CFO Leadership

Yes, Excel spreadsheets are democratizing the problem-solving capabilities of many people, but those on the CFO’s team may have the most to gain. What’s more difficult – going through account reconciliations manually, or creating the next Facebook? Financial reporting or coming up with an alternative to Uber? These may not seem like very fair comparisons, for several reasons. First, the more finance-oriented tasks are just that, tasks. They are things that have to be done on a recurring basis as part of a job. They have nothing to do with innovation that leads to a game-changing start-up that gets valued by billions in Silicon Valley – or at least that would be the assumption. A recent story on Quartz, however, suggested that developers and finance professionals share at least two things: an interest in solving problems and a high degree of aptitude for using a relatively simple software program: Elite programmers spend years in universities or hacking in their bedroom to master arcane computer languages. But coding, at its most basic, is something millions of Americans already do every week. It’s called Microsoft Excel. The spreadsheet application, like WordPress Visual Basic and Salesforce, gives anyone a simple way to program the sort of logical instructions computers can run—and that once required coding skills. In that sense, the Quartz piece, argues, everyone may be some form of software developer even if they don’t describe themselves as such. Instead, they could use Mort, the term Microsoft uses to describe professionals who aren’t quite programmers but who nevertheless apply some of the same technologies and techniques to address business needs. The idea of “Mort” is far removed from the way we typically think of innovators. We tend to look to examples like Vitalik Buterin, a 22-year-old who has developed an alternative to Bitcoin called Ethereum. Fortune’s profile of his early years sounds almost like a textbook example of the emerging genius: “Given Legos to play with, Buterin didn’t assemble miniature towers, animals, or people. Instead, he made numerals,” the piece said. “When Dmitry bought his son his first computer at age 4, Buterin took to it instantly. ‘Excel was his favorite toy,’ says Dmitry.” We don’t have to live in a world of polar extremes from Buterin to Mort, though. Maybe there’s a breed of professionals in between – people who can harness the power of Excel with other tools that vastly increase what they can do to solve problems. If so, the most innovative thing to come next might be a world where the path to genius is much more within reach. The post Why Finance Pros Are More Capable Than ‘Mort’ appeared first on Blog | Vena Voice | Vena Solutions.

Experts say financial executives need to ensure their organizations don’t make a wrong move — and success might mean earning the top job. Jumping out of an airplane — that’s risky. Rock climbing — also risky. Managing a company — the multitude and variety of risks make the others seem almost trivial. The risks in management are theoretically shared across the C-suite, but employees and shareholders know that at the end of the day, it’s the CEO who is ultimately accountable. That’s why it was interesting to see a scholarly piece on Knowledge@Wharton, published by the Wharton School of Business, which recently referred to the “CFO imperative” to take on more of the risk management mantle. “The bottom line is companies today find themselves in an economy where “uncertainty is high, innovations are disruptive, and reinvention is common,” the article says. “Traditional tools of risk management are no longer enough. These days, forward-thinking firms need to monitor changes to their ecosystem, conduct a deeper diagnosis of competitive challenges, make bold moves at the right time and redesign business models that co-create and reshape the environment, not just be reactive.” The article goes on to suggest that CFOs think of risks in as holistic a manner as possible. This includes not just examining market volatility or macroeconomic factors but even cyber-threats from hackers. There’s no question that mastering risk management in this way would make CFOs even more valued by their organizations — perhaps even valued enough to get a promotion. CNBC recently reported on a survey of more than 200 financial executives in the U.K.  that showed a whopping 86% have dreams of one day taking on a CEO position. They know they’re in competition with the heads of marketing, sales and even IT, but they believe they have an edge: According to the survey results, CFOs reckoned they would be ideal candidates for the role due to their knowledge in investor stakeholder management, their economic and business awareness and finance and data-driven business decisions. This doesn’t specifically mention risk, but the case could be made that excellence in all the areas described above would naturally involve a proven propensity for mitigating or managing them. In fact, data-driven business decision-making is not merely about identifying growth opportunities or cost savings but taking better, more calculated risks to do so. Even if they don’t land the CEO’s job, CFOs can become role models for risk management that could change the way organizations are run. That’s the real imperative. The post The Relationship Between CFO Leadership And Risk appeared first on Blog | Vena Voice | Vena Solutions.

