cfo study findings: roadmap to becoming lean & strategic
DESCRIPTION
Multiple reports on CFOs have highlighted the need for CFOs to extend their management role from a basic accounting / reporting function to a strategic contributor to the business. While this is widely acknowledged as a deep underlying force shaping CFO careers, the roadmap to strategic influence is not clear altogether. Our qualitative study concentrated on the latter point: how to bridge the transition points for CFOs from technical expertise to strategic influence.TRANSCRIPT
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CFOs: Pathways to become lean & strategic… Seeing clearly ahead is now paramount
André Du Sault, MBA (LBS), MPA (Harvard)
DS&H CFO Study Report
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Study framework
INITIAL OBJECTIVES & KEY QUESTIONS1. In an environment of hyper competition, accelerated changes, how can CFOs build on
their technical expertise to play a greater strategic role?
2. What is the profile of the new CFO incarnation? What new capabilities CFOs need to develop or acquire? What is blocking them?
3. What are the new expectations of the key stakeholders?
METHODOLOGYWe have interviewed about 50 senior executives from a broad range of perspectives:CEOs, CFOs, HROs, IT specialists, bankers, headhunters, administrators, etc.
FOR WHOMCEOs, CFOs, VP Finance, Controllers, keen to build value added in the Finance function.
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CFO study findings (6)
1. Young CFO candidates are caught between two outlooks:. A narrow view of the job in smaller companies, with standard financial reports as the main output. A demanding role in larger companies, where CEOs increasingly require lean-minded & strategic CFOs
2. CFO candidates are usually not schooled to be CFOs, leading to a poor blend of technical and strategic skills
3. Key management and strategic skills are often integrated too late in the CFO career path to yield senior influence at the C-Level
4. The job of Controller or young CFO stands at a pivotal point: What is integrated at that level (style, learnings, skills, responsibilities) shapes the potential for the CFO position.
5. CFOs receive little or any coaching when handling high stake transactions that will make or break their reputation and credibility
6. The pathway from CFO to COO/CEO is misunderstood and misapplied
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FROM FINANCIAL ACCOUNTING TO CO-PILOT
There is increasing pressure on CFOs to perform under
tight budgets & meansan expanding scope of strategic responsibilitieschanging structures moulded by globalisationand the need to balance flexibility and efficiency.
. Yet the roadmap for improvement and a new skills set is often unclear for many CFOs.
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Controller Co-pilot
Bean counter
Lean
Standard
Functional Strategic
STRATEGIC PRESSURESLeading business transformationsLeading operational excellenceNetworked organisationManaging international venturesOutsourcing, off shoring
TECHNICAL PRESSURESNew accounting standardsNew business processesComplex Information technologyDesigning information architectureFacing budget limitations
Bankers
FROM FINANCIAL ACCOUNTING TO CO-PILOTIn many competitive industries, stakeholders require a lean & strategic CFO as co-pilot for the enterprise
Deal maker
Investors
BoardCEO
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Bankers
Investors
Board
CEO
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CFOprocessesplanningcontrols
infoIT
intelligent reportsbusiness acumenvalue driven
Head-hunters
transparency – integrity -controlsfinancing strategyCEO – CFO relationship
master of cash flowbusiness plan - strategyproper controls in place
master of cash flowfinance skillsbusiness communication
team buildingleadership & people skillstechnical & strategic skills
Employees clear policiesinformationsystems that work
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FROM FINANCIAL ACCOUNTING TO COPILOTYoung CFOs start off with technical tools to address technological challenges, but soon face a wide range of expectations from stakeholders to deliver strategic value
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The roadmap from technical expertise to strategic CFO will include 3 stages :
1. standard challenges for good basic performance in reporting & budgeting
2. high stake initiatives that lead to senior roles and corporate influence
3. continuous learning of technical, managerial and strategic skills
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For instance, challenges for a good basic performance include:
organizing reporting with high automation developing custom tools for finance & cash flow controlling internal planning and strategic tools capturing in-depth understanding of industry and operations managing international operations from a distance
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High stake transactions shape reputation & credibility:
overseeing complex IT projects driving corporate operational excellence programs leading strategic planning implementing mergers and acquisitions negotiating international ventures
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Senior roles call for sharper people and strategic skills:
reading people presenting for impact translating vision into action leading large value creation projects designing structure & organisation winning investors’ trust
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Study participants indicated that poor career guidance may lead young CFOs & aspirants to make the following mistakes:
not reading challenges well ahead choosing titles ahead of better mentoring relying solely on technical skills for influence letting ego build up a trap for a downfall having no plan B in their pocket losing passion of learning losing track of family
Seeing clearly ahead shapes more productive careers
* include controllers, VP finance, young CFOs...
