Agility And Sustainability And The 8 Types Of CFOs

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2020 has been an insane year in many ways and re-shaped the corporate landscape. With limited visibility into the future companies have been forced to become more agile in their way of operating. This has also had a great impact on Finance. Why? Because in times of crisis people look to Finance to steer the company safely through the mayhem. That meant that once again CFOs had to expand on their skill set to remain relevant. No longer was it enough to… 

• …own the numbers,
• …develop insights from data,
• …drive the right strategic choices,
• …spearhead the digital transformation,
• …be a disruptive force in the business landscape, and
• …be a social being that builds strong relationships with key stakeholders with ease. 

As if becoming agile was not challenge enough then CFOs must also start to look towards the future and beyond the pandemic. There is one word that presses itself higher and higher on the agenda. That is sustainability. No longer can Finance and companies, in general, afford to ignore this topic. In fact, many are starting to see it as a strategic differentiator as opposed to just another costly initiative to run. 

This leads to the forming of two new CFO types in the ever-evolutionary role. The Agile CFO and The Sustainable CFO. They are different because they ask different questions to their peers and drive the company in new directions. Introducing the two new roles does not mean that the former six can be forgotten. No, this is the real challenge for CFOs. To be truly successful they must do all eight types well!

In reality, they will, of course, delegate some of the responsibilities within the team. However, they must be able to hold their own when facing the senior leadership team on each of these topics. Now let us revisit each of the roles and learn more about what questions they would ask to drive performance. 

The old-fashioned CFO 

The old type of CFO is focused on backward-looking financial reporting, control, and compliance, and how to keep up with regulation. This CFO struggles mightily with social skills and is not likely to have good relationships with her senior management peers. She is likely not recognized as a great leader either hence you see fewer and fewer of this CFO type although they are still very much alive! 

Questions asked by an old-fashioned CFO

• How fast can we close the books?
• How can we minimize the cost of Finance?
• Have we reviewed the balance sheet to ensure we run an optimized business? 

The analytical CFO 

How about the CFO that creates transparency through a deep understanding of the numbers and who knows how to lay the land to the rest of the senior management team? Understanding exactly what goes on in your company is a good starting point for driving value creation, however, simply being an assertive communicator and understanding your numbers is not enough. CFOs must be able to build relationships and speak the language of the business. Otherwise, they will not influence much with their speech. 

Questions asked by an analytical CFO

• What do the numbers tell us?
• How can we combine financial and non-financial data for deeper insights?
• What insights do we need to improve our decision-making? 

The strategic CFO 

In many companies, the strategy team reports to the CFO and hence the CFO should lead the strategy process. Too often though it becomes a messy process because the CFO lacks solid relationships with senior management peers. That on the other hand has the Head of Strategy. Hence, it is often she that will be leading the way leaving the CFO leaned back in her seat with little impact. Naturally, the CFO should lean on a strong head of strategy, however, she must be a strong owner too and that requires strong relationships! 

Questions asked by a strategic CFO

• What are our strategic options?
• What is the business case behind the choices we need to make?
• How will making these choices put us in a relatively better position than our competitors? 

The tech-savvy CFO 

As companies go through digital transformation many of them see an advantage in having a tech-savvy CFO. However, many of them are also starting to realize that it takes a lot more than tech-savviness to succeed with tech. It requires a strong leader that can bring people along on the journey. Why? Because after all, it is the people that in the end will be operating and monitoring the tech. Too often CFOs have forgotten this and seen the ROI on tech investments plummet. 

Questions asked by a tech-savvy CFO

• How can we best automate this process?
• What are some ways for us to digitalize our business model?
• What new business opportunities become available in a digital economy? 

The disruptive CFO 

Do not get me wrong. It is great to have a disruptive CFO that is always asking, “what comes next” and is out and about chasing the latest trends. However, the debrief of this should be received well rather than defensively. Employees should be brought along on the journey rather than alienated from what needs to happen. The team must stand strong behind the CFO to start the work. 

Questions asked by a disruptive CFO

• What big moves can we make that propels us ahead of the competition?
• What can we do radically different that will change our industry upside down?
• How can we continue to move into new or adjacent business areas that keep our company at the forefront of our industry or even create new industries? 

The social CFO 

The social CFO is a people person or at least has learned to be one. She thrives on her social skills rather than financial skills although they cannot be disregarded. To be successful she must be a great listener, know the company’s customers, know the finance team, know the colleagues outside finance and their capabilities, and is a great communicator and storyteller. Most of the things happen outside the previous CFO's comfort zone so if you want to succeed as a CFO in tomorrow’s world you better choose today to step outside your comfort zone! 

Questions asked by a social CFO

• How can we put the (internal) customer at the center of everything we do?
• How can I break down silos between Finance and other functions?
• How can we create a stronger executive team leading to higher performance? 

The agile CFO

The agile CFO moves everything in the company at speed and adapts fast to a changing business environment. She knows how to build flexible data to insight flow and operates on a state-of-the-art technology platform. She is not shy about reallocating resources when circumstances make some business case unprofitable to make room for opportunities as they arise in the market. She thrives on uncertainty as she sees it as a competitive advantage knowing that her company can always respond faster than the competitors. Lastly, she uses her social skills to bring along the rest of the management team and the finance function to ensure everyone is aboard with moving the company at speed. 

Questions asked by an agile CFO

• What scenarios do we expect in the future and how would we act should they realize?
• How fast can we change our operating model if our business environment changes fundamentally?
• How can we break down organizational hierarchies to increase our speed from thought to action? 

The sustainable CFO

In a world that is increasingly thinking about how to preserve the environment and increase the cyclability in our economy a last type of CFO is emerging. She will look towards a future that looks vastly different from the one her company operated in the past. To grow the business, she cannot just increase the resource spend but rather must do more with less. This does not mean to cut costs or down-size the company. Rather it means finding new solutions that can still grow the company at a continuously decreasing resource spend. This perhaps is the greatest challenge for all companies in the future and why the CFO must ascend above all other issues and make sustainability a core topic on their agenda! 

Questions asked by a sustainable CFO

• How can we reduce our resource spend yet increase the quality of the product?
• What is our company footprint on the environment and what are we doing to reduce it?
• What new business opportunities arise for our company in the cyclical economy? 

It’s an evolution – not a revolution 

The CFO role will continue to evolve, and the real challenge is that the demands of yesterday do not go away just because the current day and future demands are coming. This also means that the CFO must put a great team around her to succeed because without it being good at any one of these types in isolation is not enough. Do you agree that The Agile CFO and The Sustainable CFO are distinctly new types from the six priors? Now, the final question: What type of CFO or finance professional are you?

If you want to become a better business partner you should consider taking our online course "Business Partnering Explained - Value Creation Unlocked" to get a better handle on the role. It's accredited for 5.5 CPD hours.

You can read a lot more articles about FP&A, Business Partnering, and Finance Transformation below. It all start's with “Introducing The Finance Transformation Nine Box” where you set the ambition for your transformation. You should join the Finance Business Partner Forum which is part of the Business Partnering Institute's online community where we will continue to discuss this topic and you can click here to follow me on Twitter.

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Anders Liu-Lindberg is the co-founder, COO (Chief Operating Officer), and CMO (Chief Marketing Officer) at the Business Partnering Institute and owner of the largest group dedicated to Finance Business Partnering on LinkedIn with more than 9,000 members. I have ten years of experience as a business partner at the global transport and logistics company Maersk. I am the co-author of the book “Create Value as a Finance Business Partner” and a long-time Finance Blogger on LinkedIn with 50.000+ followers.