Tag Archives | financial leadership

The Importance of Knowing Your Leadership Competencies

Knowing Your Leadership Competencies, unique ability

Two weeks ago, our team celebrated 1 year since the acquisition of The Strategic CFO. In the past 12 months, we’ve grown significantly in the number of team members and clients. In our meeting, I put the quote up on the screen… “Life is simple… People complicate it.” Everyone laughed because it is so true. As we shared stories, challenges, successes, etc. in my team meeting, I asked them if they knew what they were competent and incompetent at. Everyone is incompetent at something. Financial leaders need to understand the importance of knowing your leadership competencies.
Truly successful people spend 80-90% of their time utilizing their excellent and unique abilities and delegate the rest.

The Importance of Knowing Your Leadership Competencies

Before we begin, I want to define leadership. It’s the ability to guide, direct, and influence people. There are four types of ability that a leader must know about themselves. Those include the following:

  1. Incompetent
  2. Competent
  3. Excellent
  4. Unique Ability
Become a better financial leader by learning exactly what CEOs want from their CFOs. You can find these habits or traits7 Habits of Highly Effective CFOs whitepaper in our .

Know What Your Incompetencies Are

First, you need to know what your incompetencies are. Incompetent indicates the activities that you are not good at and the things that you don’t do well. Everyone is incompetent at something. Some incompetencies could be translating the numbers to something the CEO could use to make decisions, knowing the ins and outs of your accounting system, or working with technology. Before you can start to figure out what you are competent at, you need to know what you are not good at.

Write those incompetencies down. If you are asked to do work in those areas, either defer or delegate. It is not worth your time to invest in those areas when they are not profitable.

Know What Your Competencies Are

Then identify your competencies; these are activities that you are okay at, but the majority of others are better. In other words, the general population is good at that thing. For example, all accountants will know where assets, liabilities, and equity go on the balance sheet.

What Are You Excellent At?

After you have identified your incompetencies and competencies, then ask yourself… “What are you excellent at?” This refers to the activities that you excel at, but so do a few others. If you have a knack for knowing where to unlock cash after just looking at the financial statements, then it may be time to focus more of your energy there. Not everyone will have this skill though.

Know Your Unique Ability

Finally, know your unique ability. Your unique ability are the abilities only you possess. These are activities that drive value for yourself and others. In addition, your unique ability must be valued by society.

Strategic Coach outlines the four areas that you need to look at when identifying your unique ability:

  • Passion
  • Superior Skill
  • Energy
  • Never-Ending Improvement
So, how do you tell the difference between your unique abilities and your incompetence activities? Your unique ability gives you energy and your incompetence zaps your energy!

Inventory of Role

If you want to be really effective as a CFO and a financial leader, then you need to know what you are already doing and what your CEO wants more of. In our Financial Leadership Workshop, we walk our participants through an extensive inventory of role. Some of the areas that CEOs wants more from there financial leaders include:

If you want to go through this exercise AND 32 hours of coaching from me, then click here to learn about our Financial Leadership Workshop. Registration for our series starting December 2018 is now open. Contact us for more information and to register.

The Role of the CFO

While the CEO must balance the vision, growth, implementation, cash, and profitability of the company, the role of the CFO is to compliment the skills and unique abilities of the entrepreneur. You would not find Steve Jobs or Jeff Bezos in the accounting department, but they sure need(ed) support from their financial leader to make innovation happen.

To learn other ways to be more effective in your role as the financial leader, click here to access our most popular whitepaper – the 7 Habits of Highly Effective CFOs.

Knowing Your Leadership Competencies, unique ability

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Knowing Your Leadership Competencies, unique ability

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Exploit New Business Opportunities

In this age of technology, it’s time for companies to be willing to exploit new business opportunities. More than ever before, companies are navigating this fast-pace and uncertain terrain. Bankruptcies, mergers, acquisitions, reductions, etc… It’s all changing the business landscape. But if companies do not exploit new business opportunities in fear of failing, then they are sure to fail or fall behind competitors. As financial leaders, how do we enable our leadership to take risks without neglecting the numbers?

Exploit New Business OpportunitiesWhy Exploit New Business Opportunities

The reason why one would exploit new business opportunities is to stay ahead of the ever-competitive marketplace. What needs are not being fulfilled yet? How can you gain more market share? What competencies does your company have that can be expanded into other areas – customers, markets, etc.? Opportunity exploitation is what keeps businesses moving forward. In this day and age, we need to continually reinvent our companies or we will not be around very long. Our competitors are doing this every day.

