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The many strategic roles of the CFO

Written by: ICAEW Business and Management Faculty
Published on: 13 Jun 2021

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Pic: Unsplash

ICAEW’s Business and Management Faculty recently published new research into the many strategic roles of the CFO. The Faculty spoke to a wide range of interviewees and distilled the feedback into eight different strategic roles a CFO can take, explaining the relevance and importance of each. 

To understand the CFO’s relationship to strategy we talked to a wide range of interviewees who discussed the roles that the CFO plays in strategy. Clarifying these roles and how they can be combined to form a strategic leader is an important starting point for creating the role that best suits you and your organisation. 

This will depend on a range of drivers such as personal motivation, the skills of the management team and the type of strategy being pursued. Many CFOs commented that strategy is a team sport and some aspects of the role relate to the CFO’s collegiate responsibilities as a board member. The CFO cannot do everything and will need to focus on where they can add most value. 

  • Leader – with the CEO, take a lead role in strategic alignment 

  • Analyst – pull together the facts on financials, the competitive environment and strategic options 

  • Creator – contribute strategic ideas and create an environment where innovation flourishes 

  • Critical thinker – challenge strategic ideas and ensure rigorous evaluation 

  • Adjudicator – prioritise strategic initiatives and allocate resources 

  • Orchestrator – run the strategy process 

  • Implementor – turn the strategy into reality through financing, culture, budgets, KPIs and incentives 

  • Communicator – convince stakeholders to support the strategy; translate the strategy into financial terms 

Each of these roles is discussed in more detail below.  

What ideas do you have for helping members craft their strategic role? We would be delighted to update these resources based on your input.  Let us know by emailing  

CFO as leader 

As a leader, the CFO will have a vision of what sort of organisation he or she wants to help create. So while we are focussed on strategy within these resources, the CFO’s leadership role includes working with the CEO on vision, mission and purpose, which in many cases are precursors to developing an effective strategy. Ensuring the strategy, risk profile and organisational structure are aligned with these precursors is fundamental, as is fashioning an effective culture.  

We have found that leadership aspects of the CFOs role are highlighted in CFO comments we have collected such as, “the CFO needs to lift up the business to think longer term”, “the CFO needs to be outward looking”, and “customer focus is essential”. 

CFOs also pointed out that leadership is not the same as command and control. Effective CFOs consider how they can empower staff, create flexibility and an environment where new ideas can flourish and be implemented, free from needless bureaucracy. COVID-19 has demonstrated the importance of agility when dealing with uncertainty and businesses will be keen to ensure such agility is maintained.  

The breadth of the CFO’s role can seem overwhelming, but this can be managed by building an effective team, working productively with other parts of the organisation, drawing on outside help when necessary, and carefully prioritising where to spend time and effort. 

The strategic roles we explore are designed to help CFOs and aspiring CFOs craft an appropriate role. It is not expected that CFOs will need to fulfil all of them, all of the time. As mentioned by many of the CFOs we spoke to, strategy is a “team sport” and different strategic roles will be more or less important at different times depending on circumstances. 

CFO as strategic analyst 

“Strategy is largely about understanding the market. Finance help with analysis, including competitive position, business cases, evaluating different ideas.” 

Perhaps the most accepted strategic role of the CFO is that of strategic analyst. Its importance should not be underestimated. Jim Collins, in the book Good to Great, emphasises the need to understand the brutal facts confronting an organisation if it is to be successful. The current and forecast financial circumstances of the organisation are among the most important facts. This was echoed by a CFO who stated, “the CFO is best placed to highlight the cold hard facts and ground things in reality”. 

But care is needed not to crowd out strategic thinking with too much time spent on detailed financial analysis and budgeting. Many of our interviewees were outward looking and involved in pulling together information covering all aspects of an organisation’s circumstances. 

Some found the PESTEL mnemonic useful to ensure their analysis covered the political, economic, social, technological, environmental and legal forces at play. Many also worked closely with marketing teams to decide upon which markets to be in and which to exit. One CFO stated, “The CFO is often better informed than others on competition and market trends”. 

Looking at the past and present has to be combined with analysis of what is on the horizon and assessment of the implications for an organisation’s strategy. In particular, strategic scenario planning, exploring the implications of key business drivers, trends and uncertainties, can reduce the risk of becoming too insular and too focused on one possible future. Notably, businesses have found short to medium term scenario planning an important tool in trying to weather the pandemic. 

