The CFO role has been typecast as a typical ‘finance guy’ in the past few decades. They were not seen as an individual who’s likely to be central to strategic planning or a pro-active strategist, they crunched numbers, balanced the books and analysed the financial impact of a company after a move had been made. Effectively, that was what ‘finance guys’ did, it’s just that the CFO was at the top of the pile.
I have to say that this was my general perception of the CFO until a few of years ago. Numerous modules at business school gave me little reason to doubt the CFO profile that had been forged in my mind. It wasn’t until I started to look at the role in more detail that I came to the realisation that strategy and finance were like two sides of the same coin - nobody knows the strategic limitations of a company like the CFO, what it can afford to lose and what industry trends are likely to impact the financial stability of the company most readily.
The important distinction for anyone looking to grasp the evolution of the CFO is that where they were once reactive in nature their role is now proactive. In fact, the CFO should be working closely with the CEO and CSO to guarantee that the state of the company’s finances are given the upmost attention when determining which strategic ventures to look into next.
We wanted to see what had changed, so Peter Spinelli, CFO at CFO Publishing, is the ideal person to give us his perspectives on the role’s evolution. A common theme throughout the work on the CFO looks in detail at the relationship between the CEO and the CFO and how it has changed. Pete was keen to back this up ‘The relationship between the CFO and the CEO has definitely evolved over the years, they work very closely together, versus the CFO being a financial partner and the CEO being an operational and strategic partner’. It’s now more of a support role to the CEO, an extension on the sales team and a strategic partner that looks at growth within the company.
It’s not just the CEO that Peter works closely with, whether it’s the chief strategist or the head salesman, in Peter’s words, they’re like a ‘team’ - he says ‘it’s evolved into a team where everyone has the same goal - a strategic plan for growth and profitability’. This newfound team-working only really emerged in the late 1990s, then, all the departments were working separately and the CFO was purely a number cruncher. This ‘all-together’ approach has been the main platform for the CFOs newfound responsibilities.
The proactive nature of the CFO was explained nicely by Peter ‘It’s not about saving money, it’s more about investments’. This reflects the need for the Finance department in general to add value beyond the confines of their department - this is in reaction to the upturn in the global economy. It was easy to understand why the CFO was a number cruncher when the organisation was in survival mode - now it’s not acceptable.
Peter’s pro-active role goes as far as looking at customer behaviour; ‘I know personally, I spend a lot of time from a strategic standpoint, understanding the customers and the relationship patterns that we see with them - it’s a pro-active role’. This insight was particularly interesting and a task that I didn’t necessarily think a CFO would undertake.
The main facet of the CFO’s role that has developed is to streamline processes to make the organisational workings easier and quicker for operations - Peter says; ‘It’s how we get information quicker to the people that need it so they can make conscious business decisions’. In the turbulent economic climate that many of us operate in, it’s increasingly about who gets there first, so streaming is clearly imperative to the successful running of any organisation.
When discussing the evolution of the CFO, it’s easy to forget that the role adapts and changes depending on the market the company is focussed on. A CFO’s role in emerging markets like Africa and South East Asia will be different from a CFO operating in mature markets like North America and Western Europe. In the emerging markets, the concentration of growth through innovation will not be so heavily required, because of this such the role will take on new responsibilities - clearly, when we look at the evolution of the role we shouldn’t be blind to this.
From speaking to Peter, any doubts that I once had about the extent of CFOs strategic responsibilities have now been quashed. Over the last 20 years it has evolved substantially and it’s pretty clear that they’re now the CEOs right hand man.