Building strategy is one of the important roles of a financial leader. This process includes reviewing the organization's long-term goals as well as understanding how to achieve those goals through financial planning, budgeting, forecasting, and other analytical methods.
Research shows that most young CFOs, in their early years in this position, have had little prior exposure to the strategy process, or training in how to design, build and implement corporate strategy. Or in other words, a partner on the same front line as the CEO. As a result, most CFOs have difficulty making a significant impact on organizational strategy in their first years.
Reputable, experienced CFOs are participants in the company's strategic planning process from start to finish. Their opinions are authoritative and respected in the strategy formulation process. In contrast, less experienced CFOs are often “excluded” from the process, so they feel left out of important discussions and face more difficulties. This can reduce the value of young CFOs as well as the impact on the company's Board of Directors.
Therefore, in this guide, Bizzi will help you learn how to effectively carry out your responsibilities to differentiate yourself as a senior CFO, rather than a typical “back office” finance leader.
Signs that CFOs are passive in building strategy
Before we look at tips and techniques that finance leaders can use to contribute more to strategy, let's look at some common indicators of strategy building capabilities. Yours needs improvement.
Have CFOs had the following thoughts a few times?
- “I am never invited to strategy meetings”
- “My team and I are rarely asked in strategic decisions”
- “I encounter barriers when I want to influence meetings with the board of directors”
- “I never have influence on the company's development direction”
- “I'm not sure how I should build a strategy and lack the tools to do it”
- “I have never been trained on how to develop strategy”
- “I seem to spend most of my time doing daily tasks and low-value activities.”
- “I'm often seen as just a number cruncher, not a strategic partner.”
In addition, CFOs also:
- Have difficulty finding time to think strategically
- Lack of confidence when speaking in non-financial meetings
- Too focused on details instead of focusing on the overview
- Difficulty building meaningful relationships with other departments
- Not knowing how to develop a financial strategy that aligns with the company's goals
- Find yourself stuck in a reactive mindset instead of thinking ahead
- Lack of awareness of the business side and solid knowledge of trends in your industry
- Responding to mandates and making decisions without considering their long-term strategic value
If you can relate to any of these issues, perhaps you need to take steps to create a stronger link between your team and the organization's strategy. By mastering the art of strategy formulation, you can ensure that all your activities have real value and help move your company towards its desired goals by playing a key role. important in designing, building and implementing the company's strategy.
>> See more: ESG 2023 – What should business owners, CFOs and Finance Controllers care about?
Root cause: Why do many CFOs lack the ability to build strategy?
There are many reasons why CFOs have difficulty influencing and contributing to the company's development strategy. This is especially common for first-time CFOs, who may have never been invited to build strategy.
The goal is not clear
Unclear: Many CFOs are uncertain about their role in the strategic planning process and/or lack certainty about how to make a meaningful contribution, so they often get confused while giving suggestions or ideas. feeling “excluded” from important decisions.
Work overload: A heavy workload can lead to a lack of time for strategic thinking. This can lead to CFOs focusing too much on details instead of the big picture and not having enough time or energy to focus on long-term goals.
Lack of training: Many CFOs do not receive enough training on how and what skills to contribute to strategy. This can prevent them from providing meaningful input into strategic discussions and decisions, leading to them being left out of the process.
Unconfident
Fear of rejection: CFOs may be hesitant to voice opinions in non-finance meetings for fear that they won't be accepted. Fear of rejection can limit your ability to exert valuable influence on strategy and key decisions.
Unfamiliar with the process: CFOs may be unfamiliar with the strategic planning process and lack the confidence to contribute meaningfully to it, leading to hesitation and feelings of exclusion from important discussions.
Fear of other people's "intimidation": The CFO may find that other senior members of the team have more experience when it comes to strategic planning, making them feel like their opinions are not worth enough over others.
"Poor" relationship
Difficulty connecting: CFOs may struggle to build meaningful relationships with other teams, leading to a lack of trust and collaboration during the strategic planning process. This can lead to feelings of being “left out” and not being appreciated as a member of the organization.
Lack of communication: CFOs lack channels to support communication and communication with other teams, making it difficult to coordinate strategies. Therefore, CFOs feel like they are not part of the company's overall strategy and goals.
Limited resources
Financial constraints: CFOs may not have the resources needed to contribute to the strategy process, making them feel like they are not adding value and influence to the process.
Time constraints: The CFO may be constrained by time barriers or other tasks that require longer time.
Missing tools: CFOs may not have access to the right tools for strategic planning, such as analytics software or predictive models.
Not sure about the process
Lack of knowledge: CFOs may lack insight and understanding of the changing commercial side, the fundamentals of the strategic planning process and how their role fits together. go there.
Overwhelmed by complexity: CFOs may feel overwhelmed by the complexity of the strategy process and lack the confidence to make a meaningful contribution.
Inappropriate roles: The CFO may have goals that do not align with those of the team, leading to a feeling of being out of sync with the overall company strategy.
Methodology contributes more to strategy
There are a number of ways that CFOs can contribute more to strategy to ensure that they play a key role in designing, building and executing business plans:
Participate in training
CFOs should take specific training courses on strategic planning to become familiar with the process and gain the confidence to make meaningful contributions. This may include taking courses, attending seminars, or interacting with an instructor or coach with expertise in the field.