Have you identified any opportunities yet? If not, then click here to access our External Analysis Whitepaper.

Opportunity Exploitation Definition

According to Wiley Encyclopedia of Management, “opportunity exploitation refers to activities conducted in order to gain economic returns from the discovery of a potential entrepreneurial opportunity“. Typically, entrepreneurs are known to exploit opportunities or identify opportunities because it is in their nature; however, financial leaders know what the numbers say and can identify opportunities that make economical sense for the business while balancing risk and reward.

Example: Planet Fitness and Vacant Malls

E-commerce has been growing significantly while brick-and-mortar stores have been steadily decreasing. Shopping malls are more vacant than ever before. But there is one company that is taking advantage of those vacancies and benefitting from it. In a recent Wall Street Journal article, “Planet Fitness Inc. is the rare mall tenant expanding its share of commercial real estate even as many retailers shrink their physical footprint as more commerce moves online.” This is a great example how to exploit new business opportunities. Furthermore, Planet Fitness is focusing on those that do not already have gym memberships. This combination of target market and location is proving profitable for them as they have reported “revenue increase 31% to $140.6 million compared with the same three-month period last year”.

How Entrepreneurs Identify New Business Opportunities

According to Babson College, “entrepreneurs are often characterized by their ability to recognize opportunities (Bygrave & Hofer, 1991) and the most basic entrepreneurial actions involve the pursuit of opportunity (Stevenson & Jarillo, 1990).”

Steps to Identify Business Opportunities

There are several steps to identify and exploit new business opportunities that Babson has outlined:

  1. Preparation
  2. Incubation
  3. Insight
  4. Evaluation
  5. Elaboration

Preparation

Experience is the prime ground for preparing yourself or your company for opportunities. Identify what experiences your team has and what your company is good at. For example, if your company excels in supply chain and logistics, then an opportunity that needs incredible supply chain and logistics processes will be a good fit.

Incubation

Incubation refers to the brain processing a potential idea or opportunity subconsciously. They are already attempting to solve a problem that they haven’t yet written down. This is an ongoing process.

Insight

Then, in the insight stage, an entrepreneur will have the “eureka” or “ah-ha” moment where it all makes sense. As a financial leader, it’s important to talk with your CEO about their ideas so that you can engage in this insight stage. You may even see how to exploit the opportunity before the CEO does.

Evaluation

This step is where the financial leader truly steps up to the plate. Research and analyze whether this opportunity is worth pursuing. At the end of this stage, it could end up in either one of two ways:

  • The idea is not feasible and they kill it
  • The idea is feasible and you move forward.

Elaboration

Finally, the elaboration stage is where you exploit the new opportunity through business planning and implementation.

Example of Identifying a New Business Opportunity

For example, a steel manufacturer primarily sells to commercial developers who require the steel for building and/or roadways. One day, they realized that they were not using any scraps of steel, and the company was just throwing them away. Instead of continuing to throw away those scraps, they inquired whether there was an opportunity to take advantage of it. One day, the entrepreneur stumbles across a custom scrap metal design company where they create home decor out of scrap metal. The entrepreneur goes back to his CFO to discuss this potential idea. The CFO knows of a team member who actually does this in his spare time. They gather a team and start outlining a business plan. Eventually, they decide that it is a profitable idea, and they go forward with it.

If you are not familiar with the petrochemical sector, they are experts at this. Nothing goes to waste in the petrochemical business. A chemical is made or processed, it generates a bi-product or waste, and there is always another business in the petrochemical space that buys it to make yet another product, and on and on and on… Eventually, very little is true “waste”.

Manage New Business Opportunities

So, how do you go about managing new business opportunities? It is so easy for entrepreneurs to get caught up in their ideas and chase “squirrels“. They lose focus and may not capitalize on the opportunity sitting in front of them. As a financial leader, it is crucial for you to manage those new business ideas as part of your strategy to improve profitability.

Exploit New Business OpportunitiesConduct a SWOT Analysis

First, conduct a SWOT Analysis on your company with your team. A SWOT Analysis stands for Strengths, Weaknesses, Opportunities, and Threats. There are two view points in this analysis: internal focused and external focused. This analysis provides a comprehensive look at what your company does well and what it may be lagging in. This also helps the CEO/entrepreneur figure out what opportunities they need to look for to convert those weaknesses to strengths and those threats to opportunities.

