The role of a chief financial officer (CFO) has significantly changed over time. Most CEOs and board directors often expect more from CFOs than great financial performances. They want them to collaborate to create a comprehensive business strategy. But since CEOs and the board might have different interpretations of “strategy,” different firms have varying prospects for their CFOs.
To assist CFOs in discovering how they can best support their organization’s strategy, Gary McGaghey, a seasoned divisional and group CFO with immense experience, has invented four strategic orientations for chief financial officers. These orientations cover the varying aspects of the CFO’s role and offer clarity on a firm’s ability to pivot and implement new strategies.
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Implementing choices that guide the strategy process
Gary McGaghey suggests that CFOs begin by making choices that will guide their strategic approach. He says that CFOs must consider; the company’s aspirations and goals, the products and services offered, the markets that the company plans to sell these products and services, and how the firm intends to gain a competitive edge over its rivals.
Be a responder
A responder CFO guides a firm’s strategy development by helping key executives assess the financial effects of different strategic decisions. This type of CFO works well in a highly decentralized structure, where CEO delegates performance and strategy accountability to business unit leaders.
Be a challenger
Challenger CFO serves as agents of future values, as they should carefully evaluate the risks linked to various strategic alternatives. The objective of these CFOs is to lower risks and secure sufficient capital allocations and future returns on investments.
Be an architect
An architect CFO makes key strategy decisions by working with business leaders and the financial department. As an architect CFO, you should create trustworthy relationships with the finance department to invent financial arrangements and strategies with delivery channels, suppliers, and customers.
Be a transformer
This type of CFO works with the CEO to design and implement the organization’s strategy. Transformers play vital roles in implementing financial and operational options to create distinctive capabilities, deliver value, and shift the product market mix.
Overall, you need to hire an efficient finance team and implement a strategic orientation that aligns with the company to become a tactical CFO.