Conventional wisdom has CFOs down as a fairly dour bunch of individuals (although I have a sales and marketing background…) so I am always refreshed to be reminded what a sparky bunch of them I am lucky enough to know. This was our fourth BDO CFO Breakfast Brainstorm conversation flowed to how CFOs could influence culture across their organisation – often in interesting times.
How can a CFO motivate people to focus on the right things across a business? What metrics can be shared across an organisation in order to achieve organisational goals?
I was surprised at what came out of the discussion at first. Clearly it is hard, in fact many people said, ‘dangerous’ to share information too widely across an organisation. This can be for competitive reasons – if your numbers are spread too widely, they are more likely to be found by your competitors. It can also be because some metrics are motivational for some people and downright disturbing to others. As an example, a venture backed CFO told of letting their employees know that they had 18 months cash in the bank. For one particular employee with an academic background and used to longer term funding cycles, this was simply terrifying.
So if you cannot share your management metrics, what can you do? Having a proper mission for a business becomes critical. Not something woolly, wafty, aspirational or jargon based. But one that everyone can understand.
The best example of a powerful mission comes from a great book by Chip Heath & Dan Heath, Made to Stick.
“Herb Kelleher [the longest-serving CEO of Southwest Airlines] once told someone, “I can teach you the secret to running this airline in thirty seconds. This is it: We are THE low-cost airline. Once you understand that fact, you can make any decision about this company’s future as well as I can.
““Here’s an example,” he said. “Tracy from marketing comes into your office. She says her surveys indicate that the passengers might enjoy a light entree on the Houston to Las Vegas flight. All we offer is peanuts, and she thinks a nice chicken Caesar salad would be popular. What do you say?”
“The person stammered for a moment, so Kelleher responded: “You say, ‘Tracy, will adding that chicken Caesar salad make us THE low-fare airline from Houston to Las Vegas? Because if it doesn’t help us become the unchallenged low-fare airline, we’re not serving any damn chicken salad.’”
“Kelleher’s Commander’s Intent is “We are THE low-fare airline.” This is a simple idea, but it is sufficiently useful that it has guided the actions of Southwest’s employees for more than thirty years.”
But of course to have this type of mission, you need to be really clear about what you are doing as an organisation. You need to have a clear strategy to be able to articulate it clearly.
This was where things got really interesting. In a show of hands, less than half the CFOs in our group felt that they were clear what strategy the CEO had set and therefore could hardly be expected to articulate it clearly across the organisation.
This got us thinking. Of course, in an ideal world:
“The best CFOs have a close, mutually respectful, but not subservient relationship with the chief executive. Those who never disagree and do not stand up to their boss on key matters are not worth having. While every CFO should be a partner to the CEO, they should always believe they report to the board and owners of a corporation.
“As with every senior role, an ability to manage people and a sense of humour are critical.”
In reality, both the CEO and CFO roles end up spending huge amounts of time doing things other than discussing strategy and culture. How can the CFO, as chief belayer in the business, best support the CEO in their pioneering mountain climbing, if the CEO hasn’t told the CFO where they are trying to go?
More important, how can CFOs broach the notion that their CEO has not set a clear strategy with their CEO?
Now this is a trickier one. Rather than confronting your CEO, or suggesting that they may be remiss in not making things clear, one of the subtlest approaches I heard about this morning was to take some time with your CEO and ask them, “How can I help support your strategy in the business?” This has the advantage of enabling the CFO to engage in a conversation
that could either, demonstrate the unarticulated strategy that the CEO has or, let the CEO realise that their strategy is unclear and their CFO could be just the person to help them define it. Even if this makes for more work in the short term, the future benefits are obvious.
Thank you to all of our CFO participants including: BioCair UK, Biowisdom, E-Stack, ITM Power, nCipher, Plastic Logic, Polysolar, Red Gate Software, The BLN, TTP, Ubisense, Xaar, Zeus, Zinwave.
Thanks to Red Gate Software for the excellent breakfast and for hosting and of course to BDO LLP who have been instrumental in supporting our CFO Breakfast Brainstorm from the outset.