If you want to get started on your SWOT Analysis, then click here to access our External Analysis Whitepaper.

Enable Your CEO to Make Calculated Risks

Then, enable your CEO to make calculated risks. Entrepreneurs need to take risks and make moves – that’s part of their nature and gift. But, they do not need to make uncalculated risks or risks that will cause more harm than good. As the financial leader, help them to mitigate risk and enable them to do what they do best – find opportunities and grow the business.

Do you know the opportunities and threats that your company faces? If not, then the time to figure it out is now. Click here to access our External Analysis to gear your business for change.

Exploit New Business Opportunities

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Exploit New Business Opportunities

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Invest in Leadership Development

When you invest in leadership development, you are making an investment. It’s something that you pay good money for and expect a return on your investment. But what many leaders don’t realize is that leadership development should be strategic. We once had a coaching participant (CFO) who worked in a family company. Once the CEO retires, the CFO is set to become the CEO. Instead of going into the job blind or get coaching at the wrong time, this individual sought out coaching before he was set to take over the company. So, why invest in leadership development in the first place?

Invest in Leadership Development

Why Invest in Leadership Development

People will always be a good investment. Why? Because without people, you will not be able to accomplish all  of your goals for your company. There’s a phrase… The tone starts at the top or the fish rots from the head down. Whichever phrase you prefer, it hints at the same thing. Success (or failure) is a result of the leadership of a company. If you want a future for your company, then you need to focus on your leadership and management. You can accomplish this in 2 ways – 1) hire good leaders and 2) invest in leadership development for existing company leaders.

A legal entity should stand on its own no matter what changes are made at the top. There should always be a succession plan whereby management should be able to step up to executive roles. Without investing in your team, this will not happen.

The second option rides on the fact that you have already invested in a current employees with their compensation, benefits, etc. Now, it’s time to get them the coaching they need to further increase their value to your company.

 To learn more financial leadership skills, download the free 7 Habits of Highly Effective CFOs.

Reasons to Invest in Leadership Development

There are several reasons to invest in leadership development including improving profitability, retaining talent, and improving return on investment. Harvard’s research report on The State of Leadership Development discusses how leadership development addresses the “demands for change to address threats from global competition and technology-driven upstarts; the need to engage a multigenerational workforce with a range of work styles; and the imperative to cultivate a new generation of leaders who can meet these needs and thrive.” Simply put, companies need to address competition, culture, work styles, and generational differences to compete on a global scale.

Improve Profitability

If your leaders know how to improve profitability with the tools, resources, and second-hand experience from a leadership development program, then they will become evermore valuable to your firm. Leadership development will coach them how to make strategic decisions, how to lead effectively, and how to find opportunities. All of those benefits have the opportunity to improve profitability.

Day 2 of the Financial Leadership Workshop is all about improve profitability and cash flow. Click here to learn more, then contact us to register for the next series.

Retain Talent

In addition, companies cannot motivate all people by money. In fact, financial gain isn’t the only thing many employees negotiate. The next “gain” many negotiate for is mentorship, training, coaching, and further leadership development. That should tell you something. We all know the cost of turnover is high and can potentially make a dent in profitability. Your company’s goal should be to retain talent for as long as possible.

Improve Return on Investment

Many leadership development programs do not effectively communicate how they are going to improve return on investment. A good CFO or financial leader should be able to increase value 1-2% of sales in profits. For example, if a company has $1mm in sales, then a CFO should be able to increase profitability at least $10-20,000. And it goes up from there! If the investment is greater than 1-2% of sales, then I would advise you to find a different program. How much return can you expect from investing in your leaders? Financial leaders should always be looking at ways of adding value.

Financial Leadership Development

More specifically, your financial leadership needs to be further developed in their leadership skills. In our Financial Leadership Workshop, I enable my students to go beyond the role of CFO/CEO to become the central financial leader in the company. Furthermore, our curriculum empowers you to become both an influence and decision maker in your company.

Any financial leadership development program worth investing in should accomplish a couple things. It should make the shift from numbers cruncher to financial leader. It should also cover how technology changes the role. Obviously, it should address profits and cash flow. There are many other topics that I could list here, but you can read more about what you should be prepared to walk away from a coaching workshop here.

