Senior business leaders especially directors on the board are looking for help to make critical business decisions as they engage in strategic conversations. They usually turn to one of the most influential members of the organisation – the Chief Financial Officer (CFO).

The significance of the role of the CFOs and the values they can create for their companies are increasingly being acknowledged. However, with current challenging and complex business environment, the expectation is the CFO will put on a more strategic hat.

Many companies are struggling to expand their revenue streams and optimize costs. There have been concerns that CFOs may have failed to understand and appreciate recent global trends and how the finance function could be more strategic rather than operational. 

The Strategic CFO

In a changing corporate landscape, the strategic CFO would not focus merely on managing financial statements, performance reports and cash flow. Finance roles have evolved from transactional activities to strategic finance. In most organisations, finance is taking leading roles in corporate governance, strategic partnerships and business model innovation.

A strategically oriented CFO may exhibit certain attributes, competencies and behavioural imperatives. Here are some qualities to look out for in a CFO:

Seeing the big picture in the future

Rather than merely reporting on monetary gains and losses, as in the past, CFOs are now more involved in strategy processes, governance, regulatory compliance and risk management, as well as competitive intelligence.

A strategic CFO, as a member of senior leadership, should demonstrate an understanding of the goals of the company (short/long term). And should always see the big picture.

Collaboration and monitoring

It is a point of interest to note that as companies become dynamic, their revenue streams behave likewise. A strategic CFO organizes his department to work with every team, from operations to marketing and administration, just to generate ideas and implement strategies.

A strategic CFO monitors the financial activities of every department of the company including the financial activity of the CEO, giving financial advice where necessary.

Demonstrable leadership

Strategic CFOs, are CEO”s right-hand persons that can even represent the company in the CEO role when the CEO is indisposed for whatever reasons. Strategic CFOs navigate proactively and plan for eventualities. They promote synergy among all parties in order to achieve the company desired goals.

Entrepreneurial spirit

Strategic financial officers are creative and able to easily follow-up with rapidly changing competitive trends, new partnerships, restructuring and transformation. They are resourceful, they know how to arrive at value-based decisions even in the absence of comprehensive data. 

Risked decision making

One priceless feature of strategic CFOs is their ability to make tough decisions. A strategic CFO does not fret at challenges when an economic shift or a market disorder has resulted in a reduction in revenue streams and/or increase in high operational costs.

While the CEO and the rest of the senior leadership may be tensed at such challenging times, the strategic CFO is rather expected to innovatively think through the possible mitigation measures.

Storytelling

A strategic CFO should have good storytelling skills in presenting financial information for a variety of different parties outside and inside the company. Including illustrations of the organisational changes and impacts to the understanding of investors and stakeholders.

5 core roles of a Strategic CFO

We will highlight below 5 roles that a strategic CFO should deliver on in order to create value for the organisation.

1. Revenue generation

Many CFOs maintain the belief that revenue isn’t their job. They have failed to understand that if there is no revenue, there is no job. The notion is that the sales team is responsible for revenue, but the CFO is responsible for cost control.

This is a wrong impression and a misconception among financial leaders. The finance function needs to be more involved in sales than they think. Cutting cost alone does not guarantee business success. Cost optimization and revenue generation going aside by side is what could be termed a business success.

How can a CFO lead Revenue generation? Bringing finance, marketing and sales closer to one another is an efficient way of managing income and expenses. The CFO needs to manage the cross-functional collaboration between marketing, sales and finance team inputs into growth strategic plans.

2. Cost optimization

A strategic CFO is typically faced with the responsibility of cost reduction. By ensuring that the entire finance team members are aware of and are engaged in cost reduction initiatives and being supportive in driving transformation across the organization.

How can a CFO lead cost minimization? A CFO can lead the cost optimization by having total control over cash flows and expenditures. Monitoring closely, all financial processes and engagements. A proper delegation of authority ensures that even the CEO or other board members must have the right authorities to incur costs.

3. Strategy and Business innovation

A strategic CFO should understand the business dynamics and changes in market trends. It is imperative that the strategic CFO engages in strategy formulation, business innovations, financial modelling and valuation.

How can a CFO lead strategy formulation and business innovation? CFOs who want to develop an innovative finance department needs to provide his team with training in innovative methods and techniques such as design thinking. The design thinking strategy encourages looking at things differently, questioning what is in place and seeking new solutions.

4. Performance management

An effective performance reporting coordinated by the finance drives budget performance, fund management and project delivery. The CFO should take the lead in the development of key performance measures and also ensure data integrity. Big data and data analytics are now aiding speed of decision making and performance reviews.

How can a CFO lead Performance Management/Reporting? CFOs should have good knowledge of data analytics as a tool to provide performance insights. These insights should cover areas such as project performance, system reviews, process audits, invoice payments and working capital.

