Call it the CFO conundrum. As your company’s most senior finance executive, you understand that your most important mission is to enable significant value creation. That means finding a way to shift from “just” keeping a complex finance function on the rails to establishing yourself as the CEO’s principal thought partner—rather than, as some CFOs confide, being considered “a glorified accountant.” For some CFOs, the challenge can be even more intense. Instead of being carefully prepped for succession over the course of years, they find themselves thrust into the top role unexpectedly, perhaps when the business is in distress, emerging from an ownership change, or dealing with a tail-event crisis (as occurred with the COVID-19 pandemic or as is playing out today with geopolitical conflicts). They simply must carry the mantle forward. Urgent requirements, including cash management, internal and external reporting, talent development, risks and controls, and scenario planning, can’t be wished away.
But even following the most favorable transitions, many CFOs ask how they can conjure up the massive amount of time required to run a company’s finance function and also be a thoughtful, strategy-first leader. And how, in the face of the enormous complexity of pressing and even competing demands, can they establish the credibility to have other senior leaders view them as the de facto “deputy CEO”? If only they had more time, they could be that kind of CFO. But because they’re not that kind of CFO, they need to scramble to invest even more time.
Yet some CFOs do rise to the challenge. In this article, we’ll explore how they raise their games above functional expertise to achieve real strategic impact. By improving in six critical dimensions, they solve the time-crunch challenge to become enterprise-wide leaders, superior decision-makers, and value-creating confidants of CEOs—all while running a more efficient, dynamic, and farsighted finance function.
As our colleagues noted more than a decade ago, “strategy is a way of thinking, not a procedural exercise or a set of frameworks.”1 Yet too often, CFOs find themselves solving for procedural exercises or framework elements. They iterate on small items without pausing to consider how much these details really matter to executing the company’s strategy and plow ahead with the same routine without considering which systems could be radically improved and which tasks could be thoroughly automated.
The best CFOs ask elemental questions. They focus on core, strategic issues, such as identifying new sources of growth and realizing the highest risk-adjusted returns for company capital. They also ensure that they have disciplined strategy development processes, with metrics expressed in common finance terms (such as revenue and cost of sales) and business metrics that flow directly to financial results (for example, customer retention rate or inventory turnover). Clear strategy-based targets enable easy tracking, hold people accountable for results, and help maximize value creation. Like a world-class athlete, effective CFOs slow things down and simplify. For example, they take the three- to five-year longer-term strategic plan that has been translated into a straw man set of financials and then use it as a starting point for targets in the upcoming year when approaching budgeting—continuing to stretch aspirations in a realistic way and accelerate how quickly the company reaches its clear objectives. The best CFOs understand key pain points, analyze and align their organization’s incentive structure, and assess current capabilities, particularly IT systems and tools.
One senior finance leader, faced with a deluge of performance data and a need to produce an accurate, accessible forecast, literally paused a meeting to ask the crucial question: “How can we make this process go like lightning?” In this particular instance, the solution was found in automating a critical step in the forecasting process. Today, particularly with emerging, commercially practicable solutions in generative AI, automation can be even more impactful. Cash flow and revenue forecasts that used to take teams weeks to produce can now be generated in minutes. Competitor investor presentations can be quickly synthesized as well to provide at least a solid first draft of likely questions from analysts—and initial versions of answers. And initial drafts of securities filings and stakeholder presentations (such as sustainability reports) can not only be generated near-instantaneously but also checked against current regulations and standards.
As part of one company’s financial-planning process, the CFO created a formal discussion format that focused on a few fundamental questions: How is the financial plan supporting strategy? Which resources (talent and capital) are we removing from last year or redeploying to this year? And how will we know that we need to course-correct—and when will we make these choices? Previously, these were disconnected processes. Now the simplicity of the questions allows the CFO to more directly link strategy to financial planning. The CFO also uses a tailored planning solution to ensure a common understanding of the drivers and probabilities of revenue and cost goals and early team collaboration. The improvement not only saves time but is also much more accurate than the company’s earlier, off-the-shelf spreadsheet software and its disjointed decision process.
One of the most consequential ways to cut down on the little things is to focus on what’s big. Incrementalism demands a lot of effort, but it won’t unlock major change. Our research shows that, perhaps counterintuitively, leaders tend to achieve better results in terms of both top- and bottom-line performance when they focus on the whole rather than the sum of its parts. For resource allocation, CFOs should think in terms of shifting more than 60 percent of annual capital expenditure to different business units every ten years; however, depending on your company’s specific industry, the time period may be much shorter. Other hallmarks of big moves are gross margin improvements that place your business within the top 30 percent of its industry, SG&A productivity improvements within the top 40 percent, and labor productivity improvements within the top 30 percent of peers.