Finding the Right Financial Leadership Development Program

It all starts with who is coaching the program. For example, if a 26-year old with no financial executive experience began coaching financial leadership, then there would be no credibility or experience behind that program. In comparison, if the course is coached by a 28-year financial executive who is seasoned and experienced either in a niche market or a variety of markets, then the only thing you need to look for is the fit. Finding the right financial leadership development program begins with the curriculum. Does it coach on the topics you need to coached up on? If so, then you need to also evaluate the following:

  • Logistics (time, location, schedule, etc.)
  • Cost
  • Benefits
  • The Coach

Right now, registration is open for our Financial Leadership Workshop Gamma Series starting this October. Click here to learn more about our program and contact us to see if it’s the right fit for you.

In the meantime, I also wanted to gift you our 7 Habits of Highly Effective CFOs. This whitepaper is by far our most popular whitepaper and is just a snippet of what to expect in our Financial Leadership Workshop.

Invest in Leadership Development

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Invest in Leadership Development

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Budgeting: It’s About Achieving Success

budgeting

Ron Rael, author of 13 ½ Strategic Ways of Winning the Budgeting Wars, once said that, “To achieve success in anything, you need two ingredients: a target to aim for and a way to measure your progress towards it.” Budgeting is all about achieving success in business. When you improve the budget process, you are able to foster both empowerment and accountability. Eventually, it will lead to a better company. Although initiating change in your budgeting process will be challenging, it will further demonstrate your financial leadership.

The Most Common Budgeting Problems

The reason why you may have not seen much success come from your budget is because of the following common budgeting problems. First, the goals that are established before the budget is created are either too easy to reach or are simply unachievable.

If you know your economics, then you can avoid potential unrealistic goals or assumptions. Click here to download the Know Your Economics Worksheet to shape your economics to result in profit.

Then the budget is built on faulty or unrealistic assumptions. If the assumptions are correct, then maybe not everyone agrees on the assumptions or principles. This disagreement of what to build the budget on results in a dysfunctional team.

After the budget is built, there is often little to no feedback from management about the budget. We have seen this time and time again in companies. Those not involved in the budgeting process simply don’t care about the budget. They think that because they are not the CFO or Controller, it’s not their job. But everyone in an organization should care about the budget.

Additionally, when the budget is completed (usually after weeks of non-stop focus), it is filed away. It is rarely taken out and use in the daily strategy of the company. There is a lack of follow up.

When leadership has to meet with shareholders, stakeholders, etc. regarding the budget, they realize that they haven’t used the budget at all. Then they go to any means to achieve their budget. This manipulation defeats the purpose of having a budget. We suggest to design a budget that cannot be manipulated.

If you are thinking that the most common budgeting problems are more like cultural issues, then you’re correct!

Top 2 Budgeting Problems

Everything we have already said concerns the entire company. But the majority of our audience consist of CFOs and Controllers. The two problems that impact CFOs, Controllers, and budget directors the most include hidden agendas executives may have, the lack of commitment from executives for having a budget, and executives seen budgets as the CFO’s job. The responsibility of the budget is not solely reliant on the accounting department or CFO.

How Businesses Can Prepare for Natural DisastersHow to Budget Successfully

Budgeting successfully requires you to transform how you think about budgeting overall.

Use It As Decision-Making Tool

If you want to budget successfully, then you need to use your budget as a tool for decision making. It is not some disconnected document that has little to do with the company’s actual business. Instead, it should be a living and breathing part of your decision making. Plus, it is more effective when you use it to make decisions. When people ignore it or play games with it, your budget becomes ineffective.

Additionally, understanding the need to improve the quality of decision making and making it happen are two different animals. What you get all depends on the leaders’ commitment and attitude.

Use It As Management Tool

Budgeting is a very important management tool for achieving lasting success. A budget should establish the discipline to set up a plan. But you must also adhere to the plan. Furthermore, this management tool always you to measure your progress, and ultimately, your success.

“Without a yardstick, there is no measurement.  And, without measurement, there is no control”
– Pravin Shah

Issues Are a Result of Culture

We said it earlier, and we’re saying it again because it’s that important. Most budgeting issues are a result of an organization’s culture. Issues that lead to a poor quality budget process mean that these problems already exist within the organization ALL THE TIME!

Cost Associated

Everything has its cost! The budget is no exception. Budgets take work! They are not easy to implement nor are they easy to manage. Some of these costs include the following:

In addition, there are other costs associated with budgeting that could impact the bottom line. If employees are not conserving costs and making the most of opportunities, the bottom line will suffer. If leaders are not investing in their tangible and intangible assets equally while employing them to their fullest potential, the future bottom line will suffer.

