Can CFOs Create Culture to Improve Strategy?

Can CFOs Create Culture to Improve Strategy?

There’s a reason so many companies value their culture above other business factors. Corporate culture is often the cornerstone of success. When employees are happy and productive, the company has the opportunity to thrive. As important as culture is, it is not usually associated with the financial side of the company, so in turn CFOs don’t concern themselves with contributing to positive culture. History has proven that shouldn’t be the case. During the economic downturn of 2008, Wells Fargo took a chance in buying the financial services company Wachovia. When other banks were struggling to stay afloat and seeking government assistance, Wells Fargo was making acquisitions, taking risks, and benefiting from their strategic moves. Wells Fargo chairman and CEO John Stumpf attributes this success to the culture of management and solid CFO leadership. As he told the Austin Business Journal in 2011, “We want a fortified balance sheet and strong capital. The difference actually is made in the go-go times. Don’t do stupid things. Stick to your guns in the go-go times. When things turn tough, then you’re going to have the resources at your disposal to make some very good financial decisions for the company.” CFOs who want to improve their strategy and create a strong foundation in anticipation of tough times need to invest more deeply in the culture of their company. They can do this with the following approaches. Choose Your Management Style Culture is likely dependent on the management styles of the company’s leadership. A CEO who is hands-on will inspire more employees. A CFO who is more involved in even the minute financial processes...
Is Your Finance Team Getting Data Fast Enough?

Is Your Finance Team Getting Data Fast Enough?

The finance department has long been rich in data. Ever since the widespread automated financial activity through the adoption of ERP, financial decision-makers have had a wealth of information at their disposal. However, as the last few years and the wave of “big data” have taught us, raw information on its own doesn’t equate to actionable insight. While financial activities like budgeting, forecasting, and reporting have traditionally been a natural fit for analytical technologies, proving a sound business case for implementing such tools has never been trivial. These days however, the case is clearer. In order to exploit the power of analytics and improve performance, companies have become more mature and rely on internal capabilities including. Open (and secure) cross-functional data exchange. Finance leaders have a heightened need to reach into a wide variety of data sources and functions across the company. Best-in-Class organizations have an open exchange of data across functions to help enable and enrich financial analysis. Established policies for governing / controlling enduser data access. Before a company can unleash its analytical potential, it is necessary to put controls in place to make sure the right people are accessing the right data. Best-in-Class financial executives are 65% more likely to have these controls in place. Data exploration and discovery tools. Traditional reporting tools will always have their place in finance, but today’s business leaders understand the value of exploring data, developing analyses, and answering their own questions. Top companies are twice as likely as all others to use data discovery tools With a strong foundation of capabilities such as these, and a judicious use of technology, companies that have developed a formal analytical strategy are enjoying the fruits...
Scale vs. Growth for the Midsize Enterprise

Scale vs. Growth for the Midsize Enterprise

Getting bigger and adding new team members, new resources, and new opportunities is, in many minds, the most obvious indication of success. It means your business can sustain more than it originally set out to handle. Growth is an excellent goal for a small business, but by the time an organization reaches mid-market size, growth is far less important than scale. Knowing the difference between these two objectives can be the defining factor for the CFO of a midsize company who wants to make a lasting impact. Growth is reflected by increases in revenue and resources at the same rate. Scale is the increase of revenue with no change in cost to the business. For a midsize enterprise, scale is a better goal than growth. Financially, scaling up allows a company to increase profit without expending any other departments beyond their means. There is less sacrifice involved with scale, and it can help a company making between $10 million and $1 billion each year stand out among competitors. A company’s ability to scale is often correlated with their future growth. Mid-market enterprises have maintained stable growth in recent years, comprising one-third of employment and total GDP in the U.S. As a McKinsey report stated, “A company whose revenue increased more slowly than GDP was five times more likely to succumb in the next cycle, usually through acquisition, than a company that expanded more rapidly.” To sustain scale over growth, CFOs must consider a few important approaches to company strategy, finances, and culture. Avoid Tunnel Vision One of the most defining features of a mid-market enterprise is its intimate knowledge of its customer...
Centralizing the Financial Data Story

Centralizing the Financial Data Story

Data was supposed to solve everything. Once professionals figured out how to mine the data being generated by customers and business operations, the insights gained were supposed to instantly solve problems and streamline processes. And while data has greatly contributed to these types of transformations, it has also muddled the role of the CFO. A new survey conducted by CFO Research revealed that many CFOs still struggle with managing the data of financial planning and analysis intended to help their companies. In a nearly even split, CFOs either complain about not having enough data (32%) or having too much (30%). This disparity shows how the value of data mining on the financial side of an organization has varied depending on the systems, the CFO, and the intent of analysis. Regarding the future of data analysis, almost all CFOs (94%) agree that up-to-date and instant data is the only way forward. With this expectation creating more corporate pressure for actionable insights, CFOs need to find a way to collect the data they need, whether it’s more or less, and how to write a cohesive story with the results. Knowing Where to Look The biggest areas where CFOs are and should be using analytics include assessing customer risk and behavior, compliance and regulation, and evaluating the fluidity of their future operations. Many CFOs struggle with analytics, because they are using them to address all these different areas with a single set of data. The solution to centralizing how data is used is to apply only the appropriate data to the corresponding areas. Using customer behavior data to address compliance concerns would...
CFO’s Corner: Ian Charles of Host Analytics

CFO’s Corner: Ian Charles of Host Analytics

Ian Charles is a strategic CFO with broad financial experience and a passion for building businesses. Having amassed 15 years of experience in senior finance roles, Ian was the CEO of IMC Capital Partners, where he led many successful software investments and advised technology startups in strategic development and financial analysis. Ian was CFO at RMG Networks, a digital media firm backed by Kleiner Perkins that grew rapidly and executed multiple acquisitions to establish a leadership position in digital out-of-home media. Ian was a founder and CFO at Rex & Co, SVP of corporate development for UNX, and vice president and equity research analyst for SG Cowen. He started his career as director of corporate development for AOL Time Warner, leading new acquisitions and strategic partnerships. We asked Ian a few questions about his experiences as a CFO: Q: You spent many years on the investment and corporate development side of things. What made you want to become a CFO? A: Good question. When you spend as many years as I did in corporate development and as an analyst in banking, you learn many things about a business and what drives it. You learn and understand the nuts and bolts of the business – R&D investment, customer growth and retention, revenue, employees, costs, cash flow, and how the key metrics illustrate strengths and weaknesses. So it was a natural step into the CFO’s seat. As CFO, one has purview and influence over the entire organization from a numbers point of view and my background of Corporate Development and as an Equity Analyst created a natural transition. After all, who is...
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