The CFO’s 7 Questions to focus the Leadership Team

Today’s business environment requires a CFO to be not just a strategist, but a pragmatic strategist!

Being a pragmatic strategist means being devoted to seeking solutions to problems! It means cultivating a mind-set where you, the CFO, ask the right questions about where your company is currently positioned, what is holding it back from achieving its potential or what could hold it back, and then framing what you might do to move the company forward.

Here’s how to do it.

Asking these critical questions will empower you as a strategic thinker because the answers can generate pragmatic starting points for a conversation with the CEO and other Leaders on ways to improve company performance through finance-driven and other solutions:

1. What is the CEO’s vision for growth and plan to grow the company? Is it through M&A, organically (i.e. by driving new or existing products to new or existing markets), or both?Once you know what combination of these growth choices your company is committed to, make sure that capital is available at the right cost for these choices to be profitable and that it is allocated appropriately to support that growth
2. What are the dominant constraints that hold back your company’s growth, and how might you overcome them? The dominant constraints are the issues that prevent a company from reaching its potential. Find out what they are address each one. For example, a heavy debt burden with high interest, lack of working capital, lack of a needed or key product in the pipeline or simply the mind-set and culture of the company.
3. What is your greatest area of spend where there is a lot of uncertainty about return? Creating clarity and better disciplines on spend are often a source of quick strategic wins. For example, measuring the returns from advertising and promotions to guide future spending
4. What is the greatest uncertainty facing your company, and what can you do to resolve or navigate it? Uncertainty can “freeze” decision-making. You can “unfreeze” those decisions by gathering information to resolve the uncertainty, instituting a structure to navigate the uncertainty while managing risk through insurance, or developing a step-by-step approach to real-option investment as uncertainty is resolved
5. Are your company’s financial and growth goals ambitious enough? It is easy to get trapped in the priorities of the present. But thinking beyond existing constraints and limits can sometimes help identify plays that create dramatic new strategic options. What would you do differently if the company were much larger? Maybe your ability to invest in future growth is enhanced by increasing your scale not by two times but by 10 times through a series of rollups or acquisitions. If you bring that option to your CEO and board, you’ve started a conversation that could be truly game-changing for the company
6. What would you like your company to stop doing? Are there underperforming business units or a part of the company that does not generate required returns, or customers who are not profitable? It may be best to dispose of it and free up capital and management resources to grow more high-potential businesses. Similarly, choosing not to serve unprofitable customers or to increase prices to them may increase long-run returns.
7. What could disrupt your company, and what can finance do about it? This is about envisioning a competitor’s move such as a merger or a new industry entrant that changes the nature of competition or a new technology that dramatically changes product offerings. Leverage your FP&A capabilities to model out disruptive scenarios and help frame options

These critical questions will help you identify strategic opportunities and cultivate a strategic mind-set. By asking the above questions and formulating solutions around them, the CFO can be the pragmatic strategist by addressing critical constraints, uncertainties and performance issues through tangible and realistic actions to move the company forward. Others on the team can push forward new product, product differentiation, or market strategies but you, the CFO, can keep them honest about the economic returns and viability of different positioning strategies, while creating value in the immediate context.

Rob Lancuba heads up Thought Patrol Finance, who enable CEOs and CFOs and their organisation to realise their full potential. If you are a purpose-driven CEO or CFO we’ll help you become a better business builder and leader, uncover new possibilities and achieve your goals with greater focus, greater energy and greater impact. Make contact and let’s talk strategy!