By Andy Burrows
In this article I want to show that getting yourself ready to be a business-leading CFO one day is something that should start much much earlier than you think.
When people talk about leadership and business acumen in the context of what you need to be a CFO, you may think that implies you need almost grey hairs.
We picture leaders being the old, wise and mature people. It must have taken them years to learn to be leaders.
Business acumen, too, sounds like something you get from years of experience.
And my worry is that those misconceptions put off young Finance professionals from working intentionally on things that will help them to be CFO-ready.
Two of my own experiences should show that you don’t have to wait to start learning CFO skills.
First, I was appointed as a Finance Director at the age of 29. I’ve written about that elsewhere. So, you don’t need to be older to learn CFO skills and behaviours.
Second, one of the most memorable courses I went on during my career was a 3-day residential Leadership Development Programme. It was only offered to those who were in senior leadership already (I wasn’t quite the right level, but I reported to the Group HR Director and I nagged her to let me do it!).
It was one of the most impactful and memorable courses I’ve ever attended. And yet the thing that surprised me was that quite a lot of the biggest things I learnt did not need a senior leadership position to benefit from them.
So, let’s start with those leadership skills. What can you start learning any time that will head you quicker towards a CFO role, if that’s your ambition?
Well, I’ll summarise it for you:
Have a look at my book – An Introduction to Personal Effectiveness for CFOs and Finance Professionals – for more on these points...
... or even better, read the masterpiece that is The 7 Habits of Highly Effective People by Stephen R. Covey.
And there’s plenty of opportunity to practice these things and get good at them well before you get close to a CFO role. Master these skills and behaviours, and you’ll be CFO-ready much earlier than you might think.
I learnt many of these habits, often without being overly intentional, from my approach to exam preparation, my university education and the organisation you need to pass professional exams.
But what of business acumen? Don’t you need a lot of experience to have business acumen?
Well, you definitely need to understand the business you’re working in.
Business acumen can be described like this: “... understanding what running a successful business is all about, how each function and management team need to make an appropriate contribution to long-term value creation. It is about encouraging fact based decisions, understanding the importance of strategic advantage and how it can best be applied in different contexts. It is also about understanding the competition and knowing how to beat them, about knowing your customers and how best to meet their needs. And finally it is about joining in the identification of business opportunities while showing understanding of the pressures and constraints of colleagues.” (loc 405, Alan Warner, Finance Business Partnering - the search for value, Kindle Edition.)
The thing is, though, that there is no reference book that describes all that. You have to find it out for yourself. That’s why there’s a perception that it takes a long time.
Perception? What? Do I mean that it doesn’t have to take a long time? That’s exactly what I mean!
Remember, I was a Finance Director at the age of 29. And that was partly because I knew the business I was working in very well. And yet, I’d only been there three years.
And the reason why you can get there sooner than you think is that you require essentially two things that you can basically decide to have today:
Curiosity and a business-focused Finance mindset!
First, curiosity – don’t just sit and do your job and go home! Be interested in other people and in what they do. Be interested in how activities in the business contribute to making money. If you can’t work it out for yourself, ask someone!
You can be curious any time. And I can tell you, my curiosity didn’t start when I was 29. I was curious well before then.
For example, when I was 21, just after finishing university, that summer I had a temporary job working at a nuclear fuel reprocessing plant. I was just doing data entry to earn a bit of money. I had a big printout in front of me and I had to type certain things from the page into the computer. But that wasn’t good enough for me. I started to spot patterns in the codes...
... and I asked the engineers in the office about what it all meant (I also pointed out what I thought were errors, and turned out to be correct)! They loved someone showing an interest in their work, so after a little while one of them took me on a tour of the plant. Then things made a lot more sense.
I also learnt a lot from my corporate auditing experience. Being forced to ask questions I didn’t really (in all honesty) understand (at first anyway), day after day, in many different companies, built a habit of being interested in what’s going on in the business.
If you’ve never been an auditor, it will shock you to know that the first thing you do in planning an audit is to find out what’s been happening in the business – nothing to do with numbers and debits and credits. New strategies. New personnel. New competition. Big orders. Etc etc. Then you correlate that to what you might expect to see in the numbers, and from that you assess the risk areas.
And how do you get that information? You ask!
So, however junior you are, however stupid you think your questions are, ask someone. Be curious!
But you also need a business-focused Finance mindset.
What does it mean to have the mindset of business-focused Finance?
It means thinking of everything in terms of how it helps the business. So here are three easy ways that you can have that mindset of business-focused Finance:
First, think of every question as a business question, not a numbers question.
So, the question about variances is not “why is this number different to that one”. It’s “what has happened in the business to result in this number being different to that one.”
Second, talk about value, not just cost.
If you think only about cost, then you’ll only focus on reducing the expense numbers. But the question of value forces you to think about what the expenditure buys, what the intended outcome is, and how the business benefits from the outcome.
Thirdly, think about everything you do personally, and everything we do in Finance, in terms of how in helps the business.
How will this analysis help the business? How will this forecast help the business? How is my job today going to help the business?
Trust me, just asking that question leads to surprising shifts in thinking.
And don’t underestimate the value of your accounting and finance skills, and your position in the business, in helping you to understand the business.
A business performs through carrying out transactions – sales and expenses, service delivery and resources, etc. There are no parts of the business that don’t cause transactions. Even just having staff involves transactions.
Guess which people in the business are the only ones who get to see all transactions in the business? Yup – Finance people, especially accountants actually.
So we have all the data at our fingertips to understand the dynamics of the business. Which income and costs relate to each other, for instance?
And as you learn more advanced FP&A techniques, such as Activity Based Costing, or start to look at non-financial data and KPIs, you’ll start to relate these things to what gets done in the business. Because, as I said before, every question is a business question, not just a numbers question!
All of the above – working on your behavioural skills as a foundation for leadership, working curiously and with a business-focused Finance mindset as a foundation for business acumen – you can start now.
You don’t need extra exams, or to read more books. Just start!
If you think I’m wrong let me know!
If you have the ambition or goal to be a CFO or Finance Director one day, here’s an opportunity to get yourself ‘CFO-ready’.
CFO Readiness Builder is a multi-month development journey, involving online training, coaching, homework and group work, with the support to go with it. The aim is to actually get you CFO-ready, and not just teach you about it.
If that sounds like something you’d enjoy and would benefit you, CLICK HERE to find out more, and to register your interest.
My biggest Finance career failure – and 4 things you can learn from it
Andy Burrows is a popular writer and speaker on a wide range of topics in Business Finance and Accounting. He provides online training and coaching, so that business-focused Finance professionals can grow in impact and business leadership.
He was named as one of the top voices on LinkedIn in 2019 in Finance, Accounting and FP&A.
Qualified as a chartered accountant, Andy has worked in many senior Finance roles over the last 20 years, including Finance Director at one stage, across many different sectors in a variety of companies.
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