The Chief Financial Officer as the de-facto Chief Strategy OfficerEmma
If there is one role that I truly admire in an organisation, it is that of the CFO. Given the amount of hats that he or she has to wear and the juggling of roles and responsibilities, it is truly remarkable what they do. It is not the intention of this blog to give the CFO more responsibility, but rather to provide a context from where he or she can better operate.
Through personal experiences and with working with organisations of varying sizes and shapes in a variety of industries, perhaps one of the toughest challenges facing modern business today are:
(1) How do you build a sustainable and profitable business for the future and
(2) What are some of the critical levers that we need to be focussing on to get there?
Using some of the insights gleaned from high performing organisations, there are three 3 critical drivers that every CFO should be looking at, namely:
– What is our business model?
– What is our revenue model?
– What is our margin model?
Numerous businesses fail and go out of business when the above elements are ignored or where little attention is given to them. The majority of companies that are or have been in business rescue have reached that position because of the lack of a coherent business model, the lack of a sound revenue model and the lack of good margin management. Another critical point is that we live in an ever changing business environment. Your business model, revenue model and the way you manage margins is potentially different in 2014 when compared with say 2009. Most business owners / CEO’s get so sucked in to the day to day “whirlwind” of business life that they fail to look up and adapt their business strategy to the changing business environment. We have seen a number of companies that have applied for business rescue suffer this fate. These are not start up businesses but rather companies with 10 to 12 years of track record. Failure to revisit your business strategy on a regular basis can be catastrophic and should be looked at very closely every 2 to 3 years at a minimum.
What can the modern-day CFO do?
Make the above three questions part of the Key Performance Areas and KPIs as soon as possible. Start by interrogating the business model and really ask whether the above questions can be properly answered, understood by staff and most of all, properly accounted for and measured. If you as a CFO cannot dedicate the time to investigate this to answer the questions above, there are solutions available. Why not outsource this process? There are outsourced CFOs and Strategy Consultants that can be engaged on an interim or part time basis that can help you design and implement the appropriate strategy within your business. These are successful business people in their own right who have made the decision to make a career as an outsourced part time, interim or project based CFO. They are there to assist and compliment you in achieving your goals and escalate your business potential. They have the depth of knowledge and expertise to provide you with an executive support channel whilst guaranteeing confidentiality.
So how about that Mr. CFO – you are now the de-facto Chief Strategy Officer!