How the CFO Can Become the CEO’s Collaborator in Growth

Finance chiefs should spend less time on accounting and more time helping to build the leadership infrastructure that will allow the firm to scale.
Robert SherJuly 16, 2013

Most CEOs who run fast-expanding midsize companies can benefit enormously from a partner-in-growth — a member of the top management team who can help scale the firm. CEOs who are innovative but not process-focused often make a chief administrator their collaborator. CEOs who are focused on technology rather than sales often partner with their head of sales. But not nearly enough CEOs enlist the CFO as their chief ally in the quest for growth. As a result, many CFOs lose their opportunity to provide support, though they have the capacity to become excellent collaborators in growth.

One of my clients — Atlanta-based Cellairis, a franchisor of wireless accessories with system-wide revenues of $350 million — has that exact role in mind for its new CFO, who won’t focus on accounting. Instead, his top two priorities will be to oversee international expansion plans and to create a forecasting model that can support and guide growth. We selected him based on his broad experience in finance, operations and general management. This firm does not have any problems in accounting, because it has had a veteran controller in place for years. Its new CFO will go on the offense, shepherding expansion into untouched sectors while building the processes and best practices required to set the company on the path to a billion dollars in system-wide revenues.

Most people (CFOs included) think the CEO is responsible for scaling the firm from scrappy startup to disciplined midsize or large firm. As a CEO coach I guide chief executives who are determined to increase their business acumen. But many CEOs are not interested in building management processes or skills, choosing instead to focus on their existing strengths. CFOs and other C-suite executives may try to guide their CEOs toward building leadership infrastructure, encompassing new processes — regular management meetings, business planning, market analysis, stronger leadership teams and more. Often they walk away frustrated since the CEO won’t (or can’t) do what the business so clearly needs.

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Therefore it is not surprising to find such a wide leadership infrastructure gap in growth companies. Early stage startups need few processes and big companies already have them in place. Growth companies that develop far enough to need a full time CFO are at the precise point where scaling becomes possible. The CFO’s duty is to help build the leadership infrastructure that will allow the firm to scale.

Before CFOs can step up to this strategic calling, they must spend less time on accounting and finance and concentrate on what they can do to significantly grow the company. Possible roles include working as a partner and a coach or taking on a proactive external role, connecting with customers, vendors or partners.

If you’re a CFO who wants to help scale the company, what should you do?

First, get non-strategic work off your desk. Make sure you have strong accounting and administrative people who don’t need to turn to you on a daily basis. Better still, outsource as much as you can.

Take Ken Christiansen, CFO/COO of PAX Water Technologies. This Richmond, CA based firm provides energy-efficient mixing systems for potable water applications. I first met Ken in August of 2011 at a strategy session (not a finance session) I was leading. Six months after joining PAX, the newly spun-out firm had fewer than a dozen employees. He had already outsourced HR to TriNet, a professional employment organization, so he had no HR distractions. He had also outsourced the entire accounting department to a firm in Tennessee for the price of one part-time employee.

Second, analyze what departments are missing plan throughout the company. Most CFOs I know have an affinity for reality. Don’t waste that gift on bank covenants, the cap table, or salary surveys. Use those skills to understand your company’s obstacles to growth, such as why R&D keeps missing target, why quality is low, or why the sales team underperforms.

At PAX, Ken began to investigate why the company’s largest channel partner had missed several months of sales targets. He formed the hypothesis that the partner was only managing to meet contract minimums, not the targets PAX had established. In a face-to-face meeting, the partner confirmed this tactic. Today, PAX and its partner have worked together to build joint marketing plans with specific responsibilities to maximize revenues. Ken takes an active role in this relationship, along with the CEO and the sales management team. By 2013, PAX’s sales had doubled, and its profitability was stronger than ever.

Third, CFOs should clarify the company’s vision and then determine what they must put in place to create growth in the years beyond. It is not enough to achieve the vision for next year. The growth-oriented firm must also retain enough money, ideas and energy at year-end to grow for the following year.

Ultimately, CFOs need to get out of the finance department and use their skills to become architects of growth, laying the foundations for scaling the firm to the next level.

Robert Sher is the founding principal of CEO to CEO, a consulting firm of former chief executives who improve the skills of mid-market company CEOs and C-level executives who are navigating major shifts in their business or marketplace. 

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