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The 12 Things the Best CFOs Know

I would like to share the thoughts of Stephen Roulac made in response to a question posted about what successful CFOs and Controllers read;

Stephen has offered us a very compelling question: What knowledge is necessary to be effective in the CFO role?

We wanted to share the great content Stephen Roulac contrbuted in the aforementioned comment posting:

  1. ACCOUNTING - Given current job responsibilities and CPA aspirations, for enhancing your technical knowledge and competence
  2. FINANCE - Both internal, esp capital budgeting and financial modulating, and external, emphasizing capital access...at all stages, from venture through bank, IPO, LBO, stock repurchase, M & A, going private. Here, mastering startup financing and investment banking are crucial.
  3. TECHNOLOGY - Role of information, hardware, software, systems, programming language, important new developments: cloud computing, big data, etc.
  4. MARKETING - The effective CFO is concerned with the top line...revenue...because that is of greatest concern to the CEO, to whom the CFO reports, and, especially important, because revenue is the source of the funds to pay the business's expenses. This leads to sales, sales management, customer service and related topics.
  5. HUMAN RESOURCES - Critical to business success, where much of the company's operating expenses are allocated. Compensation programs, benefits and incentive programs, motivation, performance assessment and more are all within the CFO purview.
  6. CORPORATE REAL ESTATE - Often the largest balance sheet item and the second or third largest expense item. Further, the CFO directly is invalid in this function and many times has direct responsibility for overseeing/supervisng the corporate real estate function.
  7. BUSINESS STRATEGY - Comprehending different schools of business strategy, business models, SaaS, new economy models, etc. are precondition for any exec aspiring to obtain position in and be effective in the C suite.
  8. INNOVATION - Knowing the literature of change, creativity, and invention makes executive more effective, both in obtaining position and in delivering performance in that position. New ideas, fames, insights shape the future.
  9. MANAGEMENT DISCIPLINES - The more CFO knows about other management disciplines, the more effective that exec may be. Studying operations management, logistics, corporate law, etc. are all highly relevant.
  10. PERSONAL PRODUCTIVITY - Immersion in the knowledge resources related to communications, interpersonal relations, selfmanagement, emotional intelligence, multiple intelligences, persuasion and negotiation, organization/productivity, etc. is crucial to advancing. This extends to health and fitness, for those execs who have highest energy can and do outperform those with less.
  11. GLOBAL ECONOMICS AND CULTURE - The CFO needs to understand evolving/changing economics theories, models, competitive positions, applicable at local/state/country/global levels. This extends to sensitivity to and knowledge of other cultures.
  12. COMPETITION - As businesses, governments, places, ideas, business models, and individuals are increasingly competing for ever higher higher stakes, knowing the bases of competition, the preparation and strategies, the focus and attitude is necessary success precondition.

What are your thoughts? How do you "stay on top of your game" in each area?

Comments

Chris Shumate
Title: Accounting Manager
Company: Dominion Development Group, LLC
LinkedIn Profile
(Accounting Manager, Dominion Development Group, LLC) |

Being the original author of the post, I am eager to see what others thoughts are. Stephen did have an excellent list. I learned quite a bit from the answers I received there, from Stephen and numerous others. I have been reading a few CFO.com articles, Proformative blogs, Forbes.com articles. I hope the question I posed originally helps another young professional like it did me. My hope is to have the aptitude that many on Proformative have to further educate young folks as I age and progress in my career.

Gary Spencer
Title: Managing Partner
Company: Meon
(Managing Partner, Meon) |

Mr. Chris, I totally agree with you. Everyone, in the finance area, should be educating themselves at all times. I believe that we should always attack our greatest weakness', until it becomes our greatest asset. Proformative is a practicle and invaluable method of learning from fellow finance professionals.

"Iron sharpens iron."

