Enabling Funding To Execute Strategy

Maximizing Long-Term Corporate Growth And Shareholder Value

In today’s scenario, there is an increasing need for a CFO to become a real strategic business partner rather than a scorekeeper. CFOs are no more only “information provider” rather they need to be involved in understanding information, its implication, value and risks.

Ultimately, what matters for an organization is to create long term corporate growth and shareholders’ value for which CFOs need to play a central role through strategic business partnership.

Let us understand this with an example. When economy is doing well, organizations generally look for fast growth. Is this what matters in long term? May be not. What is required is “profitable growth” in long term, which a CFO needs to drive as part of business strategy for long term shareholders value.

A question is often raised- “How CFOs can play an effective role in business strategy?”

CFO is ideally placed to play a significant role in strategy formulation and its implementation. As head of finance function; the CFO touches almost all key aspects of the business and knows where value can be created in the business and where the risks are. In order to play a significant role in business strategy, a CFO needs to ensure involvement in the following roles -
• In depth involvement in setting-up long term and medium term strategy to achieve organization’s goals
• Enabling business decisions on sound financial principles to achieve the strategy
• Enabling funding to execute strategy
• Using technology in executing business strategy such as improving bottom line by reducing costs, finding new customers, improving customer satisfaction, setting marketing penetration strategies etc

"CFO is ideally placed to play a significant role in strategy formulation and its implementation "

Clearly, the CFO needs to get involved, both in formulating and executing business strategy. While depth of CFOs involvement in forming business strategy may differ from organization to organization, however in any case, CFOs need to spend significant time with business managers (may be 2/3rd of his time in the opinion of the writer) to enable himself to play a significant role in business strategy. Nevertheless, the CFOs team can play a critical role in enabling CFO to play a significant role in business strategy.