There's something of a stereotype around the CFO function at a company: the person who fills this role is a bean counter, right? A bit of a math geek? Someone with a tight grip on the purse strings and a calculator instead of a wristwatch? It's not a position or personality that's traditionally been defined by innovation and vision, but it's long past time for that perception to change. After all, the CFO role itself definitely has, and it's still evolving.
This week on CFO Weekly, Steven Nutt, CPA, joined host Megan Weis — VP & General Manager, FAO Services at Personiv to talk about what the new strategic CFO has in common with the transactional CFO of the past, and what's different in the C-suite today. Nutt – who has almost three decades of experience in finance and accounting – is the current CFO of Community National Bank and Trust of Texas, where he has overseen remarkable growth, including a 60 percent stock value increase and a 64 percent jump in asset growth.
The CFO Role Has Gone From Transactional to Strategic – But One Thing Never Changes
While the CFO role used to largely center on straightforward accounting skills, Nutt begins by explaining, the updated role CFOs are expected to fill today doesn't mean those skills have been abandoned. It's just as important for CFOs to have a rock-solid accountancy foundation, what's changed is what they build from that foundation.
Nutt explained to Weis that the most prominent change he's seen in the role during his many years as a CPA and financial leader is that CFOs today must "Try to deliver insight instead of numbers." As an example, he cites the way weekly meetings work at Community National Bank and Trust of Texas. "One of the things we do here is meetings once a week. One of those weeks is my turn to try to educate and bring numbers for the month. In the past, accountants gave a whole bunch of numbers, and I've always felt it was more important to tell the story behind the numbers and get into not just the 'what' but the 'why'."
Weis agrees. "I think in general accounting has always been focused on backward-looking ... it's important to try to tell a story with numbers and try to be predictive and forward looking," she mused.
The Multifaceted CFO: Educator, Innovator & Advocate
So while the basic accounting skills and proficiency with numbers has always been absolutely vital to the CFO role, Nutt illustrates that soft skills – the ability to make all that financial information information easily digestible to key stakeholders that may not have that same number-oriented mindset – is just as important in this newest iteration of the CFO as a strategist.
Nutt puts this concept simply: "Accounting is the language of business, and I see myself as an interpreter. This ability to educate those around him is essential in the other two key roles that Nutt says CFOs are increasingly responsible for, and all of them depend on transparency and authentic interactions in order to be effective. In particular, the swell of available technology and the possibilities that data collection and analyzation make possible require today's CFOs to be "innovators in IT and data."
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"I'm not an expert in IT," Nutt says candidly, "and I don't think a CFO needs to be a super-expert in IT. But you have to be a champion of IT. [You] have to be a supporter of IT spend." Here's where the interplay of soft skills and transparency become vital. By fostering relationships of mutual respect outside of the finance department , CFOs are empowered to speak confidently to which innovations, changes and adoptions can and should be made going forward.
The relationship between the C-suite and IT is becoming increasingly important thanks to one crucial tool CFOs have available in their strategic toolbox: data-driven decision making (DDDM). It's largely thanks to the ways that data can be collected, scrutinized and disseminated that CFOs are stepping into strategic roles.
Data has a vital role in strategy, according to Nutt. He describes it as "Moving away from 'What happened?' to 'Why did it happen?', 'What will happen next?', and 'How can we make it happen?'" Finding accurate answers to these questions is possible thanks to hard numbers – data – that help CFOs extrapolate, predict and strategize for growth as opposed to presenting a black and white balance sheet that doesn't allow for realistic predictive models or scenario planning.
The CFO's Role in Culture Creation
The caveat, Nutt says, is that it's difficult to implement new ways of doing things and the new tools to do them with if stakeholders don't have a vested interest in them. He sees securing that interest as the CFO's responsibility as well. "Get buy-in," he advises, by "... creating a culture of transparency – be willing to share information! People are reluctant to use things they don't understand."
That's why, he explains, a CFO must also be willing to empower those around them – everyone from leadership to front-line employees – with a mix of education, transparency, and incentivization. "Create a story that works for all of the [stakeholders] ... a shared message that we're able to share with all constituents, across the board."
This is especially important when it comes to the professional partnership that comes as a result of the relationship between CFOs and their CEOs. "It's based on trust," Nutt explains, "and you have to be on the same page." This partnership, at its core, comes down to one key question for CFOs to ask themselves.
The CEO works toward creating and increasing value for shareholders, and the CFO should ask themselves, "How do I support that?" KPIs and accurate predictive modeling are one way to provide hard numbers that may prove useful to supporting CEO strategy, but Nutt describes one more important adjustment CFOs have had to make over the years, having weathered downturns, recessions and shortages: "For a strategic CFO to be a partner to a CEO they need to shift to a growth-minded revenue seeker and not just a cost-cutter."
To learn more about how the CFO role has changed – including how Weis and Nutt expect it to evolve in the current economic climate – tune in to the entire episode of CFO Weekly over on Apple podcasts or wherever you get your favorite podcasts, where you can also subscribe.
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