Not too long ago, CFOs were widely viewed as risk-averse executives, the ones who focused more on costs than benefits and who put up roadblocks to innovation. In today’s digital economy, that’s no longer the case. Modern CFOs are expected to be business leaders who embrace digital transformation.
The role of the CFO has now expanded beyond tactical jobs like closing the books and keeping the lights on. Indeed, the top CFOs are making real contributions to business strategy and serving as trusted advisers to the CEO.
If you’re a CFO who is prepared to take on a larger role, here are four strategies you should embrace to be hyper-effective in the modern enterprise.
1. Focus on long-term strategy
Ask yourself what you want to achieve as a CFO. You need to focus on the long-term goals for the company, and to make progress towards those goals, you should focus on certain metrics which help measure progress. The more you measure what success looks like, the more likely you are to achieve it.
As an example, at one of my previous companies, we had around 20 Fortune 100 customers when I joined. We wanted to focus on gaining new large customers, so we set a goal of raising that number to 50 Fortune 100 customers. Over time, we actually had over 60 Fortune 100 customers. Setting these sorts of long-term goals and measuring your progress along the way is crucial to success.
2. Focus on leading indicators
Every CFO has to choose which metrics to focus on most intently. Personally, I put a lot more emphasis on leading indicators than I do on lagging indicators. But while leading indicators are very exciting, they are also hard to figure out.
That’s why I spend a lot of time getting to the bottom of our leading indicators, such as our customer churn rates, customer satisfaction, customer references, and cross-sell and upsell expansions. There are lots of leading indicators like these that can help you see not just where your company has been but where it is going.
3. Leverage the data
There is so much data available today and it is the CFO’s job to tap into to see what is working and what is not. The good news is that there are now many business intelligence tools on the market that make it easier for CFOs to access data in real time and use it to better understand how the organization is performing overall.
Yes, the CFO has to be a steward for the organization by protecting assets and mitigating risk. But more than that, CFOs have to figure out new ways to enable growth by leveraging all of their organization’s data.
4. Be a driver of innovation
CFOs used to be in the back office looking at what happened in the past and reporting results. Today, CFOs have to keep pace with what’s coming next in the market. We are in a period of huge digital transformation that is taking place across every industry. It’s critical for CFOs to understand the trends that are coming our way, because they’re coming faster than ever.
Personally, I like to focus on the hard trends and figure out how best to adapt and evolve in the face of those changes. At the very least, you need to know where your company stands relative to the rest of the industry so you can pivot fast enough and not be blindsided by upcoming changes.
My view is that today’s CFOs must be growth drivers and value creators. They have to be enablers of digital transformation, not disablers. That’s how CFOs can put themselves in a position to lead their companies forward and achieve even greater success.