ways: not only does the CFO get kudos for helping, but this approach may also motivate the business unit to work harder on an otherwise uninspiring task. And addressing the issue face-to-face, versus by phone or e-mail, also wins points.
It goes without saying that such CFOs have strong relationships with various people in the businesses. Eileen Kamerick, for instance, CFO at Tecta America and on the board of two public companies, says she regularly picks up the phone to check in with her company's business-unit leaders. One recent example: she polled them on how changes in revenue-recognition practices could affect their businesses. "I wanted to know if it would create more paperwork or less, and if there is a way we can structure it so that it's the least amount of trouble possible," says Kamerick.
In some cases, thinking business first, numbers second may actually mean offering less information. Chuck Eldridge, senior client partner at Korn/Ferry International, tells of a CEO who was asked to describe what he liked so much about a departing CFO. The CFO made a huge impact on the business, the CEO said, by taking away a 200-page data book that the previous CFO had given the CEO each month and replacing it with a much briefer description of the metrics, data, and insights that really mattered to the business.
Strategic CFOs push the boundaries — but recognize the limits of their role. The vast majority of CFOs — 88% of those studied by the Corporate Executive Board — think they have a good relationship with their boss. That should be a given. But that relationship doesn't necessarily parlay into power.
"If the CFO views him- or herself as a change agent but the board and CEO don't, it will be hard for that CFO to really play that role," says Click. To broaden their horizons, then, he advises CFOs to educate themselves about various areas of the business and take on incremental responsibilities, with an eye toward building up their experience base. One, for example, took an active role in a Booz & Co. project analyzing the client's global strategy, taking it as an opportunity to learn more about the operational side of the business, and "leveraged that into more responsibilities for himself," says Click.
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