The evolution of the CFO role is never more apparent than when you're surrounded by hundreds of them and they can offer slightly different takes on emerging challenges. Two of those people with high visibility in this emergence are Andrew Hoag, CEO of Teampay, and Marshall Cooper, CEO of the Chief Executive Group.
CFO spoke with both during the CFO Leadership Conference in May, and this article represents part two of a wide-ranging conversation.
You can find part one of this interview here.
- Notable previous companies:
- President, Ferocia
- Creator, Founder's Nest
- Founder, CEO, Urbantag
- Founder/CTO, Zwaggle
CEO, Chief Executive Group
- Notable previous companies:
- Partner, Greenhaven Partners
- Board member, AIPAC
- Board member, Pyramid Research
- President, Kennedy Information
This interview has been edited for length and clarity.
ANDY BURT: Why do you think CFOs need connective experiences such as the CFO Leadership Council and the Leadership Conference?
ANDREW HOAG: Talking about it from the customer side, I think it's great to bring people together, and I'm a big believer in peer networking and leadership, and also just mentoring.
I've had amazing conversations on the floor [with] people that are not quite CFOs, but they want to get into that role, and [the conference] gives them kind of a peek behind the curtain. I also think it's really important to get people together to talk about best practices and share some of their learnings. And also, collectively define the shape and vision for the future, for the role.
MARSHALL COOPER: Like Andrew, I believe peer-to-peer learning is one of the most effective ways executives learn.
CFO Leadership Council has a wonderful community with 20 chapters around the country. They meet frequently, but [the conference] is where they get together nationally, by far the biggest event we do.
I believe peer-to-peer learning is one of the most effective ways executives learn. - Marshall Cooper, Chief Executive Group
Things are moving so fast. It's very hard to keep up with things. So having solution providers in one place, it's easy to see what the latest and greatest is.
CFOs are drawn to localized meetups, but sometimes it's difficult to bring them together into this kind of larger experience. Is it just a function of available time?
COOPER: In our experience serving top-level executives — it's always time, there is just always a shortage of time. But things that are practical and really help them work with practical applications of real-world experience — not theory, this is not academics they are applying — this is [the benefit] of learning from their peers that have real-world experience, adult scars, making mistakes and can really learn through it.
So the CFO and the CEO are probably the two positions in any organization responsible for looking outside and bringing outside ideas back to the organization. I think there's a natural tendency to try to focus on the inside team, the internal team, and the organization, but it's critical that the CEO and CFO are constantly looking outside, bringing in best practices, new technology, better processes, systems, people, etc.
What are some of those outside ideas this conference can offer to CFOs?
HOAG: After my talk, a number of people came up to me and they were – “surprised” maybe is too dramatic of a word — but really pleased we were talking about broadening the role of the CFO. I think historically, there's fairly a narrow box around some of these roles. And as Marshall was saying, in today's environment when things are changing so quickly, the lines in that box are very blurry.
When people come here, they're looking for, “How can I think about this differently? What can I do to get outside of kind of my current experience, going back to this other point on the national side?”
And I think a lot of people here really enjoy thinking about the role of people and talent beyond just the numbers. That kind of expansion of the role along with the strategic side, I think, has been very beneficial for people.
[CFOs] are looking for, “How can I think about this differently? What can I do to get outside of kind of my current experience, going back to this other point on the national side?” — Andrew Hoag, Teampay
COOPER: I would add that the complexity is accelerating and there are so many issues that people are grappling with. People are at all sorts of different stages of accomplishment on different challenges.
To take digitization, for example, there are startups that were more digital, and it's native, and they've never had a second look back. But there are also large enterprises that are sort of early-stage and stuck with paper. In a place like this, you'll look at peers that have gone through the journey that you're thinking about, and are all along the [journey] spectrum.
Even if you're not ready for some of those ideas and solutions down the road, often you find in two, or three years where you could go to a different size or scale, you think, “Oh, wow, now I see why that's relevant.” Now it's important to me.
You mentioned the blurring of the lines between the traditional CFO and future expectations. Could you provide some examples of how this is happening?
HOAG: I talked to a CFO from a fairly large nonprofit yesterday. He had taken over human resources (HR) and that was... I mean, he just came to me and said, “you're speaking to my experience.” His HR leader left so he was acting.
And I think CFOs are being viewed more ... I really look at my finance team and my CFO as a strategic partner [with] me running the business.
I'm a very product-centric, market-centric CEO. Having a CFO that can tell the story of the business through numbers … there's a narrative part of that that I think is really important.
I really look at my finance team and my CFO as a strategic partner [with] me running the business. — Andrew Hoag, Teampay
It's not just reporting the numbers to the board, or the street, or people like that. But it's actually telling the story of the business, both to external stakeholders, and even internal stakeholders. I think that requires an additional leveling up of some of the soft skills that haven't traditionally been in that role. And as we talk about the strategic part of that role, I think it's a combination of that EQ, those soft skills, the storytelling.
But, being able to back it up with data and numbers? That is something that I'm actually not that great at. And that's what I want in my CFO partner.
COOPER: I think Andrew hit it on the head. We do a lot of polling of board members and CEOs and unequivocally they want their CFOs to be strategic. They're being asked to do much more than ever before.
The topic of ESG, for example, nobody knew where to put this in an organization. But more often than not, it falls to the CFO to start to track this ... and evolve the metrics. And this is an area where it's very murky. Nobody really has clear guidance. It's unfamiliar to everybody, but it frequently falls to the CFO to lead in that area.
