Happy Finance and becoming Strategic Business Partners (1/2)

I am delighted to share my thoughts on Happy Finance and Strategic Business Partnership. I was honored to be interviewed by Andrew, a recognized influencer in the field of Accounting and Finance, and be part of his podcast serie Strenght in the Numbers. #happyfinance #happycfo

Andrew Codd

Founder

I have 18 years experience in finance leadership and business partnering – developing accounting & finance talent to add value on the commercials and the numbers at recognizable brands like Pepsi, Virgin, Dell and also have a track record of driving sustainable profitable growth for local SMEs.

Our Guest Mentor:

Marco Venturelli  has over 35 years of experience in finance and accounting and currently leads Performance and Financial Strategy at Novartis where he is CFO of the Oncology Europe Region, as well as being on the CFO Board of Directors (CFO Consigliere di Amministrazione).

Marco’s career has seen him hold various roles such as Country General Manager, undertaken international assignments and led global teams. He’s also regularly commenting and contributing on LinkedIn particularly with the handles #HappyFinance and #theHappyCFO.

Marco is currently based out of Milan, Italy and also volunteers with Action Aid, looking to alleviate poverty with a constant flow of support to different programs in Africa and India.

Key Quotes From the Episode:

 “Happiness and Finance are a kind of oxymoron .” [03:09]

“What I advise to my teams and myself is that we must be adaptable. It’s more than anticipating the future which is very difficult, it’s about adapting to the future (otherwise you’ll be acted upon by markets, governments, etc…)” [08:28]

“I think we in Finance are very well accustomed to have very strong, well-structured financial reporting, that are coherent and accurate and we can really add value to our organisation facilitating this process [of reporting on ESG (Environmental, Societal & Governmental) perspectives] because I see them coming.” [13:44]

“The CFO together with the CEO is the only one in the company that has access to every area of the company and also has an understanding of the way the company functions. So if the CFO spends more time or is more involved in defining the business priorities and contributes to a clear vision of the business future it’s easier to move from a purely operational role to a strategic role.” [20:20]

“A strategic role also means that [a Strategic Business Partner] should be able to influence the others, propose simplification projects, because he has the possibility to look across various functions and more and more we see CFOs that are driving the execution of the operational excellence programs and also the technological evolution.” [21:03]

Key Points From the Episode:

  • Why sustainability is important for happier Finance and where the pressure is going from to be so.
  • How Finance are well positioned to drive better sustainability.
  • Four components that make up a Strategic Business Partner
  • The results of an internal Novartis survey asking internal customers what they would like a business partners to be and where is Finance today

Time Stamped Show Notes:

[03:09] – Why Marco uses the tag handle #HappyFinance in his posts.

[04:34] – Why sustainability is important for happier Finance and where the pressure is going from to be so.

[08:18] – We discuss why companies generally aren’t sustainable in the long run

[08:28] – And what we can do in finance to help reverse this using the Energy Industry as an example.

[09:57] – Simple steps to be more proactive on sustainability.

[10:44] – How impact investment, green bonds and public private partnerships are shaping the sustainability agenda and so are important to include in our strategic planning.

[13:44] – Marco’s thoughts on why Finance are well positioned to drive better sustainability.

[18:39] – How an understanding of the ‘circular economy’ is important to mitigate risks.

[21:03] – Suggests four components that make up a Strategic Business Partner.

[21:33] – Highlights McKinsey report where 41% of CFOs are involved in transformational and non-recurring activities.

[22:42] – Mentions an Ernst & Young survey where CEOs wanted their CFOs to be more strategic.

[22:57] – Shares the results of an internal Novartis survey asking what you would like a business partner to be and where is finance today.

[26:39] – Marco brings up the Stakeholder Analysis Grid from my Audacious Finance Partner Book and how he helps towards developing our courage behind becoming more valued business partners.

Resources Mentioned:

    • “The Happy CFO: How Finance helps Society,” by Marco Venturelli, 2017 (article)
    • Measuring the impact of Impact Investing (link)
    • The Business Value of impact measurement (link)
    • Survey on CEOs expecting more from their CFOs (link)
    • McKinsey report on where CFOs spending their time (link)
    • “The Imperial CFO, ”Economist article on the influence of the CFO (link)
    • The Audacious Finance Partner: Reveals The Key Factors and Skills for Business Partnering Success, by Andrew Codd
    • Give and Take: A Revolutionary Approach to Success (2013), by Adam Grant

 

Happy Finance and becoming Strategic Business Partners (2/2)