Require Specificity

The budget and the plan it drives from is only effective when it leads to specific actionable and measurable activities and generate stakeholder value. Therefore, a budget must require specificity.

Assumptions Drive Everything

Also, your assumptions drive everything. Therefore, it is crucial that everyone be on the same page regarding assumptions in relation to decisions on what is important in your budget.

Governance of Budgeting Process

When your leadership team establishes governance in your organization, they are deciding how to best use all their resources to accomplish the purpose or mission.

Governance Principles

Use the following governance principles in your budgeting process. A reality based budget and planning system that enhances accountability is necessary for the good governance because it increases transparency. Furthermore, the key factor in a realistic and honest budget is people and their accountability. A well conceived and thoughtful budget improves the governance demanded by all stakeholders. In addition, the budget is a reflection of the importance that your executives place on governance and ethical conduct. Every game played with the budget is actually a breach of the organizations Code of Ethics.

CFO’s Role in Making the Bottom Line Commitment

 The CFO is essentially the CEO’s cheerleader! The CFO inspires higher level of performance.  The greatest challenge is to ensure that the strategic objectives and operational plans are adequate and inspirational enough to achieve the leaders’ desired financial objectives. The leader’s three plans, when combined into a cohesive strategy, will generally lead to success; however you define it. Furthermore, the CFO and executive team are the guardians of all assets – physical, financial and human ones. Use these assets to implement the plan and achieve the goals!

 CFO’s Discipline

Having the discipline to build a healthy budget, and having the budget instill discipline across your firm has many benefits. Not only will your budget properly serve as a management tool, but the benefits of discipline will filter over to other areas of your operation which will lead to efficiency and profitability. The next step in achieving success through your budgeting is knowing your financials or economics. If you want to shape your economics to result in profit, then click here to download the Know Your Economics Worksheet.

budgeting

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Demystifying the 80/20 Rule

Whether you are working with a client, putting together a reporting package, networking with potentialtheory, or closing the books, there’s a rule you can apply to make your life easier. This rule is probably one that you’re very familiar with – regardless of whether you practice it. When you are completing a job, there always seems to be a few things that push the needle further than anything else. This is the 80/20 rule.

Using the 80/20 rule is a great way to be a more effective financial leader. Click here to read more about how you can be a highly effective CFO.

What is the 80/20 Rule?

Simply put, the 80/20 rule is where 20% of the work results in 80% of the outcome. Likewise, 80% of the work only results in 20% of the outcome. While the numbers may not be spot on, the theory holds true in pretty much everything you do.

In the early 20th century, Vilfredo Pareto, an Italian economist, introduced this concept to explain the distribution of wealth in his home country – Italy. It first came about when roughly 20% of his pea pods made 80% of the total number of peas grown. As he continued to test this theory, he expanded it into other areas of macroeconomics (wealth distribution). Then roughly 30 years later, Joseph Juran applied the 80/20 rule to business production methods. He explained this rule “the vital few and the trivial many.”

Demystifying the 80/20 Rule

Many may argue that it’s not exactly 80/20, and you would be correct. It may even be 99/1 if you look at a particular situation. But as we demystify the 80/20 rule, we need to be thinking from a macro viewpoint. What is the minimal amount of work you can do to result in the most work.

How It Applies to Financial Leadership

As the financial leader of your company, it’s so important to know what pushes the proverbial needle forward the most. Look at your team, your fulfillment, your customers, your vendors. Then look at your role in the company. What work can you do that will result in bigger and better outcomes? Identify the work that takes up the most time without providing much. You may consider having a lower level employee work on those tasks. If that 80% work is too sensitive, then restructure your day to allow for the most time sensitive issues to be front and center.

80/20 Rule

Customer vs Revenue Relationship

Because there is no business without its customers, let’s look at the relationship between customers and revenue.

Who are your best customers? They are the ones who pay their invoices on time, don’t require extra time from your team, and never complain. They are also your most profitable customers. These customers are your 20%ers, and they make up 80% of your revenue!

But then, there are those customers who you dread receiving a call from because you know it’s going to be yet another complaint. These unprofitable customers suck your time, resources, and money. They make up 80% of your customer support/implementation/sales. Yet, because they take advantage of you, they only result in 20% of the company’s revenue (and less in profit). If you are overrun by profitable customers, you may want to think about firing that customer.

An effective financial leader is able to guide their CEO through the numbers and demystifying what may be unclear to them. If you want to more effective, click here to download the 7 Habits of Highly Effective CFOs to become a more valuable leader.

