How to become a valuable strategic partner
I worked as a chief financial officer for 20 years, so I’ve heard all the jokes and comments about the stereotypical CFO. They have their personality removed before being promoted. They’re the “no man or woman.” Or they lack imagination or innovation. The CFO of today needs to shun these stereotypes and step up as a fully-fledged innovation partner, otherwise their organisation risks missing a crucial voice in strategic discussions.
An article by McKinsey & Company addresses this issue and provides five actions CFOs can take to support innovation.
- Build innovation goals into the company’s plans for growth.
Quantifying required revenue growth, or introducing incremental targets, always in consultation with senior management, can add value to innovation projects. - Discover and validate untested assumptions about an innovation project
Rather than just questioning the numbers, the CFO can also seek answers to assumptions no one has thought to evaluate. Use this process to then discuss the finance-related issues. - Speed up the standard budget process
Instead of an annual budget cycle, innovation projects need a more frequent cycle so resources can be allocated in response to the progress, or otherwise, of the project. - Establish metrics specific to innovation projects
Innovation by definition means new and different, so it’s appropriate to have bespoke metrics relevant to the project instead of trying to make generic ones fit. - Upskill and empower the finance team
Consider rotating finance team members through the various innovation projects to give them the experience and a better understanding of how the projects function. They are then in a much better position to assist the CFO.
The article has other useful tips to help CFOs overcome the (often wrongly-attributed) stigma of being obstacles to innovation and instead be seen as valuable strategic partners in the innovation process.
Photograph: Sora Shimazaki from Pixels.
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