Topic Expert
Barrett Peterson
Title: Senior Manager, Actg Stnds & Analysis
Company: TTX
(Senior Manager, Actg Stnds & Analysis, TTX) |

The list is excellent and essentially comprehensive. I am not currently a CFO, but have held that role, and that of COO, in smaller manufacturing companies. Marketing is certainly important but I would add margin awareness rather than primarily "top line" focus, often a misleading indicator. Operating experience can be invaluable, particularly in process design and management awareness. Keeping current is a major challenge, but can be facilitated by current technology. I use Netvibes, with tabs by topics as you have listed to "collect" data rather than "look" for data. I subscribe to elecgtronic notification of new materials when available and organize my "favorites" by a topic organization similar to the list above. I have found Twitter can help this, particularly as I have a daily train commute of some length. Books remain invaluable, both physical and on my Nook. My vacation reading is planned to include elements of the above list, "fun" reading, and an annual "new topic" [to me] to improve my undersatanding of the topic and possible impacts on my core business knowledge.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

We should make a distinction between knowledge and expertise. What used to be expertise in many of the areas you described erodes over time due mainly to changes (and for some items drastic changes) in the landscape.

Take for example Human Resources. In this economy and the lack of resources governments seem to find themselves in, they are either passing new HR laws or enforcing ones that they never really bothered with previously. Examples are the wage and hours laws, 1099 rules and in NYS the Wage Theft Protection Act.

As CFO's we can't be experts on everything, but we need to realize when we need to hire those experts. This my friends in knowledge; mostly self knowledge, but knowledge none the less.

Ian Bradley
Title: Controller
Company: T&S Brass & Bronze Works
(Controller, T&S Brass & Bronze Works) |

Wayne,

Wholeheartedly agree with your sentiment that you can't be an expert in everything. I think the secret of good management is to accept that and have broad enough knowledge of key areas to realize when you need an expert.

International business is a great example. Too many businesses assume they can act the same way overseas that they do in the US, which is just not true. You need to be proactive and understand the business culture and legislation before jumping into new countries. If not, you can find yourself facing hefty tax penalties and contractual obligations you didn't even dream of. A little due diligence and expertise goes a long way!

Surround yourself with experts where you can, lean on your network (which you should be constantly working on) and hire consultants when necessary.

Helen Litovsky
Title: CFO
Company: GlenMartin
(CFO, GlenMartin) |

Could you provide any tips on books or articles to improve operational management skills? I am newly in the CFO role for a manufacturing company, so I wanted to know more about improving operations. I would appreciate any suggestions.

Chris Shumate
Title: Accounting Manager
Company: Dominion Development Group, LLC
LinkedIn Profile
(Accounting Manager, Dominion Development Group, LLC) |

Helen - Steven Bragg has authored many books, I have read a couple of them. He has books on accounting best practices, CFOs financial leadership, cost accounting fundamentals, and closing the books accurately and quickly. He is an author I would recommend.

Here is a link to books by him on Amazon. http://www.amazon.com/s/?ie=UTF8&keywords=steven+bragg&tag=googhydr-20&index=stripbooks&hvadid=2811948345&hvpos=1t1&hvexid=&hvnetw=g&hvrand=2017192708720249600&hvpone=&hvptwo=&hvqmt=e&ref=pd_sl_4z0bl7952f_e

Here is a link to his website also: http://www.accountingtools.com/

Also, www.cfo.com magazine has great resources. Also consider looking back at the post I did, referenced above by the author of this blog. There are many excellent suggestions by a dozen or so people. Here is its link: https://www.proformative.com/questions/what-do-successful-cfos-controllers-read

Tom Hoster
Title: CFO
Company: EndoGastric Solutions
(CFO, EndoGastric Solutions) |

I had Steve Roulac as a professor at Stanford Business School. The guy is brilliant. But what I remember most is that he used to wear the damnedest pale yellow suit. Okay, it was the mid-seventies, but geez ...

wayne ackerman
Title: CFO and SVP
Company: ATC
(CFO and SVP , ATC) |

List does not include Emotional IQ. In this line of work with large staffs and matrix reporting, the ability to motivate people towards a certain behavior is critical.

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