Being a chief financial officer (CFO) pertains not just to a career progression but the initiation of a whole new game, demanding a unique set of mindsets and practices to ensure not just immediate success but sustained value creation.
It is imperative that finance leaders must understand their way towards success, not only for their role, but for the organisation as a whole.
In mapping the road to success, CFOs must adhere to the following practices:
- Scope the Challenge: As a CFO, the task is to construct an independent, fact-based perspective on the organisation’s resources, support structures, and activities that contribute to value creation. Aligning all C-suite colleagues, business unit leaders, and the board of directors is paramount but not without its challenges, as leaders’ judgments can be clouded by incomplete information and biases.
- Adopt a Bias for Action: Stagnation is the antithesis of competitive advantage. Exceptional CFOs are perpetual architects of the future, committed to identifying avenues for creating more value in the ever-evolving competitive landscape. This commitment extends to embracing innovation and allocating resources for the digital transformation of all facets of the company.
- Bold Bets and Portfolio Innovation: An effective CFO ensures that every aspect of the business is open for negotiation, adopting a “grow or go” mentality. This may involve making bold bets that could reshape core business functions. The best CFOs comprehend the necessity of taking calculated risks and communicate that avoiding risks altogether is a losing proposition.
- Teach and Translate: Effective communication is at the heart of the CFO’s role. The best CFOs engage in candid dialogues with the CEO, the board, and the top team, providing a clear understanding of the organisation’s economics and the consequences of various trade-offs. Communicating without financial jargon is imperative, striking a delicate balance between clarity and avoiding oversimplification.
- Proactive Risk Management: Risks are inherent in business, and the effective CFO takes a proactive stance in helping the organisation respond to crises and fortify long-term resilience. Drawing from lessons learned during the 2008 financial crisis, strategic interventions that balance performance and position for recovery are key.
- Strategic Thinking on ESG: Environmental, social, and governance (ESG) considerations are woven into the fabric of the organisation’s unique business model. Beyond risk mitigation, forward-thinking CFOs view ESG as a growth catalyst.
- Collaborative Talent Management: Collaboration is the hallmark of effective CFOs who work closely with colleagues, particularly the CEO and Chief Human Resources Officer (CHRO), to strategically direct capital toward attracting, educating, and retaining top-tier talent — a critical factor in sustaining organisational success.
Adopting these mindsets and practices lays the foundation for a strategic and impactful tenure, steering the organisation toward sustained growth and value creation.
