Is the “Strategic CFO” Beyond Our Grasp?

In the abstract, CFOs are successfully rebranding their role as “strategic.” CEOs, private equity firms, and boards all say that is what they want – a “strategic CFO.” Sometimes I wonder whether the profession reinvented itself in response to market demand, or professional aspirations created a previously unidentified need.

Perhaps this is a “chicken-or-the-egg” question. Whatever the answer, the strategic CFO role to me seems more conceptual in most instances than a reality.

To be sure, the CFO role at the largest companies is no doubt a strategic one. But the typical CFO at a middle market company – sitting atop the finance function of a family-owned or private equity-backed organization, or at a small to midsized nonprofit – is more likely to find themselves dragged into the weeds, synthesizing data in Excel from disparate enterprise systems while also filling aspects of controller, treasurer, and financial planning and analysis roles on a lean finance team. Finding the time and cognitive bandwidth to sustain an elevated strategic perspective in such an environment is extraordinarily difficult.

Is it possible that by chasing the “strategic” ring CFOs have raised the bar to a level they cannot meet in certain situations they find themselves in, while inadvertently devaluing their skills in leading the finance function and maintaining financial discipline?

The typical middle market CFO job description is likely to call for strategic thinking, insight, or perspective. Yet, it is just as likely to simultaneously call for a “hands-on CFO.” This is indicative of expectations that can lead to a challenging environment for a CFO. Being “hands-on” very well could mean analyzing data without adequate resources, which can pull the CFO into the details where they risk losing the forest for the trees, most likely leaving no time or space to think.

Being expected to provide a unique strategic point of view on numerous topics is a tall order when surrounded by executives that have been on the front lines of the commercial side of the business for decades. The CFO’s advice is undervalued when it seems self-explanatory (“We won’t hit our EBITDA budget if you go forward with this unplanned expenditure”) or rejected when it is inconvenient (“We have to raise prices or we can’t sustain margin”). Finance initiatives are sometimes interpreted as tactical and not strategic, even though they are in fact the distillation of strategic initiatives, which would be nothing but abstract aspirations without the CFO’s focus on execution.

The CFO is tasked with scaling the finance function for growth in size and complexity, while often bearing an incremental workload from participating in whatever cross-functional workstreams spring from strategic initiatives. Ironically, when the CFO leads the finance function strategically, and somehow manages to juggle a dozen projects while keeping financial operations on track, it is rarely of particular interest to the CEO precisely because the CFO has kept the CEO from having to worry about any of it. Worse, when the company’s strategic vision and growth plan is executed flawlessly, the “strategic CFO” rarely gets credit; on the flipside, the CFO often gets blamed when the business faces a downturn.

Does this mean a middle market CFO can’t be strategic, or that a CFO can’t be hands-on while still satisfying the CEO’s desire for strategic partnership? Of course not. None of the challenges described here replace the responsibility and opportunity to add value, proactively identify problems, and reach outside of the finance swim lane to offer strategic solutions and perspectives. The ideas below can help turn the concept of a strategic CFO role into a workable reality. While the ideal time to address some of these areas is before assuming a new CFO role, many can be deployed as course corrections at any time.

Align with the CEO and board on expectations for the CFO role – Focus on the organization’s needs and the needs of the finance function to support it. If baseline stewardship and financial operations are lacking, obtain agreement that fixing these takes priority over any expectations of becoming a strategist. Obtain clarity about available resources and the organization’s willingness to invest in the systems and people that will enable you to operate at an elevated level. If you are in a situation now where you lack adequate resources, make the business case for what you need. Consider outsourcing as a cost-effective alternative where appropriate.

Establish weekly one-on-one meetings with the CEO and align on a standard agenda – I once started in a new CFO role and was told by the CEO on my first day, “We won’t be having weekly one-on-one meetings; I have too many direct reports to meet with everyone every week.” This was an ominous sign. I wish I had asked about it before taking the job, but I had assumed it was standard practice everywhere. If your CEO does not find value in using the time for status updates on matters that affect the finance function, send an email in advance of the meeting to provide your CEO with an overview of everything on your plate. Prepare for the meeting by identifying one topic that may interest the CEO or show some strategic curiosity by asking for their perspective on a current issue in the industry.

CEOs must be a part a CFO’s strategic development – CEOs naturally have the broader view of the organization and the market and have things that keep them awake at night. They should proactively engage the CFO on strategic topics, not just passively expect the CFO to come to them with insights. Before taking on a new CFO role, ask questions to assess the CEO’s approach in this regard. If your current CEO does not do this, ask them to begin including you in strategic conversations or to bring one current issue or concern to your weekly one-on-one.

Use board meetings as an opportunity – Demonstrate a strategic perspective at these meetings that goes beyond the financials. Review the nonfinancial sections of the board presentation and be ready with a point of view or potential insight for each topic.

Understand the role of the COO in the organization, if there is one – A good COO can clear operational obstacles and allow you to elevate your own level – or it may leave you with less opportunity to get involved in areas outside of finance.

Proactively study your industry and market – Subscribe to newsletters and trade periodicals, follow blogs and social media posts of thought leaders, talk to commercial executives within your company, etc. When you are already working 50 to 60 hour weeks, it’s fair to assess the extent to which this is worth the incremental effort and how much of an industry expert you want or need to be in your role. However, if you want to progress in the industry, perhaps to a position with profit-and-loss responsibility, it is critical. Either way, stay attuned to the goings-on in your organization outside of finance. When strapped for time, it’s easy to disregard email threads that do not impact finance, but AI large language models can quickly summarize these topics for you.

Ensure you have good personal systems to manage your workload and your time – Schedule dedicated time every week to “zoom out” and view the landscape from an elevated strategic perspective, and to think about where the organization is heading and the value you can add. Consider your job as consisting of two separate roles – strategist and day-to-day “doer.” (A former boss referred to this as “porpoising” – alternately rising to the surface and diving down when necessary). Structure your personal to-do lists of projects and tasks separately for each of these roles. Plan your days with intention, separating time blocks for strategic, focused work from those dedicated to day-to-day tasks. This practice will help you shift your cognitive context between two very different modes of thinking.

Nearly a decade ago, I left a job as a consulting partner in a national CPA firm to take a CFO position in a private equity-backed company. Before my first day, I excitedly told a friend and fellow CFO that I was focused on adding strategic value in areas outside of finance. His advice stuck with me: “If you don’t properly manage the financial side of the business, nobody is going to care how strategic you are.” In other words, being a “strategic CFO” cannot come at the expense of being a good steward.

While good financial management may be nothing more than table stakes, it requires a ton of time and effort to get it right, particularly in environments with lean teams, disparate systems, and rapid change. A CFO must do what it takes, even if it means getting dragged into the weeds from time to time, more so than in other functional areas where there is greater tolerance for lack of detail and precision.

To be sure, it’s a struggle to maintain strategic perspective in this context. But if you can do the right things in the right environment, becoming a strategic CFO will move from conceptual goal to realistic aspiration. 

James J. Caruso, CPA (Inactive), is the CFO of ClearView Healthcare Partners of Newton, Mass., and a member of the Pennsylvania CPA Journal Editorial Board. He can be reached at jim.caruso@clearviewhcp.com.