Clearly, when broad strategic ideas become narrowed down, the CFO plays an important role in analysing specific initiatives and business cases. Where strategies are fast moving, emergent and opportunistic, ensuring new initiatives make strategic sense will be a constant requirement. 

CFO as creator 

“Finance should be there for ideas generation; they provide a diversity of views in the creative process and can do disruptive thinking.” 

There is no doubt that CFOs can contribute strategic ideas and shape strategy. One CFO we spoke to was integral to refocusing a construction business on its core competencies and disposing of a number of non-aligned subsidiaries. And many CFOs go on to become CEOs where strategy creation becomes a core task. 

The creator role is not just, or even mainly, about generating radical new ideas from scratch. It includes using the CFO’s overview of the business to see where successful initiatives can be used in other parts of the organisation. Equally important is playing a role in creating a culture and space where people can safely suggest and explore strategic ideas. 

One of our interviewees stated, “you need to ensure tentative ideas are captured and, even if they are not immediately useful, they may become important in the future”, and another in a similar vein, “you need to spot what’s interesting — let’s explore. Don’t let it get lost”. 

There are limits. One CFO in the manufacturing sector stated: “If you are relying on the CFO for creative product ideas that is not a good place to be…the CFO is not really cut out for knowing what the customer wants…you need someone with a passion and understanding of those things…imagination cannot come from finance you need wonderful engineers.” 

While it may be the case that the CFO is more likely to contribute creative product ideas in certain industries, such as financial services, it is also the case that CFOs are users of many products and may bring a useful customer perspective missed by those thinking about products day in, day out. 

And, strategic creativity goes beyond markets, products and services. It also includes how an organisation structures its business model and identifies acquisition targets. 

CFO as critical thinker 

“You need to prevent people going up blind alleys, challenge conclusions, ensure they are realistic and that you have truly got the skills and resources to implement.” 

Strategy is often about dealing with tensions, dilemmas and trade-offs, such as balancing long-term initiatives with short-term pressures. It is through critical thinking that CFOs help organisations manage these tensions. Critical thinking requires a CFO to be disciplined, clear, rational, open-minded and informed by evidence. As one CFO stated, “the CFO is the least emotional person in the room”, and, another, “the CFO is important to the quality of thinking”. 

Critical thinking is a part of many strategic roles. For example, as an analyst the CFO needs to choose from and synthesise an overwhelming volume of information to make it accessible, meaningful and useful for the board and executive teams. 

"The call I have to make is what assumptions and information I am taking responsibility for and what assumptions and information I need to highlight and discuss with the CEO”, stated one of our interviewees. 

The chief executives we spoke to mentioned the need to use critical thinking to tell truth to power and challenge strategic ideas. CFOs are well aware of this need, along with the need to earn the right to challenge and the high level of skill required to reduce the risk of conflict. One tip from a CFO was to use the question: “How can we build on that to achieve X?” 

The CFO influences others by leading by example when it comes to critical thinking, but one CFO felt she had to go beyond this and “push the executive team to be informed enough”. 

CFO as adjudicator 

“It's likely that only the CFO and the CEO understand all the strategic plans, so only they can prioritise and see where compromises are needed.” 

Making the most of limited resources is core to achieving competitive advantage. The CFO is often, like it or not, cast in the role of adjudicator. When there are conflicting views on which strategic projects to approve and where to put budget, the CFO will need to weigh up the options and come to a considered view. In particular, CFOs “need to stop time-wasting initiatives that do not align with the strategy”. 

Financial management is about creating value, not just about cash conservation and cost reduction, although the pandemic has brought these to the fore. Where possible, resources need to be made available for innovation and experimentation, to help ensure a business has a long-term future. 

As we discuss in our report on the nature of strategy, sometimes strategies are not developed through big, one-off decisions but emerge from a pattern of smaller, operational decisions. Whether or not the CFO and his or her team are directly involved in these decisions, the CFO will need to be conscious of the patterns emerging and ensure they are consistent with the long-term vision and mission of the organisation. For example, if the organisation is aiming to be a leading digital player, driving sales through the web and social media, the CFO may need to question the inconsistency of regularly hiring direct sales staff. 

How the adjudicator role plays out in practice will depend on the decision-making processes within the organisation. Are things largely driven by consensus? Does the CEO make the final call? How much delegated authority do managers have? Does the CFO have a right of veto? 

CFO as orchestrator 

“Here the CFO is leader of the strategic process.” 