Improve Your Productivity by Applying the 80/20 Rule

If you desire for your team to be more productive, then you need to start with yourself. A fish rots from the head down. Start by analyzing your to do list. Are there a few things that will make a big difference? If so, prioritize those over everything else. Remember, not everything on your to do list will have the same impact or risk. A great way to assess the weight of each task is to use “tags” labeled: non-essential, essential, and critical. Are you chasing administrative tasks or completing the same tasks over and over? Ask yourself whether those can be automated or if a less expensive employee can complete them.

Why You Need to Be More Productive

There are so many squirrels that you could chase! There’s a million ideas that are all million-dollar ideas. But what do you need to do to meet your goals? If you continue to get bogged down by things in the 80% pile, then you risk never reaching your or your company’s goals. You need to be more productive, more streamlined. Although many see automation as a risk, we see it as an opportunity to force ourselves to be more productive.

How It Impacts How Effective You Are

When you apply the 80/20 rule to your leadership and workspace, you become more productive. You are then able to see clearly what is going to push the needle further. In our experience, our client’s experience, and our vendor’s experience, there are just a few indicators that hold much more weight. Think about it this way… If you listed everything you need to improve, you would never get it all done. You simply don’t have enough time to do everything! But you do have enough time to focus on the 20% and reap the 80%.

Lead From the 40,000 Foot Level

An effective financial leader leads from the 40,000 foot level. If you only look at an issue 2 inches away, then you are going to miss what’s causing it, what it’s impacting, etc. A good leader needs the entire picture before they make a decision for the company. This also helps you guide your CEO. Click here to download the 7 Habits of Highly Effective CFOs to find out how you can become a valuable financial leader.

80/20 Rule

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80/20 Rule

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Are You Wearing Too Many Hats?

Do you sometimes feel that the value you bring to your company is worth more than your salary?  In the business world, often expectations exceed compensation, especially with financial leaders. What does the role of a CFO actually look like?

Before we dive deeper, it’s important to ask some questions:

Are you the person that your CEO contacts to “fix the problem”?

Have you been told to figure it out even if you don’t know how to fix it?

Are you responsible for learning the skills to fix that problem?

If you answered “yes” to any of the above questions, you may be someone who is “wearing too many hats.”

Wearing Too Many Hats

Often, CFOs will find themselves wearing too many hats due to problems within the company.  The CEO’s solution is usually to generate more volume, but resources don’t generally increase proportionately.  Most of the time, this means that the CFO takes on more responsibilities in response.

This isn’t always a good thing. Sometimes the company depends so heavily on the CFO, that the CFO feels unappreciated or that he/she deserves more money or esteem.

This past Friday, I moderated a panel of 3 financial leaders in various industries to discuss the issue of wearing too many hats. I’ve put together a summary of what issues were raised among our panelists as well as the Houston CPA Society’s Conference attendants.  The discussion was so interesting and enlightening, we’re dedicating the next few blog posts to the highlights of what the panelists shared.

Life Cycle of a CFO

At the heart of this juggling routine is what we call “the life cycle of a CFO“.

too many hats

The notion that CFOs had a “life cycle” came to me through observation over 25+ years of consulting with entrepreneurs and their companies. This cycle is comprised of 4 stages: a problem arises, cleanup occurs, new duties are assigned, and the CFO burns out or looks for greener pastures.

Problem

The life cycle of a CFO begins with a problem within a company. The company has grown beyond the capabilities and skills of the current employees. To solve these problems, the company hires a CFO on the team (either temporarily or permanently).

Clean Up

From there, the CFO cleans up the company’s financial processes and gets the systems up to speed. The problem is fixed – so now what?

Often, the CFO finds himself/herself filling time and justifying their existence once a problem is resolved.

New Job Duties

The CFO will pick up new job duties, help out other departments, etc. It’s only a matter of time until the CFO realizes that his or value is worth more. The real question becomes how to add value as a CFO.

At this point, the CFO is wearing the janitor hat, the insurance agent hat, the HR hat, the banker hat and the CFO hat (and possibly others depending upon how good/willing they are).

You can probably guess what happens next.

Say Bye-Bye!

So the CFO leaves, either for a more challenging position or, if they’re too stressed out with multiple duties, settle for something less. Most companies won’t rush in to fill the void left in their wake, and so the cycle begins anew…

What Hats Do You Wear?