For example, a CFO in the life sciences industry focuses personal time on capital allocation and has only three main priorities—business development of innovative products, funding for clinical development to support internal programs, and support for the successful launch of the largest commercial product. This focus on capital allocation allows the CFO to home in on the team and drive the big moves that matter most to the company.
The most effective CFOs radically simplify their function. Even among smaller or midsize companies, it’s not unusual for finance departments to have hundreds, or even thousands, of reports that its employees must fill out. Often, the information is duplicative—or worse, not connected to strategy. Duplication also extends to an employee’s responsibilities and roles: the same task, with some variation, can be the responsibility of multiple people. In one major agribusiness, for example, three separate managers, in two locations, were responsible for tracking the enterprise’s purchase orders. And in a leading national airline, the CFO discovered that employees in external communications regularly released data that decidedly did not align with key messages from investor relations. Effective CFOs get ahead of that kind of disconnect by mapping out roles and responsibilities—which, in turn, allows them to have the most important details at the ready. They put themselves into their CEO’s shoes and imagine what they would ask if they were running the company. One highly effective CFO who thinks at the enterprise level was referred to by the CEO as a “walking encyclopedia.” It’s a remarkably apt analogy: one person can’t know everything, but they can be proactive in identifying what are likely to be the most important issues.
Effective CFOs save time and achieve stretch goals by clearly identifying potential outcomes and keeping their teams focused on what’s needed to create outsize value (exhibit).
To measure the impact of their initiatives in a nontheoretical way, it’s essential to start with a “do nothing” momentum case (to represent the true, declining baseline if no business improvements are made) and a range of outcomes from budgeted initiatives.
Budgeted initiatives create a new baseline for expected EBITDA.
Recognizing concrete, higher targets enables companies to create significantly more value.
To measure the impact of initiatives in a nontheoretical way, it’s essential to assess how the enterprise performs compared with its peers (including on a business segment level), to identify core performance differentiators (for example, growth and margin expansion), to size investors’ current and potential expectations for each major business, and to call out and constantly strive to meet clear performance indicators and targets.
It’s true: some days will be busier than others, and some periods—such as a major acquisition, a materially adverse event, or even the days immediately preceding and including key quarterly or annual financial results—can be especially intense. But every day should not feel like a new crisis.
The most effective CFOs save time by investing effort to build the tools, reports, and calendars that enable agile change. This starts with the basics of performance management, including standardized templates, clear action items, and targeted outcomes that are regularly updated to track progress. CFOs and their teams should have a standardized playbook outlining key questions to evaluate actual and forecasted results for the momentum case, investments, and initiative tracking. They should also establish clear guidelines on when ad hoc analyses are needed (for example, variance management based on a defined threshold) and clarity on processes, governance, and timelines. And to ensure that the most impactful projects are receiving the resources they need, CFOs should meet with their senior team members, and ideally the CEO, at least weekly to track resource allocation.
The CFO of one industrials company dramatically reduced the number of meetings they attended and instead delegated the monthly reviews to the financial-planning and -analysis leader. This CFO also made one-on-one meetings more focused on personal development, as opposed to content area reviews. The meetings that they have with teams (and their personal time) are focused on a set of issues that are directly linked to the strategy and performance of the company. Other functional and business leaders are invited to the meetings based on the topics, eliminating the need to track them down later and slicing decision-making time as a result.
Financial performance is ultimately measured by hard numbers, but some of the biggest time sinks aren’t mathematical; they’re behavioral. Common human biases, including tendencies toward risk avoidance and loss aversion, show up frequently in large organizations, bog things down, and lead to worse results.
There are several shifts that CFOs can make to overcome time-wasting inertia. For starters, they should be clear about what their strategic priorities are, rather than getting sidetracked by glamour projects or, even worse, relegating the strategic plan to being just one more item on their to-do list. A best practice is to track the company’s portfolio of initiatives across multiple horizons and update strategy based on how the company actually progresses, comparing three years’ preceding results against the three-year-forward plan on a continuing basis.
CFOs should not waste time solving for consensus. The most effective leaders frame strategy around major choices, calibrate aspirations against their company’s endowment and industry as well as broader macroeconomic trends, and relentlessly prioritize. To break free of groupthink, CFOs can use practical debiasing techniques (such as red teams and blue teams and devil’s advocates) and bring outside experts into the room. Their highly performing teams compare actionable, alternative plans with different risk and investment profiles, track assumptions over time, and build contingencies into planning to rapidly evolve choices as the CFO learns more. Meanwhile, they can save time and eliminate petty squabbles by adjusting incentives so that managers of all businesses are rewarded when the organization as a whole outperforms.