Many people might still equate farming as a relatively low-tech enterprise involving small teams. In fact, the opposite is often true – farming can be a high-cost business that needs as much strategic planning and foresight as some Fortune 500 firms. The one thing they may share in common with more traditional finance departments is the use of Microsoft Excel as their tool of choice. Just take a look at this recent post on Country Guide, a trade publication for the Canadian agriculture industry, which suggested that farms stick with what’s tried and true versus relying on simplistic smartphone apps: You’re better off with an old-fashioned Excel spreadsheet, and thanks to government extension staff in Alberta, Saskatchewan, and Manitoba, there are many adaptations where you can plug in data to help make better short- or long-term decisions on your farm. They’re especially useful for “what if” decisions on whether purchasing equipment or inputs improves profitability. Buy more cows? Use more nitrogen? Rent more land? There’s a spreadsheet for that and more. The article walks through each of the calculators in question, but the point should be obvious to those who work in sectors far different than farming: Excel remains adaptable to a seemingly infinite variety of scenarios. Need more proof? Consider a piece from Lifehacker, where a popular tech gadget guru turns to Excel for a far different decision-making process: the choice of Intel processor for those building a gaming workstation. “The spreadsheet is a collection of all of Intel’s currently available processors, complete with filters that make it easy to sort out the ones you’re not interested in,” the article says. “He also offers some step-down picks for people building on a budget, or building workstations without gaming or content creation in mind.” The post Banks need a CFO. Major retailers need a CFO. But a farm? Hmmm. . . appeared first on Blog | Vena Voice | Vena Solutions.

It’s not like anyone in finance walks around all day thinking, “I’m a global citizen!” How they work on a day-to-day basis, however, should say a lot about how international their perspective has become. A possible role model in this regard is Shyrose Janmohamed, CFO of TFS – Canada’s International School (formerly Toronto French School). She was among those recently profiled by Canada’s Globe & Mail in a special series about changes in the finance department at major organizations. She suggested that while a lot of the forecasting and analysis CFOs and their teams do focuses on internal or local information, true leadership in this area demands keeping a close eye on what’s happening all over the world. “It’s more than just numbers. You sit right next to people and create budgets collaboratively because everybody needs to be on the same page,” she told the newspaper. “Gone are the days where the finance people sit in their offices, crunch the numbers and dole out money.” The question is, how do you achieve that kind of global outlook? It’s not just enough to stay on top of the daily news, obviously. There are lots of sources of information, but the first step is really ensuring you have the tools and infrastructure to properly manage a range of data sources that touch on myriad factors that could influence business performance. The next step might easily be overlooked, but a recent report from Deloitte is trying to make sure CFOs give it more attention. This is what the consulting firm describes as setting a “talent agenda” for finance. This involves hiring the right people, of course, but also thinking deeply about how you manage them and arm them with the techniques that will establish a strong development and succession plan. One approach stood out to Deloitte in particular: Experiential learning is very powerful. It enables executives to develop their own tacit knowledge and expertise in context. It shifts from theory and exposure to learning by action and having to respond to the consequences of their individual choices . . . What was important was having “a great boss” and a sponsor who put the individual through a learning-by-doing experience versus being just a mentor. Finance teams learn quickest – and best – by getting hands-on with data and the processes that shape decisions. This, in turn, will lead them to look more broadly at the landscape they work in, far beyond the confines or an office or cubicle. The post The Big Picture Thinking CFOs and Their Teams Need To Cultivate appeared first on Blog | Vena Voice | Vena Solutions.

Do finance leaders need a new job title to reflect their focus areas, or is it really about walking the walk? Where there were once chief marketing officers, there are now chief brand officers. VPs of HR are now sometimes referred to chief people officers. This makes it only natural that something similar might happen with CFOs. In a recent interview with The Australian newspaper, executive and co-founder of Sheldon Harris Consulting, John Sheldon, discussed just how challenging it has become to source finance leadership talent. He suggested that this is in part due to the rise of CFOs being re-imagined as “chief performance officers” — putting an extra emphasis, not on the fact that they look at financial information, but that their work leads directly to improved organizational performance. “Their role will include performance improvement and strategy — we’re now living in a digital world and disruption happens daily,” he said. “They’ll look at that disruption and what it’s producing, how do you harness that and put it to the organization, and somebody has to pull that together. The requirements of the role are much more than we’ve ever seen before at this level. There isn’t going to be a queue of 100 people who can do it.” The notion of a CPO may align well with the fact that corporate performance management using Excel has evolved to the point where it is easily available via the cloud and can connect to something as fundamental as spreadsheets. Still, there has to be more to this increased emphasis on performance than merely giving CFOs a fancier job title, doesn’t there? FEI Daily may have gotten close to a glimpse of what the specific concerns of a more performance-minded CFO look like when it interviewed an executive from ERP vendor SAP: When I talk to CFOs, they say, ‘Look, I want insights. I want to be able to make decisions on things. I want to know that if I have a short-term cash-flow issue in one of my emerging countries, and I’m going to miss payroll, that I can find access to a low-interest, overnight loan that I can get from a variety of vendors and that I can get an instant decision on that. And I can’t do that unless I know my cash position.’ Really, at the CFO level, it’s more about insights, it’s more about the narrative. The narrative in question is really a story about how companies become more proactive, agiler and ultimately better at judging when and how to act. The person living and breathing that narrative might be called the CFO or the CPO — it doesn’t really matter. What matters is that the hero of the narrative wins in the end. The post What Makes a Performance-Driven CFO appeared first on Blog | Vena Voice | Vena Solutions.