As I mentioned, I recently moderated a panel discussion at the Houston CPA Society’s CFO/Controller Conference. During this session, I asked the panel many questions including what hats they wore within their companies, and how that posed challenges in their work experience.

Determining your Role

One panelist, Derek, mentioned that he had to balance both operational and financial roles in his company. They hired Derek to handle both of these roles. This illustrates how the role of a CFO has evolved over the past 25 years. As the role of a CFO changes, the relationship between the CEO and CFO changes.


Learn more about how to guide your CEO as a trusted advisor by downloading your free guide on How to be a Wingman.


Derek mentioned that the job was particularly difficult because he had no definitive role or expectations. He found it challenging that he didn’t know how the typical day is, what reports were required, or where to find the information to solve these issues.

Determining his daily role within the company become a task in itself. Especially as he stepped into higher levels of financial leadership, there were more moving parts that hadn’t been defined.

Finally, he concluded that delegation was the hardest because he was bogged down in cleanup.  He felt like a janitor; going behind people and literally cleaning up their messes. Delegation is extremely important as a financial leader.  In Derek’s words, “Delegation was important to me to further my role in the company, and to take on multiple other jobs.”

“The Job Man”

The next panelist, John, had a different situation than Derek. John is the CFO of an engineering firm. Rather than working an operational job, John calls himself “The Job Man.” He receives all the jobs that nobody else wants.

John looked at this from a positive standpoint. In order to continue working as a valued asset to the company, you must learn not to say no. In this ideology, there is nothing in your realm that you cannot do. This stance is interesting; not everyone is usually as optimistic.

If there is a problem left unaddressed, it will grow into something uncontrollable. John commented that he prefers that the issue is resolved so he can go on with his business. Take action; address it; knock it out.  John’s thoughts, “I’m the one that gets all the jobs that nobody else wants.  You’ve got to learn not to say no.”

How high can you stack the hats?

Paul, the third panelist, mentioned a great point: in any small to medium sized company, you’re always going to stack hats. The questions is, how high can you stack them before they fall (or your neck snaps under their weight)? 

Upon hiring a CFO, a company interviews to see what you can bring to the table (i.e. the right amount of relationships with banks, the IT skills required to be a financial leader in the company, knowledge of your financials).  You’re sharing everything in your bag of tricks not realizing that they are listening most attentively.  How can you be surprised when they take you up on your special skills?

Despite your amazing skill set, you can’t do it all.  So to keep the hats from crashing down, which hat would you give up?

The Most Important Hat

No matter what hats you wear in your company, the most important hat is wingman to your CEO.  Business owners care more about the value you help them bring to their company and your financial leadership than they do compliance and caution.

To extend the life of a CFO, it crucial for the CEO and CFO to partner together.  As a CFO, you are in the unique position to understand all that is necessary to keep moving the company forward.

Conclusion of Part I

Our panelists highlighted the importance of determining your role, taking action to learn new skills, and focusing your skills within the company.  While you may sometimes feel like you’ll topple over under the weight of all the hats you wear, remember to focus on what’s really important – having your CEO’s back.

Next week, get the panelists take on what millennials bring to the table!

If you’re interested in becoming the trusted advisor your CEO needs, download your free How to be a Wingman guide here.

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Are you a Luddite?

Now that the furor over Brexit has simmered down and some of the excitement has worn off, it’s interesting to note the chatter about the root cause of the decision.  One of the theories put forward most loudly is that those in favor of leaving the EU were heavily represented by workers in the industrial regions of Great Britain and those who voted to stay were mostly comprised of workers in the financial centers of London.  The “stay” faction thrives on access to free trade and globalization while the “leave” group feels they have been harmed due to globalization.

All the uproar of Brexit puts me in mind of another struggle over a very similar issue in Great Britain that occurred over two hundred years ago (albeit with a very different outcome).  The parallels are quite interesting…

financial ludditeThe Luddites

Back in early 19th century, a “battle” broke out between textile workers and the proponents of technology that essentially eliminated these workers’ profession. Thanks to the Industrial Revolution, these laborers didn’t have any more work.

The Industrial Revolution’s push to implement new technologies that would lead to the obsolescence of these manual jobs created a region-wide rebellion. Northwestern England faced military force from the rest of England who agreed with industrialization.

This rebellion of the working class laborers gained a folk hero in the form of Ned Ludd.  Ludd allegedly destroyed 2 stocking frames in a fit of rage in the late 1700s, and was nicknamed “the machine destroyer.”

What is a Luddite?

