CFOs are broadening their roles, taking greater leadership in strategic decision-making, catalysing change throughout their organisations and working to become more of a business partner. Yet in many organisations the CFO is often viewed as a 'Dr. No,' whose role is to block new projects, investments and growth opportunities in the name of cost-cutting and preserving the bottom line.
Ajit Kambil, Ph.D. and global research director for Deloitte's CFO Program, draws on his experience designing and leading the Deloitte CFO Transition Lab" (1) to discuss how incoming and established CFOs alike can overcome being perceived as naysayers and instead be viewed as value creators.
Q: What is keeping CFOs from creating value?
I think the toughest role for most CFOs is being a catalyst of change in the organisation. Most CFOs don't have an organisational behaviour or organisational design background. Yet, when they become CFOs, suddenly they are charged with working through the crucial "soft stuff" around relationships and relationship-building with other leaders, especially the CEO.
CFOs have the authority to do a lot of things, but they may not be permissioned to drive change, or to drive change in areas they want to or feel they need to focus on. So they have to determine whether and how much permission they have to drive change. They also have to learn how to effectively characterise the change issues they find and devise a communication strategy to drive resolutions to those issues. That can be a challenge.
Q: How can CFOs shift the perception of finance as a roadblock to a catalyst for value creation?
I think CFOs can do a lot to alter that perception by focusing their time and conversations about how to create value for the organisation. CFOs are expected to protect the bottom line, and they've done a lot of important and necessary cost-cutting over the last few years, but they don't have to be viewed just as a cost-cutter and a "Dr. No." These days, CFOs are also expected to be catalysts for change in a positive and value-creating way. With the opportunities afforded by reducing cost-cutting, it makes sense to shift the focus from savings and value preservation efforts into actions that add value and promote value creation.
Q: How can CFOs balance their role as steward and the accompanying fiduciary responsibilities with their role as strategist focused on value creation?
It is a delicate line in that CFOs do perform the important and necessary role of keeping a sharp eye on costs and value. But it's important for CFOs and for the success of their organisation that they don't play the role of "Dr. No," at the expense of sometimes being "Mr. Yes," in positive, value-creating ways. Equally, of course, just saying "yes" to every single funding request is not prudent, but understanding which projects could add value—and why—and what finance can do to support them is critical, especially in this slow-growth environment.
When CFOs take a leadership role in activities that create value, it helps them relate better to everybody and to the businesses. And CFOs should not just say "yes" to every; they should also have strategies that enable them to say "yes." I think it is important for a CFO to ask, ''what can I do to bring cash or value to my organisation beyond cost-cutting?" And many of them are acutely aware of how important it is that finance add value to the organisation; the CFOs who participate in our labs frequently name it as a top priority.
Continue reading the full interview with Ajit here: http://deloitte.wsj.com/cfo/2013/02/12/lessons-from-the-lab-it-takes-more-than-dr-no-to-create-value/
(1) Deloitte CFO Transition Lab" - a powerful one day experience that helps CFOs think through their priorities, talent, and relationships to develop an action plan in their first 180 days.
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