THE CFO’S MOST IMPORTANT ROLE
To kick off our new partnership here at LiftBridge CXO, we agree it is important to help our audience understand why an interim, project-based or part-time CFO role is valuable to entrepreneurs, founders and CEOs (“Leaders”). There are many articles on what you should expect from your CFO, but we believe there is one key element you need and hope a recent experience I had illustrates it.
The Key Element
As I was working with a seasoned entrepreneur launching a company with the tagline - a firm for, by and with entrepreneurs. I listened to his pitch multiple times with this same story.
You know when you are CEO of a startup and you have a moment where you are just not sure what to do? Who do you ask? Going to your Board is out. They look at you funny wondering if they have the right guy. If you go to your team, they panic and maybe tidy up their resumes. You go home to your wife and launch into the same tired story until she finally blurts out ‘go get a real job’. Then he would finish his pitch by saying, we are the firm that helps that CEO.
I feel sad that my friend has not experienced the type of CEO/CFO relationships that my partners and I have. He seems to think of a CFO as someone who creates spreadsheets and financial reports, and at times presents a few scripted points to investors. He said he had one CFO who preferred to stay in a telephone booth-sized office rather than work out in the open with the rest of the team at the tech company and that’s when I began to understand the distinction. While it might be a function of the size or stage of the companies he led, he had not had a CFO he considered a trusted advisor; someone he could talk to when he truly did not know what he wanted.
Doubt is part of being an entrepreneur. A Leader is generally disrupting the status quo by creating a new product or new way of doing business. Being successful means bringing the right talent, tools, and strategies into execution. But before you can decide what is ‘right’ you need to ‘wonder’. A Leader needs a place to test - to wonder aloud “what if”? What if we went international from the start, abandoned our core product, lost the biggest customer, fired the biggest customer…? My friend is right that a leader must be judicious in where, when, and most importantly with whom to test ‘what if’s’. Regardless of company size, the head of product is probably highly vested in keeping the core product the same. The head of sales might cringe at firing a customer. Board members want strategic conversations, but demand structure in these discussions. Friends and loved ones are sympathetic only for a while. There has to be someone better suited to brainstorm ideas.
We believe the CFO is uniquely positioned for the role of exploring ‘what if’s’ with the Leader. First, maintaining confidentiality and integrity should be givens with your CFO, as they are fundamental to building trust in any relationship. As CPA’s, CFO’s are held to a high professional standard of ethics and integrity. Being able to throw out a wild idea and then walk it back five minutes later knowing it will go no further is essential to a successful CEO/CFO relationship. Creating a space where ideas can be revisited, honed or even discarded is the goal of the ‘what if’ session.
Next to the CEO, CFO’s typically have the broadest understanding of the company because we oversee all the cash. Think of the old detective adage ‘to find the truth, follow the money’. The CFO’s job is to make sure the way money flows around the organization aligns with the vision. She translates the money flow into a road map for others to use. When the CEO starts the ‘what if’ conversation, the CFO can immediately draw upon this road map to expand the discussion.
Not all CFOs have the right mindset to act as an advisor, but the right CFO is an advisor style CFO because she stays open and encouraging. It may be a surprise, but the conversation is rarely about the financial impact - not at this stage. Bold conversations extend beyond the current business issue to travel at least for a moment into uncharted territory. Later the discussion might morph into a new strategy or it might only build a capacity to react swiftly to a threat. The point is actions may or may not arise in this stage. What is built is confidence and a shared understanding of what is important - leaving both leaders positioned for success.
As my partners and I began to think about the greatest value to deliver to our clients, it always comes back to the role of trusted advisor. At LiftBridge CXO , we start with the idea that entrepreneurs benefit when they take a more holistic view of the CFO role in today’s business environment. Good CFOs are more than a numbers person. As you assess your company’s future, we invite you to consider whether you need a CFO who is:
A partner working beside you to help create the vision and then translate it into the road map for the company’s success.
A neutral, informed, sounding board who is also able to brainstorm new ideas without judgement.
A devil’s advocate to create ‘what-if’ scenarios and thoughtfully challenge your view.
Someone you trust to keep things confidential until you are ready to execute.
A team builder and collaborator who helps every area of the company move toward the common goal.
Someone who is adept with both talent and technology and wants to optimize each.
And most importantly - Someone you would call even after the company is sold for the next ‘what if’.