What the best CFOs actually do
The role of the Chief Financial Officer has changed more in the past decade than in the previous forty years. The executives navigating this shift best share three uncommon traits.
The historical version of the CFO role was, at its core, a reporting function. The CFO was the person who counted the money, produced the numbers, and presented them to the board. They were the “financial conscience” of the business – a useful restraint on the optimism of the CEO and the expansionism of the operating teams. That version of the role still exists, in some organisations. But in the highest-performing companies we follow, it has been substantially replaced by something more complex and, frankly, more interesting.
The shift
The change began with data. As organisations acquired the ability to measure more things more precisely, the volume of information flowing through finance functions increased dramatically. The CFO who could only read historical financial statements became the CFO who could model forward scenarios, stress test assumptions, and quantify the financial implications of strategic choices before they were made rather than after.
This shift from retrospective to prospective thinking changed the nature of the CFO’s relationship with the rest of the executive team. Instead of being called in to explain what had happened, the best CFOs were being asked to help decide what should happen. The role became, in effect, the analytical function of the broader leadership team.
The most expensive thing a business can do is not have options. Having capital you don’t need right now is not a failure of efficiency. It is the price of flexibility – and flexibility is what keeps you in the game when things change.”
– CFO, global professional services firm
Trait one: they translate between languages
Every function in a business has its own vocabulary. Sales thinks in pipeline and conversion. Marketing thinks in reach and engagement. Operations thinks in throughput and efficiency. Finance thinks in margin, return on capital, and cash.
The outstanding CFO is the one who speaks all of these languages and can translate between them – not in the direction of reducing everything to financial terms, but in the direction of helping each function understand the financial implications of what they are proposing and helping the finance function understand the operational reality that underlies the numbers.
Trait two: they manage decision velocity
These executives spend significant energy thinking about how quickly decisions are made in their organisations. A capital allocation that takes six months to approve is, in most cases, a more expensive allocation than one that takes six weeks – not because the money costs more, but because the opportunity it was meant to fund has either passed or been pursued by a competitor.
The best CFOs have diagnosed where their organisations make decisions slowly and have worked to reduce that friction – not by lowering the approval bar, but by improving the quality of information available at the point of decision, so that the right answer becomes clearer faster.
Trait three: they protect optionality
Outstanding CFOs think constantly about preserving the organisation’s ability to respond to future events – including events that cannot currently be anticipated. This means maintaining balance sheet capacity that is not strictly necessary by current projections. It means avoiding contractual commitments that would constrain strategic flexibility. It means building the financial habits and reporting systems that would allow rapid resource reallocation decisions if circumstances required it.
The CFOs defining the role for the next decade are not, primarily, financial operators. They are strategic partners who happen to have the most rigorous analytical tools in the organisation. That distinction matters enormously in the environment most businesses are now operating in.
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