CFOs across companies of all sizes, industries, and maturity levels continue to stretch beyond traditional finance roles. Furthermore, the changes that have taken place in the workplace over the past decade — from advances in technology to an increasingly mobile workforce to prioritizing work/life balance and company culture — have challenged CFOs as well.
Where can finance chiefs look for inspiration on how to be better at their jobs in these trying times? Here’s a surprising thought: Even those running finance at big, established companies can draw some lessons from the way CFOs at start-up companies work.
Start-up CFOs naturally work across silos (the C-suite, HR, product teams, marketing etc.), wearing many hats to create processes and procedures that will quickly result in measurable success.
I’ve seen this issue from both sides, as a mergers and acquisitions executive for Fortune 500 companies and now as the CFO of a quickly growing and ever-changing technology start-up based in Dayton, Ohio. I’ve seen firsthand how the nimble and entrepreneurial thinking required at a start-up can greatly benefit any finance executive.
Here are five ways that the start-up mentality can benefit CFOs:
At a start-up, change happen quickly, and often there is no established business model to fall back on. This type of ambiguity is challenging and disruptive to the traditional role of the CFO.
However, being able to quickly assess a situation and make a fast change when things aren’t working is invaluable. For example, at Krush Technologies we use a cycle of “Plan, Do, Measure, Act” to help guide decision-making in our programmatic monetization group.
We decide what monetization adjustment to make and what we think the outcome will be based on our best analysis; we make the adjustment; we measure the impact of the adjustment; and we act to either leave the adjustment in place or to remove it depending on whether we achieved the desired outcome.
We typically run this cycle two or more times a week, providing maximum speed and flexibility in decision making.
Successful CFOs must embrace and enable change that will lead to business success and growth — even when it challenges the status quo. In other words, be more flexible or be left behind.
Start-up founders often conceive of their business by first thinking of the end result. The process that will get them to their desired goal is, comparatively speaking, an afterthought. For example, Uber started out of a desire to crack the cab problem in San Francisco by having a car simply show up at the exact time/location where it’s needed.
CFOs are often married to process, but the fast pace of modern business means they need to consider the bigger picture first — forecasting desired outcomes and making recommendations on how to get to ROI quickly.
They need to be unafraid of speaking up and shedding procedures that are weighing down their business, while actively optimizing toward creating a results-driven culture.
CFOs are notoriously risk-averse, which is a stark contrast to the stereotypical start-up mentality. A CFO’s mind is often in the data and financials, leading to conclusions based on the safest path to the most predictable outcome.
However, there’s a happy medium here — and it’s pushing CFOs into the role of change agent — based on taking measured, calculated risks using expert assessment of any given situation.
A start-up company is extremely risky by nature. After all, we are trying to build new products with new business models to address unproven market demands. We know that not every project that is green-lighted at Krush will be successful. But the success or failure of a single project does not determine long-term success.
We tend to view projects as a portfolio of activity. Some projects will fail, some will result in ho-hum performance, and some will really move the needle. As long as we have more good outcomes than bad over time within the constraints of our resources, value will be created.
CFOs should use their analytical talent to predict needle-moving outcomes and push toward change instead of away from it. The only real failure is missed opportunities.
Successful start-ups are generally home to some very passionate people who have strong opinions about various things. Sometimes these positions approach a fanatical level.
Start-up CFOs need to be capable of brokering compromises between entrenched stakeholders that move the company toward its strategic objectives. This ability to understand both sides and identify processes and solutions for all parties based on established business goals is an important skill set for CFOs.
To be most effective at diplomacy, CFOs must build strong personal relationships with key organizational stakeholders, the foundation of which is trust and loyalty.
Big data has been a game changer for enterprises, allowing executives to make informed, intelligent decisions and better analyze risk. Start-ups have been early adopters, relying on big data for business intelligence on everything from audience segments to sales strategy to market adoption. CFOs should be company champions for big-data projects and work toward creating a corporate culture that harnesses the value of data of all types.
A great start-up is the perfect mix of people and product — a talented team working productively toward a goal that will deliver big impact and results.
In today’s fast-changing global marketplace, CFOs, and other managers should develop their styles from both the large-company and start-up models: process but with purpose; risk minimization but with smart risk-taking; set goals but flexibility in approach; and deep belief in ideas but with pragmatic diplomacy.
By blending the best from both worlds, CFOs will be effective, no matter what environment they find themselves in.
Brian Faust is the CFO of Krush Technologies, the mobile technology startup behind ooVoo (video chat and instant messaging service) and Moveo (immersive virtual reality simulator). The company builds digital products to narrow the gap between humans and machines.