HOAG: I think the CFO is becoming in some ways a bit of a catchall for things that don't know where [they should] fit. ESG is a great example. It's got something to do with the numbers and how we operate a business. So the CFO should go figure it out, right?
And one of the finance leaders I spoke to said it to me really well: “I like working in finance because it's a pathway for me to see across the entire business."
You mentioned the phrase, the CFO is a storyteller. How do you equip the CFO and how should the CFO be thinking about the bigger story beyond straight financials?
HOAG: I think a lot of it comes back to the classic kind of narrative storytelling. And this is something I work with my team on and I think is really important. It means the beginning, a middle, and an end. You have a hero, a conflict, right?
Let's talk about the arc and let's talk about the journey where we are and how these data points along that line are supportive of that arc. And I think that's a really important skill for a CFO to have, which is, have that all be coherent, here's where we're going, and here are the milestones along the way. And that's a pretty classic narrative skill set, but understanding the bigger picture I think is super important.
COOPER: There are so many sophisticated CFOs, large companies who do this, who practice narrative storytelling. It's inevitable that most of them in fact will become CEOs as well. So I think just watching and learning from their peers that are doing it currently is the best way to learn.
As these leadership lines get blurred and the role expands, at what point is the responsibility too broad? How do you know when you're starting to run up against that wall of just basic function of the role itself?
HOAG: Yeah, I think that's a great question. Because it's the Peter Principle in modern day, right? You can ascend to the level of your incompetence. People continue to take things on until eventually, they can't, and then they've kind of hit their ceiling.
I'm always watching for two things. One is, is there evidence that they're able to take more things on? Where are they at in terms of that capability? Two, how does this align with their inherent skillset and motivation?
There are different personas and stereotypes, and, obviously, there's some Venn diagram in the middle where those things merge, but I actually really think carefully about this [overlap]. And this is why management is an art and not a science.
I think carefully about the person that's in that role and where are their strengths and weaknesses. And I've seen this throughout my career where some people, we've given them too much. And you you look for those signals of "Hey, how is this performing?" Are they stressed because they're not really able to succeed in that role? Do they have the right support?
But I do think there's a bit of a puzzle fit there that has to happen. And I think good managers recognize how to get the best out of their people and not overload them with things that they aren't so good at or won't succeed at.
COOPER: I think individual motivation is critical, obviously. I think another way to attack this is through organizational design.
Ram Charan wrote an article in Harvard Business Review about the [evolving] role of the chief HR officer. They had gone through a similar evolution. He said there's a body of work that needs to get done. There's paperwork, there are filings, there are some employment issues, there are all sorts of things. But then there's this strategic component. He argued, to really design [the department] that reports to the top HR person, one part is a straight piece, and the other is strategic.
I see a very similar analogy with the CFO. By designing part of their reporting structure to be financial, and then the other piece tackles some of these other emerging issues, I think that's a practical way to approach this.
HOAG: We call that operational finance, or "FinOps," right? It's definitely one of those vectors of that segregation between the strategic and tactical.
COOPER: I'd also add that I don't think there's a limit, an upper limit. I think the CFO is uniquely equipped to measure and report and ... pull data to tell stories. The demand for that skill set is just increasing and will continue to increase in a world of exploding data. Somebody in the organization has to do this, and it's going to become a bigger and bigger job.
I think that the CFO is best equipped to do this. It behooves every CFO to adapt and to take this on. The organization needs to do this. So, the organization will do it, everything reports to the CEO. So if the CFO doesn't do it, the CEO's going to find somebody else to do it. But like I said, I think that it does, it should, best live with the CFO.
HOAG: I think about the analogy of a band, right? The CFO started as the drummer, they're kind of in the back behind the drum kit. And then they moved up to the bass player, and now they're rhythm guitarist.
That progression is just speaking to them becoming more in the forefront of the business, including the external stakeholders, and really holding almost a peer relationship with the CEO.
Somewhere there is the joke in there about the drummer wanting to write some songs for the band.
HOAG: One hundred percent, yes.
COOPER: And a big drum solo.
This gathering brings out a lot of challenges and opportunities. What would you like CFOs to take away in terms of hope?
COOPER: Even though the complexity is increasing and the responsibilities are increasing, there's also sort of an explosion of solutions and community. People coming together, networking.
I think that CFOs have been sort of in their own little caves. But it's critical to see what's going on in the outside world. There's a ton of innovation happening and organizations are succeeding. They are actually accomplishing all these goals. They are serving multiple constituencies. They are measuring these new things that should be measured.
It's an exciting time for people that are willing to adapt and be nimble, but it's definitely a different skill set than that of the old number crunchers that were behind the scenes.
HOAG: I think inherently humans think change is scary. When you bring people together in an environment like this, you're actually able to see people in various stages, or on the other side of that change. That visibility of, "oh, this is possible," is really important.
And I actually think [what we're doing is] reframing of a lot of their existing skill set. Most CFOs know how to persuade. They know how to use the numbers. They know how to identify stories and patterns and the numbers. The communication skillset that builds on top of that.
But I think in most cases, inherently, CFOs have the ability to do this. And it's a slight reframing of some of the things they're already doing into this new world. And that hopefully can make it a little less scary.
Well said, thanks to you, both.