Training can also help finance leaders understand their role in the overall strategy and how they can leverage their skills and abilities to help the team achieve its goals. From there, finance leaders have a more comprehensive view of the business and make it easier to make meaningful contributions during strategic planning sessions.
Finance leaders should use training as an opportunity to build relationships and create trust between departments. This is important for effective strategic planning and can help ensure that everyone is working towards a common goal.
Participate in strategy meetings
CFOs should actively participate in all strategy-related meetings, even if they are not directly involved in the process. Thereby, CFOs can easily stay updated on the latest developments and contribute their information.
Attending meetings also allows the CFO to network and build relationships with other team members helping ensure that everyone is working toward a common goal.
It is important for CFOs to speak up in meetings and share their ideas and information. This helps ensure that their contribution is appreciated and can make it easier to make meaningful contributions in the future.
Data synthesis
CFOs should collect data to use for strategic planning, such as customer surveys, competitor analysis, or financial forecasting. This type of information can be extremely valuable for decisions and will help ensure that the strategy is based on accurate data.
The CFO should also use his or her knowledge of financial information to identify trends or opportunities that could benefit the business. This type of analysis can help inform strategic decisions and provide valuable information about different aspects of the business. Finally, CFOs should use data to identify potential risks or issues that could negatively impact strategy. This can help ensure that all risks are taken into account, thereby making successful strategy implementation easier.
Generate solutions through idea discussion
The CFO should actively participate in brainstorming sessions and contribute ideas that can help improve the strategy. This is a good way to approach problems and find creative solutions.
Brainstorming sessions are also an opportunity for CFOs to share their information and insights about different parts of the business, such as customer behavior or financial performance. This type of information can be extremely valuable for strategic planning and will help ensure that the strategy is based on reliable knowledge and data. CFOs should use these sessions to create a shared vision for the company's future that everyone can pursue. This will help ensure that all team members are working towards a common goal and make strategy execution easier.
Take advantage of technology
CFOs should leverage technology to improve the efficiency of the strategic planning and execution process. Technology can be invaluable for providing access to data and insights that can benefit strategy, as well as identifying potential opportunities or risks that may arise in the future.
CFOs should also use technology to track the progress of the strategy and evaluate whether it is delivering the expected results. This type of analysis can help CFOs identify areas for improvement and make strategic adjustments easier.
CFOs need to apply technology to create a unified vision of the company's future. This will help ensure that all team members are working towards the same goal and make strategy execution easier.
Thinking about the future
CFOs should create time to think about the future and anticipate possible future difficulties or challenges. This type of thinking can be important for successful strategic planning, as it will help ensure that all risks are accounted for and that the strategy is based on reliable data and judgment.
Predicting future trends can also help CFOs identify potential opportunities that could benefit the business. This type of knowledge can be extremely valuable for strategic planning, as it will provide valuable information about different aspects of the market.
CFOs should use their forward-thinking skills to create a shared vision of the company's future that everyone can pursue. This will help ensure that all team members are working towards a common goal and make strategy execution easier.
Track progress
Tracking the progress of the strategy is important, as it will help ensure that all risks are being managed and any potential problems or difficulties are resolved. Tracking progress also allows the CFO to identify areas for improvement and adjust strategy appropriately.
CFOs should also use their knowledge of financial information to evaluate whether the strategy is delivering the expected results. This type of analysis can help identify areas of the strategy that can be improved, making successful strategy implementation easier.
At the same time, the CFO should periodically review the progress of the strategy and ensure that all team members are working toward the same goal. This will help ensure that everyone is clear on the overall goals and ensure that the strategy is implemented effectively.
Create a culture of feedback
Creating a culture of feedback is important for finance leaders, as it will help ensure that any issues or risks can be identified and resolved quickly. This type of open communication also allows team members to contribute valuable information about different aspects of the business, such as customer trends or operational issues.
CFOs should also use feedback to evaluate whether the strategy is delivering the expected results. This will help identify areas for improvement and adjust strategy appropriately. Furthermore, CFOs should create a culture of feedback that encourages team members to share comments honestly and constructively.
Develop commercial awareness
CFOs need to ensure that they have a good understanding of the current market, including competitive forces, customer trends and economic conditions. This type of knowledge can help shape strategic decisions and provide valuable insights into various aspects of the business.
Developing a commercial sense also allows the CFO to spot opportunities that can benefit the business. This is vitally important for strategic planning and will help ensure that decisions are based on data and insights from the broader market.
Therefore, CFOs should use their knowledge of commercial sense to identify potential risks or issues that could negatively affect strategy to ensure good control of risks.
Building strategy is a challenge that finance leaders face throughout their careers. However, with the right knowledge and tools, CFOs can contribute significantly to the success of a company's strategy.
By understanding the importance of thinking ahead, tracking progress, creating a culture of feedback, and leveraging technology, finance leaders can develop strategies that help their organizations achieve your goals.
In short, CFOs can make a major impact on the success of their organization's strategy by leveraging their knowledge and expertise. With the right resources and guidance, finance leaders can become indispensable contributors to creating successful strategies.
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