Consider Business Strategy First, Finance Second
By Alan Haughie, SVP-Finance & CFO, ServiceMaster Company
CFOs cannot take a passive role in defining company strategy. We’re uniquely positioned to have a panoramic view of the company and its performance–what works, what doesn’t–and help shape the story we tell our board of directors, employees and shareholders. The CFO has the ability to see the lay of the land better than most and we should be helping the team to form a vision of the future and describe a path to get there. The most enlightened management teams expect their CFOs to spend more time looking through the windshield and less time looking through the rear-view mirror, and where this environment doesn’t exist, CFOs need to push their way into that role. Just think of the CFO as the most financially savvy member of the management team; and that means putting management and business strategy first, and finance acumen second.
Forecasting must Solve Business Purpose
Effective forecasting requires an appreciation of the true underlying drivers of performance, and an awareness of the company’s overall strategy. The mechanics of forecasting can be pretty simple, and the tools and systems should be viewed only as enablers. Forecasting should always serve a business purpose; it shouldn’t be the purpose in itself.
"The most enlightened management teams expect their CFOs to spend more time looking through the windshield and less time looking through the rear-view mirror"
The real key in forecasting is it should help the management team stay focused on the issues that matter most–whether it’s productivity, cash flow, margin growth, etc.,–and identify the actions needed to move the business forward. Some of these actions will be short-term, others will be long-term, but once we know what we’re trying to achieve, we can build forecasting tools to fit the strategy.
Demanding Information Instead of Data
Finance teams have a tendency to seek comfort in data–often in large volumes. The CFO should demand information in place of data. I tell my team, “Don’t tell me everything you know. Tell me what it means.” One of my jobs as CFO is to demonstrate to my team how information, its interpretation and use in decision-making are exponentially more useful to management than mere data. Communication, involvement and empowerment are undamental to this process. I’ve found that finance teams that deal in information over data and get involved in the decision-making based on that information will rapidly evolve into value-added business partners.
Constant Re-prioritizing and Reallocating Resources
If we agree that the CFO is responsible for helping management to form a vision of the future and a path to get there, then innovation simply has to be a part of our job. Even when budgets are tight, we literally can’t afford to let our companies stand still. Blind adherence to budgets that constrain growth and innovation is suboptimal. CFOs need to constantly re-prioritize and re-allocate resources to ensure that we stay on course or can quickly adjust if market conditions change–or opportunities arise. Sometimes this requires pulling the plug on a project to which time, money and resources have been devoted. What really matters is allocating the right resources– in the right amounts–to support the company’s long-term goals.