Most people are not used to seeing or hearing the words "Happy" and "Accounting & Finance" in the same sentence, however our latest guest mentor shares why today this can be more the case. Let me introduce you to Marco Venturelli, CFO Novartis Oncology Europe and part 2 of our latest podcast together #026: #HappyFinance and becoming Strategic Business Partners. In this episode we cover: • The two best bits of advice that have helped him most in his career. • A simple tip to increase the perceived value you add to your colleagues. • Why we shouldn’t view influencing so negatively in finance & accounting. For detailed time stamped show notes, links to resources mentioned, and further contact details for our guest check out sitnshow.com/podcast/026 Also available as on iTunes, Stitcher & Soundcloud. #HappyFinance#FinanceMentors#sitnshow

Great article that confirm your Happy CFO intuition: great company returns come from Happy associates.Today's CFOs are not just company officers charged with optimizing the financial performance of the companies, but is actually embracing the organization's entire value chain.

 

CFO Drive Culture Change

In today’s highly competitive business environment, corporate culture must be a top priority,CFO plays a critical role.

CFO come Business Partner

Il CFO non sarà un algoritmo ma uno strategic business partner“ da Sistemi e Impresa Set 2017

Come innovare i processi di business senza le risorse necessarie? Creando canali di dialogo efficaci fra le imprese e il mondo finanziario

di Veronica Pastaro

La trasformazione del Chief Financial Officer (CFO) è ormai in atto da molto tempo. Sistemi&Impresa ha riunito attorno a una tavola rotonda diversi esponenti, a vario titolo, dell’ambito Finance per discutere il tema dell’analisi della relazione delle imprese con il mondo finanziario. A partire dal presupposto che il rapporto fra aziende e banche negli ultimi anni è andato incrinandosi, poiché è diventato sempre più difficile trovare canali di finanziamento per innovazione e ricerca, come si possono aprire nuove vie di dialogo? Ci sono in giro tante buone idee e una discreta liquidità per finanziarle: serve trovare il linguaggio e gli strumenti adatti per raccontarsi. Qual è il ruolo della tecnologia in questa attività di forecasting per aiutare a mantenere l’equilibrio finanziario e presentarsi nel migliore dei modi al proprio interlocutore? Sembra che in questo quadro caratterizzato da sempre maggior complessità, la figura del CFO si stia andando configurando come un ruolo chiave.

(...)

La finanza è una scienza funzionale agli obiettivi dell’impresa”, ha esordito Marco Venturelli, CFO Oncology Region Europe di Novartis. “Il primo elemento da chiarire agli imprenditori è la necessità di avere una propria narrativa, capace di descrivere la mission dell’azienda”. Venturelli è infatti convinto che siano proprio questi i temi su cui il CFO può dare il suo contributo: “Il CFO ha infatti un vantaggio, perché è l’unico, insieme con l’AD, a poter tenere sotto controllo tutti gli aspetti dell’azienda. È necessario che i vertici concedano la delega per avere visione di tutto il budget, altrimenti non è possibile svolgere correttamente il proprio lavoro”. Venturelli è persuaso che il CFO sia “uno strategic business partner, ovvero un leader che aiuta gli altri manager a prendere decisioni strategiche per il business”: “Se il CFO deve aiutare a prendere decisioni, la padronanza dei dati è certamente il punto di partenza. Inoltre, l’interazione personale e relazionale è il fondamento su cui puntiamo in Novartis”.

Per leggere tutto l'articolo: Sistemi e Impresa Set 2017

Becoming a Strategic CFO

The CFO Role: The Two Faces of the Chief Financial Officer

Steven Brown

The role of the 21st Century Chief Financial Officer is drastically different from its traditional book-keeping function. Deloitte tried to map this transition with their article 2011 “The Four Faces of the CFO”, but their failure is that they stop at the theoretical and haven’t gone the extra step to put figures to their ideas. I wanted to see if I could do just that. As such, I got in touch with 449 Chief Financial Officers in Australasia and asked them to look at a more recent article by Deloitte where they delineated that a CFO tends to fit into one of the four categories listed below. Putting this recent article to the test, I asked the CFOs how they felt their role as a C-Suite executive had changed in recent years and did it match any of the following four categories. The following is an outline of the different perspectives as advocated by Deloitte: cfo job

Responder: The Responder CFO supports the company’s strategy development by helping business leaders to quantitatively analyze financial implications of different strategy choices. This CFO is usually evident in decentralized businesses where the CEO drives accountability for strategy and performance to business-unit leaders.