Operational executives are less prevalent in the Fortune 500, but that doesn’t mean companies can ignore operational excellence. If there’s one person whose role you could safely assume is reasonably secure, it’s probably the CEO’s second-in-command. The statistics around chief operating officers, however, suggest otherwise.  According to the 2016 Volatility Report from recruiting from Crist Kolder, which looks at executive turnover and retention across a variety of senior levels, there has been a 15% decline in the number of companies that employ a COO over the past 10 years. There is some differences across sectors – technology and industrial companies are less likely to have a COO in place, while nearly 40% of service companies utilize this role – but the overall trend seems clear.  “The COO’s role continues to diminish,” Peter Crist, chairman for Crist Kolder, told the Wall Street Journal.  “The vacuum in that role allows the CFO’s prominence to continue.” To some extent, this makes intuitive sense. “Operations” can encompass a wide spectrum of the business, from manufacturing and logistics to sales and marketing. The goal for a COO, in part, would be to ensure everything in the organization runs efficiently and effectively. The bottom line for CEOs, however, is the same bottom line that is monitored and reported on by CFOs.  As they gain a greater foothold in not only assessing the current state of revenue and expenses but forecasting how capital can be effectively allocated for maximum return, CFOs have a natural advantage in tying operations more closely to business performance. That’s not to suggest this is at all easy to do, of course. In fact, a recent article in the Economic Times of India put a spotlight on how CFOs are taking on many of the things that might have once preoccupied the COO and several others on the senior leadership team: It has almost become jugglery. Raising capital, dealing with investors and lenders while understanding the evolving nature of the business and hunt for opportunities to grow has become the new mandate of CFOs. This needs a lot of operational and managerial role skills that come in beyond accounting.  If the COO role is on the way out, it’s obviously not because there isn’t value in what they’ve historically done. In fact, it was back in 2006 that the Harvard Business Review looked at some of the key challenges and concluded that one of the problems is that COOs’ job descriptions haven’t been well-defined. Those of CFOs, meanwhile, are being rewritten before our eyes as technology changes the impact they can have. Ultimately, what’s important is not which titles remain in the C-Suite. It’s what those who make up that team deliver back to the business. The post What ‘The Vanishing COO’ Trend Means For CFOs appeared first on Blog | Vena Voice | Vena Solutions.

  Businesses need more than the same old numbers, but finance departments aren’t stepping up, a new book argues. With a book title like The End of Accounting, it doesn’t take long to realize that Baruch Lev is on a mission to shake up finance departments around the world. A professor at NYU Stern, Lev was recently featured in a video interview with Canada’s Globe & Mail newspaper where he talked about the problems he sees with the way financial reporting has evolved in recent times. His essential argument? That while CFOs and their teams are well-versed in tabulating traditional key performance indicators, there are many other factors that aren’t making into quarterly or annual reports. “The usefulness, the relevance of financial information, not just earnings, has been declining significantly over the last 20, 30 years,” he says on camera, adding that what’s missing are things like the impact of branding, IT investments and even more intangible things. “Everyone celebrates, everyone participates in (talking about these kinds of assets), except for accountants, who are stuck in the Industrial era.” By “Industrial era,” Lev is referring to the way companies typically monitor the output of factories, machines and similar things. “If you open a financial report of a company, the only information you’ll see is about R&D,” he complained. If the company increases the quality of its employees by training,  on the other hand, it may not be factored into the reporting or forecasting. What would help, obviously, is the kind of dashboards that have long been promised to finance departments — and which are finally coming to fruition. A recent story on Health Care Finance News offered a great example of what this could look like. Among those profiled were Christopher Lah, Revenue Cycle Senior Director at Cincinnati Children’s Hospital. He said his The top three areas on his dashboard include cash collection vs. projection and total revenue, cost-to-collect and, perhaps surprisingly, patient satisfaction. This is how he talked about it: A dashboard report is there to give me the vitals on my entire revenue cycle. So if my efficiency indicators look good at each step I move on because I have other work to do. The minute one of the indicators doesn’t look right, either in relationship to the rest of the report or benchmarking it against itself, I’m going to drill down and ask more questions about what’s going on. This is a really important point. Not only are finance professionals like Lah starting to take into account the sorts of KPI Lev suggests are largely missing — they are using such KPIs as the starting point for analysis, rather than some sort of set-it-and-forget-it reporting approach. This may or may not be the end of accounting, but it’s definitely the start of a new era in financial and business management.   The post Why Dashboards Are Becoming A Major CFO Priority appeared first on Blog | Vena Voice | Vena Solutions.  

