It's that time of the year again
They call it the fall, but most things rise
Energy is high, Motivation roar
Optimism abound, Sparkles shine
Where is Dr. No? We need the most
Coz it's not any fall, it's fall after the winter!
All companies are unique, and that's never changing. But currently, more companies are in a similar tussle than ever. Years of macro tailwinds have lifted most boats, and no tide looked lethal enough. Yet here we are, with political tensions, rising inflation,
slowing demand, compressed valuations, dried-up funding, continuing workforce reduction and an uncertain future.
The fact about the future is that it's always uncertain. No one can predict how it would exactly manifest itself. If we are in a positive environment, it looks better, and if in a negative one, worse than the present. It is primarily a result of our mindset. But as the sage advice goes, "It's never as good as it seems, and it's never as bad as it seems." And such pragmatism, which one may call "emotional dissociation," is something we can find in most finance professionals.
The last phase of the year offers an opportunity to think of things afresh. Almost hit Reset and start building the company again. And this is where the role of the CFO (or Head of Finance) becomes more critical than ever. We explore some key areas for CFOs to command over 100 days - whether it's your first 100 days at a company or the next 100 days, they should be of help.
This article is a multi-part series where today we discuss Leadership.
The relationship between CEO and CFO is arguably the most critical relationship within any company. Trust, alignment, openness, and respect are the core pillars of this relationship. CFOs should analyze the relationships with their CEOs and devise strategies to strengthen these pillars.
No human can run the entire company in today's complex environment. Everyone has their strengths and weaknesses. It's on the CFO to understand both for herself and the CEO. Once identified, both CEO and CFO should align on how best they can collaborate on various areas. See below for a 2x2 matrix to unpack and further clarify this.
It is a unique time for CFOs to enhance their influence across the organization truly. All leaders want to make more data-driven decisions and make the company more efficient. CFOs have the numbers and analysis and should be the mirror to the rest of the leadership to enable such decision-making.
Below is a framework that could help with engagement with functional leaders, but the pre-requisite to this is a mindset that Every Function is My Business. CFOs are no more just bean-counters and should be an integral part of decision-making, if not drive it.
The three components are individually powerful and create a robust flywheel that increases collaboration, goal orientation, and accountability. The CFO must devise personalized playbooks to engage with different leaders on these three components based on their personalities, style of working, strengths, and weaknesses. For longer-term alignment, you can't force your way into it; the other leaders must see value in your work and advice. And hence building this collaborative environment requires tactful thinking and execution. If you are hard-pressed to devise a specific plan, start with periodic 1-on-1 meetings and ask, "How can I help?"
As with all other functions, Finance needs to scale appropriately to support the next stage of evolution. Most companies would treat Finance as a cost center, but it's the CFO's task to understand the business imperative and act accordingly.
Ask the following questions around each sub-segment of Finance - Accounts Receivable / Accounts Payables / Taxation / Accounting / Audit / Compliance / Procurement, etc. to crystalize action items for the next 12 months:
1. What are the pain- / choke-points in this area?
2. Are they going to increase or become unbearable over this period?
3. If not solved, does it create issues over the next 12 months? And, if solved, does it help further harness our growth / efficiency over this period?
4. How can I make it better? - People / Systems / Processes
5. Is the investment warranted over the next 12 months? Or could it be better deployed in an alternative / more high-pressing, high-impact area?
Most CFOs delay scaling their organization from both people and systems standpoint, and it quickly becomes a choke-point for the overall organizational machinery. Therefore, CFOs must introspect, research, and discuss this piece deeply and have a clear strategy for CY2023.
Communication is the core of effective leadership. In the absence of Communication, all other virtues of leadership would be futile. The present age is an age of transparency, openness, and collaboration, both within the company and with outside stakeholders.
Communication from CFOs must exhibit strength of data, clarity of purpose, and higher frequency, to ensure the recipients on the other side are empowered to perform their responsibilities to the best of their abilities.In addition, given that the focus is much more on profitable growth now, having some of the core business performance messaging coming from the CFO provides a unique sense of comfort to various stakeholders.
CFOs should assess their past communication patterns and, based on the needs of the next 12 months, realign the frequency, tenure, and subject of all regular communication channels with the CEO, Functional Leads, and her team.
We believe it's the best time for a CFO to showcase their impact on the business. They have the ultimate fiscal responsibility of ensuring a thriving organization. A little strategy, thoughtful tactical executive, and an optimistic mindset would go a long way in solidifying their leadership in the year 2023.
We are happy to be a brainstorming partner and discuss ways to unlock your / Finance function's full potential. So do not hesitate to reach out. We care for your success!
***