The most effective CFOs address challenges proactively. Among other steps, they confront budgetary sluggishness by freeing up resources as much as a year before their strategy will need to deploy them, adapt “80 percent–based budgeting” when possible to keep more resources liquid, and charge managers an opportunity cost for their resources, incenting them to free up capital rather than hoard it. They take on sandbagging by forcing hard conversations for major improvement, significant growth, and meaningful commitment; tailor approaches to no-regret moves, big bets, and real options; and adjust metrics and incentives to reflect the risks that people are taking. For example, they reflect higher or lower probabilities of success in their compensation structures, using team metrics that extend over longer time horizons in riskier contexts, and encourage “noble failures,” focusing on the quality of the participant’s game and the size of the potential candle. Finally, rather than getting bogged down by people’s apprehensions about the enormity of long-range planning, effective CFOs force the first step. While they have a clear vision of long-range objectives, they disaggregate the long run into practical six-month increments—starting with the first six months—and set short-term goals based on fundamental criteria. The objective is to focus more on what’s really driving the short-term numbers and less on a business’s monthly or quarterly profit and loss statements and continually identify where more resources are more immediately needed.
A final, critical component of being a time-efficient CFO is to practice effective microhabits—daily practices and ways of working that make for a more effective leader. Small actions and discrete steps can make an enormous difference.
The first microhabit, which may be perceived as the most challenging of all, is to be frank when managing up. This starts with speaking with the CEO. It’s common for CFOs, particularly ones that are early in their tenure, to assume they and the CEO are aligned on key priorities. An effective CFO makes those understandings explicit. There are several ways to clarify priorities and action plans, even understanding that the best approach depends on the styles of the individual CEO and CFO. Practical tips include a monthly email that a CFO writes to the CEO, a specified agenda for regular one-on-one catch-ups, and a formal professional-development plan that defines priorities up front. By being clear and specific, CFOs can better prioritize and be more effective both in investment committee meetings and in running the finance function.
In addition to the CEO, CFOs should invest in managing their relationship with the board. It’s not uncommon for individual directors to have different perspectives and expectations. While that can seem frustrating, an effective CFO turns those nuances into time savings; the more a CFO understands what a director seeks, the better a CFO can manage time to provide it—and indeed, anticipate it. It’s extremely rare for a board to be overtly adversarial; directors are, after all, solving for the best interests of the company and its shareholders. But if there are disagreements, we find that boards appreciate a CFO who can plainly state the question (for example, should we or shouldn’t we write down an investment), provide clear facts, and identify pros, cons, costs, and benefits—and then enable the board to address a problem before it reaches a critical stage.
In addition to managing up, effective CFOs also excel at managing themselves. One effective microhabit is to sit down and write a memo to yourself about your most important priorities; doing so helps immediately, simply by making these points clear to yourself. It then continues to pay off as you review it, ideally every quarter. Counterintuitively, taking time for reflection is a time-saver. It lifts you out of the hustle and bustle and allows you to re-center on key goals. Another useful practice is to reduce meeting time, frequency, and number of participants. It’s rare that a 60-minute meeting can’t be reduced to 45 minutes, and that 30 minutes can’t be sliced into 20 or 25. Keeping to the clock helps cut right to the business at hand. A similar dynamic applies to meeting frequency. Daily meetings can almost always be replaced by weekly ones. Monthly meetings, depending on what the subject is, can be every two months, or even once a quarter. And meetings themselves should be limited to decision makers and those who can immediately help them; if a meeting doesn’t end with a decision, it probably shouldn’t have been held in the first place. While “town halls” are useful—your team should not view you as someone who sits in an ivory tower—the absolute number should be limited. Otherwise, the CFO will be called to sit in on or lead too many meetings or calls and lose valuable time as a consequence.
Finally, to be at your best, CFOs should strive to stick to a fixed routine. Without sounding too much like a parent: get exercise, have a shutdown time for unwinding, and get enough sleep. Set aside time for your family and personal life. Multiple senior leaders have shared with us that they’ve achieved their greatest insights during or immediately after the time they’ve set aside to unplug. If fixing work–life boundaries sounds like an impossible goal, we can assure you that we’ve worked with dozens of CFOs who successfully make it work. They are more energized, efficient, and effective after starting and then sticking to their routines.
CFOs face an extraordinary set of concurrent challenges—to carry out company strategy enterprise-wide; manage a complex, detail-based function; and serve as the confidant and critical thought partner of the CEO. It takes exceptional discipline and focus to find time for it all, particularly for CFOs who find themselves thrust into the role. Yet by minding six critical sets of actions, the most effective CFOs do find the time to make it all work and help the company create outsize value for the long term.