Some are putting up CFOs on a pedestal, while others can’t wait to take them down a peg. What really matters is how they bring value to their organizations–and that should be the main characteristic they’re judged for.  No one is saying financial executives have a “God complex,” but the influence of the CFO role is starting to generate almost religious fervor among some observers.   Take a recent article in Manorama, a newspaper based in India, headlined “It’s The Era Of CFOs In Corporate World.” The op‐ed piece by P. Kishore looks at how the leadership of finance departments has risen to such a degree of importance that there may be no stakeholder in the C‐suite with greater influence, including those with an even more senior title. “There was a time when subordinates obeyed a CEO’s order as the Word of God. In the current set‐up, CFOs have the power to strike down that ‘Word’ if necessary,” the article said. “A CFO is responsible for the financial aspects of all company transactions, apart from overseeing auditing and accounting. She conducts surprise field visits to check whether the operations matched the data record.” This portrait of omnipotent CFOs suggests financial leadership is simply a matter of continuing to wield power and enjoying the fruits of it. As more hard data about CFOs comes to light, however, the wisdom of their judgment will inevitably come under greater scrutiny. As proof, just look at a research initiative from Duke University’s Fuqua School of Business, titled The Equity Risk Premium in 2016. It looks at all the variables CFOs say go into their decision‐making, and what level of caution they employ. A post on MarketWatch wondered if that level of caution is, in fact, too high: It turns out the typical CFO doesn’t want to OK a project unless it offers a return on investment of at least 14% — even though their company can borrow for half that . . . Sure, you wouldn’t OK a project unless it offered a healthy return over your cost of capital. You want to make a profit, and you want a margin of safety. But demanding a return that’s twice your cost of capital is quite something. There might be more to this data than meets the eye, of course, but it suggests that in some cases finance leaders lack all the information they need to feel confident in taking on the risks that their organization wants or needs to pursue. The value of leveraging technology to not only better organize and access data lies not only in de‐risking more decisions, but being better able to explain why something like a 14% return is the best possible course of action. To err is human, of course, and despite the hype, CFOs are mere mortals. To achieve true data‐ driven decision‐making though? That’s as close to divine as we’re likely to get. The post The Divine and Unbeatable Nature of Data-Driven CFOs appeared first on Blog | Vena Voice | Vena Solutions.

The role of the journalist once revolved around making phone calls while puffing on cigarettes (indoors!) and typing away on typewriters. Today a journalist is expected to not only carry out interviews and write articles, but to be active on social media, produce blogs and interact with readers using audio and video as well; similarly, the role of the CFO is also experiencing that kind of evolution.  As KPMG writes, we have now entered the age of the Renaissance CFO. KPMG’s report “The view from the top” states that those who become CFOs today are expected to be leaders and influencers, and have a global reach while “leveraging financial data and analytics to achieve profitable growth, capitalizing on a dynamic regulatory environment and nurturing and acquiring top talent.” Such responsibilities hint at some of the challenges that CEOs see today in the evolving role of the CFO. While the bar is set high–63% of CEOs say that the CFO will become more important in the next 3 years–confidence levels from CEOs are on the other hand low: almost one in three CEOs think that their CFO isn’t ready for the challenge ahead. What this means is that if CFOs want to fulfill their business and leadership duties they need to develop certain characteristics to become successful. For starters, an embrace of their leadership role beyond finance is paramount for today’s CFO. As a report by EY puts it in a recent report: Based on our research, it is clear that the CFO role at today’s leading companies is evolving. Alongside their traditional mandate to provide financial insights and analysis and insights, CFOs describe a greater involvement in supporting and even developing strategy, guiding key business initiatives. A Shift In Attitude and an Embrace of Technology To develop and share the strategic insights their organizations expect from them, CFOs need to also embrace the kind of technology that helps with the busy work and frees time for more analysis-heavy processes. A survey of financial executives profiled on iTWire showed that CFOs are becoming much more comfortable adopting things like cloud computing and financial software where it makes sense. “CFOs want more insights into their business than simply broad stroke profit and loss numbers. Tools that provide greater understanding of nuanced performance metrics such as business unit performance, customer lifetime value, and churn will also be part of the CFO’s top technological investments over the next 18 months.” Adopting technology to meet increasing demands makes a lot of sense. Only by embracing technology that offers greater analytical capability and numbers they can trust, will CFOs really understand their business. By applying data in insightful ways and gaining an understanding of every metric in their business CFOs are now able to communicate with, persuade and motivate their team while providing the business value organizations expect from them. That sounds a lot like the perfect Renaissance CFO to me. The post The Role of the CFO is Changing. Here’s What’s Expected from Them Now appeared first on Blog | Vena Voice | Vena Solutions.