Orchestrating the strategic process often falls to the CFO, particularly in the absence of a chief strategy officer. With a formal process this will cover the basics of setting out timelines, milestones, pulling together discussion papers and documenting decisions. In particular, “the CFO has to make sure the board has sufficient knowledge of strategy to make key decisions. A lot of preparation goes into getting the board agenda right.” 

One CFO argued that apart from financial knowledge, “CFOs know a little about a lot, others know a lot about their sphere. CFOs don’t know enough to make decisions, others are better placed. But the CFO should be skilled at getting the right people in the right place with the right information to make a decision.”  With their overview of the business, CFOs are well placed to lead a cross disciplinary strategic team. 

While most people want greater involvement in strategy some CFOs pointed out that this is not always the case, with strategic discussions seen as pointless. One CFO told us that part of the orchestrator role was about “firing people up with it” and “scaring them [the executive committee] about the future and creating a sense of urgency”. 

Most of our interviewees were sceptical about using consultants for strategy formulation – “Strategy has to be owned by the company; we only use consultants for specific projects.” CFOs view strategy as an organisation’s core competence and were concerned that consultants would come up with generic strategies which cannot create competitive advantage. However, CFOs did realise that consultants could plug gaps in knowledge, such as around new markets and technologies, and also that they could be used to overcome political resistance to strategic change. 

As an orchestrator, the CFO will also need to consider whether the strategic process is right for the organisation. Is it too bureaucratic or too informal? Does it strike the right balance between planning and emergence? Overall, it is important for the CFO to develop a process which generates the right amount of time spent on strategy and makes the most of such time by preventing people from getting bogged down in unnecessary detail. 

CFO as implementor 

“The CFO can never walk away from strategy implementation.” 

The CFO’s role as strategy implementor relates to the adjudicator role in influencing priorities and where to direct resources. This is seen most prominently in the CFO’s role in leading the planning and budgeting process. Allocating budget and resource is usually a negotiation process but, “the CFO sets the boundaries of what can be achieved within financial constraints”. 

Moreover, the CFO and his or her team will play varying roles in the myriad of smaller decisions that will either support or detract from the organisations vision and strategy. Again, a CFO needs to know where they can add most value and where to get involved. This is particularly important when the strategy is more emergent in nature. 

There are a number of key processes which impact strategy implementation where the CFO plays a central role. Not least is the role the CFO plays in obtaining the financial flexibility to deliver the strategy using the most appropriate funding options. “Key for the CFO is creating the financial flexibility to weather financial storms and exploit opportunities – everything requires funding.” 

There is then the need to ensure that there is alignment between management information, objectives, key performance indicators and incentives with the strategy. Risk management systems also need to be aligned with the risk appetite implied by the strategy. 

Strategy implementation is not easy, therefore monitoring the progress of an organisation’s vision and strategy is essential to ensure corrective action can be taken if necessary. This is not just about whether the financials are on track and strategic milestones are being met. The CFO needs to have processes in place to monitor whether the environment is changing or competitors are making faster progress. If so, the CFO can initiate a strategic review before it is too late to respond. 

For more on the CFO as implementor see the Business and Management Faculty’s roundtable write-up “Key concerns for CFOs”. 

CFO as communicator 

“Whenever you talk to stakeholders it has a strategic angle...The CFO and CEO own the narrative and are in charge of the communication of it.” 

Convincing external and internal stakeholders to support an organisation’s strategy is essential; without their active support strategy implementation becomes impossible. This is perhaps most visible in the CFO’s role in investor relations. With an intimate knowledge of the strategy, the CFO can connect the strategy to the numbers and communicate it in a language that makes sense to investors. Some CFOs spoke of this in terms of being a “translator”. This is perhaps most important in communicating an organisation’s strategic approach to climate change. 

CFOs also emphasised communication with the board, including non-executive directors, and the internal communication of strategy. One stated: “Selling strategy to staff is underestimated…good CFOs are always doing this selling”. According to another, “the CFO needs to be part of selling strategy internally – again and again. We did mean it, we are going to do it. You have to get people truly in line.” However, there was a dissenting voice who said that, “cascading the strategy in an organisation is better done by the CEO and business heads”. 

Another translation aspect of communicating strategy is trying to ensure there is a mutual understanding of what strategy is. Our report on the nature of strategy discusses multiple definitions of strategy, none of which are right or wrong. But if people are not on the same page it can lead to confusion, wasted time and a failure to discuss key components of strategy. This is probably one of the key reasons for frequent stakeholder complaints about organisations not having a strategy. CFOs can take the lead in avoiding such issues.   

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