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BUILDING UP A ROADMAP FOR OUTSTANDING CFO SKILLS
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Financial statements
Intelligent reports
Master of cash flow
International expert
Co-pilot
Standard accountsCOGS
Value-added reportsBudget planningStrong teams
ForecastsFinancing strategyInvestments
Global fluencyForeign exchangePartnerships
Strategic planningOperational excellenceGrowth & M&ACompany valuation
BUILDING A ROADMAP FOR THE CFO: 5 LEVELS OF COMPETENCESThe potential value added from the F&A function is wide and incremental:from basic financial statements to international fluency, to co-pilot.CEOs can plan to accelerate the CFO’s contribution.
Basic
Intermediary
Advanced
International
Strategic
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Basic
Intermediate
Advanced
Internationalexpert
Co-pilot
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Experience in managing risk from a distance
Adequate finance & cash flow training
Integration of IT platform & accountingBuilding strong teams
Early mentoring of strategic skills
TYPICAL ROADBLOCKS
Mastering COGS
Operational intelligence
Financial statements
Finance strategies
Strategic influence
Global fluency
DESIRED OUTCOMES
1
2
3
4
5
Early roadblocks are mostly technical, but shift rapidly to managerial and strategic.
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LEVEL
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On becoming lean & strategic
CFO FOR THE 21ST CENTURYConclusions
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Lean & strategic finance functions require a match between the CEO’s demand forhigh standards and the CFO’s technical and managerial capabilities.
CFO candidates should balance their continuous professional development in amix of technical, managerial and strategic skills.
Coaching and training for young CFOs can greatly accelerate their potential.
Skills development can be structured for quick pay-offs.
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EXECUTIVE EXPERIENCE AS CFO:M. Du Sault has accumulated more than 20 years in corporate financial management:Annual consolidated financial statements audited and sent to the head office on 10 January. Having a budgeting and strategic process impeccably integrated to the information systems. Preparing monthly executive reports limited to 10 pages, that speak loud and clear, with insights. Managing international treasury (financing and hedging) programs, over and through financial crises. Meticulous planning of M&A activities, with emphasis on integrating and capturing synergies.Executing several corporate programs on Operational Excellence. Outlining strategic guidelines for pension fund investments.
MULTINATIONAL EXPERIENCENovartis AG (Pharmaceuticals, Agro, Chemicals, Nutrition, Animal Health, Environment), SwitzerlandM. Du Sault was a head office delegate from 1987 to 1999, as CFO in a variety of country holdings, with revenues ranging from $US 15 M to $500 M.Switzerland, Head Office: Controller for Europe Sweden - Auditor: Internal audit program Brazil - Controller: Multiple financial crises, with hyper inflation (1000% p.a.) Philippines - CFO & HR: Restructuring for growth Spain – CFO: Turnaround and best merger operation acknowledged within the Novartis group Mexico – CFO: Novartis merger, local economic crisis, M&A activities
FINANCE FOR SME:Worked in a variety of industrial and technology sectors, from start-ups to mid-size companies.Fund raising for private technology companiesPublic fund raising for Capital Pool Companies Restructuring of finance departments for higher productivity and coaching new CFOsM&A activities for SMEs (USA-Canada).
André Du SaultMBA (LBS)MPA (Harvard)
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About the author
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DS&H has designed a series of programs for better CFOs
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FINANCE FOR small SME1.5-dayValue added beyond accounting
Develop Outstanding CFOs3 daysThe foundation for senior roles
The CFO as co-pilot0.5-day modulesHigh level expertise & influence
DS&H
On becoming lean & strategic
CFO FOR THE 21ST CENTURY
DS&H CFO Training Programs
For more information & insightsfrom the study:André Du Sault514 [email protected]
Confidential and Proprietary to DS&H 18
On becoming lean & strategic
CFO FOR THE 21ST CENTURY
DS&H CFO Individual Programs©
For more information & proposals:André Du Sault514 [email protected]
June 2011
Seeing clearly aheadCritical issues & smart choices
1. Coaching the young CFO and aspirants
Before it all crumbles downSymptoms & remedies
2. Fixing and improving the F&A dept
When doing business overseasA discipline & tool kits
3. Mastering foreign exchange risks
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International finance
Mastering foreign exchange
Successful international partnerships
Doing business in Asia with no regrets
From great ideas to breakthrough innovations
Lifting strategy onto the board agenda
DS&H
On becoming lean & strategic
CFO FOR THE 21ST CENTURY
DS&H CFO Conferences
For more information & insights:André Du Sault514 [email protected]