5. Governance, risk and compliance

The current trend is that responsibility for managing governance risk and compliance (GRC) is being embedded in the finance roles as corporate responsibility. This role responsibility aligns well with finance expertise in financial control, financial risks and CFOs support at the board and business controls monitoring.

How Can the CFO Lead GRC? The CFO can manage C-level reporting, provide guidance at decision boards, be a custodian of manual of authority and monitor process and regulatory compliance.

Takeaways

As the CFO being a strategic decision-maker, a board member and a business partner to the CEO, finance leadership is ideally placed to set the right governance norms, risk policies, and compliance processes. By this, the CFO being the custodian of a company’s finances should play a primary role in designing the GRC policies and procedures.

The CFO leads financial due diligence process on investments options and provides advisory on risks management. The CFO should constantly be thinking of ways of bringing in more money while keeping costs down.

Innovation is heavily dependent on having a culture of curiosity. This includes challenging the implications of new developments, new technologies and potential business model changes.

The capability to challenge existing norms and ask the right questions will aid CFOs to know if the finance team has right competencies to drive future opportunities and complexities down the road.

Do you wish to transform your finance processes and operations? Are you looking to an Interim CFO or add a new CFO role to your company? Contact us at Gabriel Domale Consulting.

We have hands-on experience to assist your company in the transformation of the finance function, act as Interim CFO or recruit your finance executives.

How Gabriel Domale Consulting create value for clients

Gabriel Domale Consulting leverages our deep hands-on industry experience to provide consulting services including strategy, corporate governance, transformation, due diligence, cost optimisation, training, financial modelling, valuation, fundraising and business model innovation.

The growth of our firm is hinged on the strategic perspective of growing a strong relationship with our clients and working with them to achieve competitive advantage and viable market growth.

We are committed to continuously engage with clients to develop innovative solutions and to collaboratively implement business decisions to achieve sustainable outcomes.

Request our services â–º https://www.www.gabrieldomale.com/submit-rfp.php

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Authors

Eric Beeka and Dr Leesi Gborogbosi

Dr Leesi Gborogbosi – CEO, Gabriel Domale Consulting

Dr Leesi Gborogbosi is the CEO of Gabriel Domale Consulting, a management consulting firm based in Nigeria, that helps companies in Africa to grow, provides insights to leaders and transforms institutions.

He has about three decades of leadership experience in the oil and gas industry (Shell Nigeria). He is an expert in finance, strategy, corporate governance, transformation, cost management, leadership development and due diligence.

Dr Leesi Gborogbosi was Project Finance Manager of Upstream Oil & Gas Projects (7 projects - Headline size: $8 bln) - Southern Swamp Associated Gas System, Forcados Yokri Integrated Project, Otumara, Adibawa, Agbada and Assa North/Ohaji South Projects.

He provided advisory services namely, strategic planning, budget management, funding strategy, risk management, governance, due diligence and investment plan covering the full life cycle of the seven major upstream oil/gas projects, power facilities and export pipelines.

He collaboratively works with business leaders and their organizations to identify growth opportunities and create value through operational excellence in strategy implementation and capital efficiency by delivering projects within costs, building strategy and planning frameworks and crafting of innovative funding solutions.

Dr Leesi Gborogbosi provides support to finance leaders to make crucial decisions and optimize performance through financial excellence in finance systems and accounting operations, budgeting, finance transformation, cost reduction, governance, risk, and compliance.

He has doctoral degrees in strategy and business studies and MSc (Research Methodology in Management) from IE Business School, Madrid and an MBA (Finance and Banking) from the University of Port Harcourt, Nigeria; and BSc (Accountancy) from the University of Nigeria, Nsukka. He had his secondary education at Federal Government College, Jos, Nigeria.

His doctoral dissertation focuses on strategy implementation, collaboration, the role of middle managers, and the dynamics of social movements (host communities).

Dr Leesi Gborogbosi leverages his professional experience as a Certified Management Consultant (CMC); Fellow, Institute of Chartered Accountants of Nigeria; and The Institute of Management Consultants. He is member of the Chartered Institute of Procurement & Supply, London; Nigerian Institute of Management (Chartered); and Strategic Management Society, Chicago, United States.

He was nominated by the Strategic Management Society, Chicago for "Best International Conference Paper Prize Awards" in 2017 and 2015. He was appointed the Chair for the Session on “Leading change implementation processes” at the Strategic Management Society conference in Denver, United States in 2015.

Dr Leesi was a member of the Strategic Management Society “Special Committee on Diversity and Inclusion”, Chicago, USA, with the responsibility of providing the Strategic Management Society Board of Directors with a good audit of where the Strategic Management Society stands with respect to inclusiveness in its activities.