A Luddite, in short, is someone who denies the emergence of technology and refuses to adapt. The term Luddite fell into use in the 1800s as part of the rising tide of discontent among the English working class.  Initially, this term referred to individuals who, like Ned Ludd, were known to smash machines in an attempt to forestall the advance of technology.  Eventually, all who opposed the Industrial Revolution were called Luddites.

This description (Luddite) shares two sides: those who reject technology and those who adapt and utilize technology to their advantage.  Since the early 1800s, many have not used this term widely until the 20th century. The modern Luddite is more likely to be called a “technophobe.”

Luddite to Neo-Luddism

Neo-Luddism is a relatively recent philosophy that opposes many different forms of technology.  You can see elements of Neo-Luddism today in movements such as Brexit.

The EU referendum had two parties: Brexit (Anti-EU labor parties) and Pro-EU Labor parties.  Those for Brexit were generally located in the same northwestern region where the term Luddite was born. Globalization has hurt that region. The advancement of technology is seen as something bad, whereas London (a financial hub) optimizes technology to their benefit.

Neo-Luddism isn’t only a British phenomenon.  Ever heard of the Rust Belt?  It’s the region between New York and the Midwest where steel manufacturing and other forms of manufacturing were once the dominant industry. Because of the decline in industrial demand, the once lively industrial hub is now rusted.  Many of the companies in that area failed to combat off-shoring or outsourcing. They did they because they neglected to adapt to better technologies.

The philosophy of Neo-Luddism can have major financial implications. Regions that were once thriving are now hubs for decay and crime. These formerly great cities struggle to break free of this “Financial Luddism” and reinvent themselves.

Are you a financial luddite?

What is a financial Luddite?  If you’ve read any of our posts, you’ve heard us say (sometimes shout) that the role of a Controller or accountant is becoming automated.  These roles must adapt to new technologies or they will soon go the way of the weaver in the Industrial Revolution.

How often are you implementing new softwares, programs, or technologies that can automate some of your role, while allowing you to focus on more value-added tasks?

In a study published by Accenture in 2014, they found that 43% of C-suite executives believed their sales team adopted new or better technologies. Only 20% of the same group believed that their financial teams were doing the same.

Why is it that?  Over the past 25 years consulting with CFOs, I’ve noticed that financial people tend to be late adopters. They are the people that are now just getting a smart phone. Whereas salesmen got their iPhone 1 early 2007 when it was first launched. While a regular flip phone fulfills its role as a mobile device, the industry now demands that you have a fully functioning computer that can fit in the palm of your hand.

Dr. Christian Campagna, managing director of Accenture Strategy, said that “there is also an emerging role for the CFO in driving and assessing digital technology investments.”  Technology and all things digital have become the backbone upon which we operate. For example, look back 10-20 years. The Internet was not particularly prevalent. Now, if you don’t have your smart device to Google a question, you feel lost in the wilderness. Well, maybe that’s a little dramatic.  You get the gist.  Technology is an asset that should not only embraced, but optimized.

Luddite to Wingman

Technology is not stealing jobs. Rather technology is creating new roles. The advancement of technology still requires people. We haven’t quite reached the iRobot stage where artificial intelligence takes over our role completely…

Begin to transform your thought process from:

“Technology is the worst and is useless

to

“Technology is my best friend and is able to help me perform my job better.”

This transition from thinking like a Luddite to a wingman is imperative to achieve success. CEOs have clearly stated that they want their CFOs or financial leaders to be a wingman. Typically, a CEO has a sales background and are more of the early-adopter personality. A wingman needs to emerge from the Luddite age and turn into someone who adopts new technology.  Learn from the Luddites – you can’t fight the march of progress so, lead, follow, or get out of the way.

How to be a Wingman

Dr. Campagna put it best,

“The finance function has played a vital role in helping companies to overcome the challenges of the past few years, and the Chief Financial Officer (CFO) is now the Chief Executive Officer’s (CEO) go-to partner for driving operational transformation and strategic execution. CFOs have helped companies to impose the discipline over costs, cash and capital that has been necessary for survival, and advised business leaders on how to allocate scarce resources against a highly challenging backdrop. Such influence is even clearer among high-performance businesses. Thus the CFO can be the architect of business value, providing the means, the tools and the acumen to design for and deliver valuable business outcomes.”

Your CEO need a trusted advisor. Download our free guide to start developing your financial leadership skills and become the wingman your CEO wants.

HOW TO BE A WINGMAN

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