5 Steps CFOs Can Take To Become Chief Performance Officers
A new era is approaching for Finance. As automation takes over much of the manual work involved in day-to-day accounting, finance leaders are increasingly free to perform more value-added work and take on a strategic leadership role. This shift away from manual accounting is happening so dramatically, some industry experts predict that the traditional position of Chief Financial Officer is soon going to be obsolete. Replacing it will be something along the lines of a “Chief Performance Officer” with a much larger role.
The term may be new to you, but it reflects the scope of the finance team’s job in an environment of freely flowing enterprise data and automation. The CPO role combines the CFO’s existing skill at analyzing data with a political savvy that can see advice taken up by the company’s senior leadership team and drive new results. It won’t be the same as the job of running finance, but it is a natural, maybe inevitable extension of that job. Here’s what today’s CFO can do to become tomorrow’s CPO.
Gather real time data from across the org
Before you do any analysis, ensure that you have the data necessary to piece together a picture of the whole business. Just as you gather signals from across your finance stack, it’s essential to get data from the organization’s sales and customer success teams, from marketing, from HR—from everywhere. Luckily, gathering timely and accurate data shouldn’t be difficult with the integrated cloud solutions that most teams use today.
Understand the organization holistically
As CPO, you’ll likely be asked to take over a number of diverse departments that already report to the CFO in many organizations. For that reason, CPOs need to take the data flowing in from all corners of the organization and see the business holistically. It’s not necessary to understand every team on a process level, but it is your job to push them towards better results. That requires knowing what they’re aiming for in the first place.
Focus on uncovering growth
CFOs are used to comparing output to benchmarks. That’s too small a scope for a forward-looking executive. Instead of reporting on past performance, CPOs need to look for new potential areas for growth. To do that, understand your company’s growth models and push teams to adopt new ones if necessary. Start seeing operating budgets as levers of growth instead of control mechanisms; start asking what resources could improve the company’s competitive position, rather than focusing on minimizing those resources; and so on.
Communicate your analysis effectively
One crucial skill that spells the difference between a financial analyst and a strategic member of the leadership team is the ability to advise action to the whole team. CFOs don’t frequently consider it their responsibility to get buy-in from different departments—others attempt to convince them, not the other way around. A CPO has to view their role differently. The job requires a bit of political skill and an understanding of the levers by which decisions are made.
Train to be a leader
CFOs and other members of the finance team have the luxury of being discipline-minded and concrete with their objectives. The CPO, however, needs to be more of a leader—vulnerable, visionary, human. The role is ultimately judged by what you’re able to inspire people to do, including members of teams that don’t officially report into the CFO, like HR. Luckily, leadership is something you can learn. To take the next step and impact strategy, it’s a must.
Ultimately, the difference between today’s CFO and tomorrow’s CPO is that the former records performance, while the latter drives it. It won’t be the easiest of shifts—plenty of today’s control-minded CFOs won’t enjoy life as a rainmaker on the leadership team—but for a function that’s increasingly handing off its tasks to reliable and efficient automation, becoming an even more valuable analyst spells out a great future.