Sometimes a CFO’s leadership style fits a new company perfectly. Pete Carlson, formerly finance chief of MiMedx, was one such example, stepping in to restore integrity after an accounting fraud at the biologics company.
But such situations may be uncommon. A new piece of CFO research from Accenture, the CFO Success Paradigm, found that many CFOs achieve limited success at their companies, often falling short of their self-set goals.
Why? For a CFO to be successful, make the right decisions, and executive on them, three variables must be aligned, said Accenture: the CFO’s leadership style, the company’s current strategic imperative, and the company’s culture.
When properly calibrated, these variables work together “like tumblers in a locking mechanism,” according to Jason Dess, senior managing director, global CFO and enterprise value services, at Accenture.
Dominant Types
The four CFO leadership styles Accenture identifies are not much different than other organizations’ attempts at putting CFOs into categorical buckets. Deloitte’s Four Faces of the CFO was one of the early attempts.
A CFO typically will have a dominant style and the characteristics of other styles that support their approach.
Jason Dess
Leader, global CFO and enterprise value services, Accenture
Accenture estimates that 32% of global CFOs are financial engineers; 32%, problem solvers; 13%, collaboration creators; and 23%, change agents.
The leadership styles are not “absolute,” cautions Dess. “A CFO typically will have a dominant style and the characteristics of other styles that support their approach,” he told CFO.
“It is hard for a CFO to change their leadership style completely, but [they] can certainly adapt over time as they learn and grow personally and professionally,” he said.
How a finance chief’s leadership style fits with the other two variables is what’s important. The four kinds of strategic imperative are:
- Continuous improvement
- Acceleration and growth
- Disruptive change
- Burning platform
The four kinds of company culture are:
- Consensus-driven
- Growth mindset
- “Big-bet” focused
- Top-down
An example of a bad fit would be putting a change agent — a CFO good at driving transformation and executing big ideas — into a consensus-driven culture where the strategic imperative is continuous improvement. Change agents fit better in companies with a top-down culture facing a big, disruptive change or a crisis of survival (“burning platform”).
Dess said CFOs’ chances of success increase when they flex and adapt their leadership style and decision-making approach to the organizational culture. But a CFO misaligned with the culture or strategic imperative can also surround themselves “with people who can bring the skills that they are not strong at — i.e., [to] fill in the blind spots,” he said.
Some people lack that degree of self-awareness. “From my perspective, some CFOs are very self-aware. Others might do things subconsciously and have some awareness but maybe not full awareness — that would be the bulk of the CFOs,” said Dess. “And there is a small percentage that are absolutely not aware.”
More Collaboration Creators
While traditionally most CFOs are either problem solvers or financial engineers, Dess thinks in a couple of years, as fewer CFOs come from accounting, more will be collaboration creators — celebrating diverse viewpoints, building partnerships, and “motivating their teams to go the distance.”
Collaboration creators “embrace change, view it as an opportunity, and are proactive in identifying where change is required — and whom they need to pull in (inspire, motivate, rally) to solve complex enterprise issues collectively,” Dess said. “This is a critical element to deal with disruptive change successfully.”
According to the Accenture research, which involved interviewing more than 150 global CFOs, half of whom were at companies with over $10 billion in revenue, collaboration creators are twice as likely to achieve their organizational objectives.
But they don’t fit every situation. As the chart indicates, they sometimes lack urgency and focus, which could be a disaster in a top-down culture, for example, in a financial crisis (burning platform) when the CFO must “prioritize ruthlessly” and “make decisions quickly and decisively.”