Challenger: The Challenger CFO acts as a steward of future value in the strategy process by examining the risks to and expected returns on different strategy alternatives. Being a Challenger is sometimes equated with being a “Dr No,” as the CFO seeks to minimize risk or ensure adequate returns to future capital allocations and investments.

Architect: The Architect CFO shapes strategy choices and applies finance strategies to complement and maximize the value of particular strategies. Architects go beyond the Challenger in enabling the financing of innovative initiatives. Architects thus work to find “A path to yes” on key business investments.

Transformer: The Transformer CFO becomes a lead partner to the CEO in shaping and executing future strategy. The CFO is key to the execution of “Real operational and financial options” for shifting the product market mix, delivering value and creating distinctive capabilities. In short, CFOs as ‘Transformers’ proactively engage in addressing the core questions in a strategy process.

 

For some people this might seem like a lot of pseudo-business bingo, here’s my quick breakdown of Deloitte’s four category model:

  • The Responder provides those at the top with financial information so as they may all create an informed strategy for the future.
  • The Challenger asks as the opposite side of the yin-yang spectrum to the CEO to make sure that the business has thought about all of the possible ways to develop itself. Is the CEO pushing for X? Perhaps the CFO proposes executing Y or Z instead because the company will look to be in greater profit in doing so.
  • The Architect serves to take the direction the CEO wants to push and find out how to get to that point with the resources to hand. If the “Pharaoh CEO” wants a pyramid, it’s up to the CFO to strategize how resources can be allocated to achieve this dream.
  • The Transformer normally acts as an arbiter of change. A business wants to enact some sort of change; the Transformer uses their financial knowledge and skills to execute that change.

The Transformers came from the following industries; Transport, Energy, Manufacturing, Logistics, Sporting Organizations, Online Services and the Big Four.

The results that returned from my survey showed that the respondents felt that they suited the following categories:

  • 47% Transformers.
  • 21% Thought that they were all four.
  • 20% Architect.
  • 9% Challenger.
  • 3% Responder.

Having looked at these figures, I wasn’t surprised that the majority of respondents found themselves to be Transformers as I have, in my own experience, often been assigned Executive Searches for individuals with the ability to execute on, as the CFOs themselves fittingly put, “The financial and operational detail across the business”.

Here are some of the views from the CFOs who saw themselves as Transformers;

  • “In my organization it is the CEO and CFO driving strategy and the business forward.”
  • “In this day and age, all CFOs need the ability to be transformers. These are the CFOs with vision. A CFO that has both quantitative skills and commercial nous, the transformer effectively acts as a receiver (although not when the company is in trouble) by predicting if a business model will not work, if there is an opportunity in the market, or if they can take advantage of an arbitrage opportunity. Often a transformer would be more of a CEO than what the CEO is. In this case, the actual CEO would be free to have more of an external facing role, and motivate staff by constantly travelling around divisions.”
  • “Working with the CEO to challenge, empower and enable our various division managers to execute on the key strategies within their businesses.”
  • “As CFO, I have taken different approaches depending on the skill set of my CEO at the time. I consider it essential that the CFO acts in a way that is complementary to their CEO, in filling gaps and bolstering strengths”

What did surprise me however, was the number of CFOs that couldn’t decide between the four categories and saw themselves as operating as each of the roles in relation to the day at hand. One respondent gave me a poignant explanation for this in that “The modern CFO will inevitably move between styles” depending on “The needs of the organization at a given point in time”. In that case, it makes sense that these CFOs would see themselves as Transformers as a lot of New Zealand companies are currently seeking drastic change in order to expand and capitalize on their growing market.

Another view from a CFO who saw themselves as been all four categories: 

“My thoughts on the article is simply that while the definitions are largely correct, no CFO is only one of these categories. Their role is defined by the needs of the company, and these needs can change at any time. I believe all exceptional CFO's can be all of these defined categories.”

Respondents who saw themselves as being all four categories came from the Finance, Dairy, Livestock, Packaging and Recruitment industries.

To conclude, I would have to say that I disagree with Deloitte’s idea that there are four faces or even four categories to the Chief Financial Officer. My results certainly point to the fact that the CFO has moved away from “Traditional…accounting…morphing into a strategic role” (Wayne Goodall, Oracle, 2017), but I would argue that, like the Roman god Janus, there are only two faces for the CFO:

 

Arbiter of Change

Acting as a partner to the CEO, this CFO is close to Deloitte’s ‘Transformer’ category. Once the C-Suite have set a direction for big change, the CFO will utilize their financial skill set and resources to make this big change a reality.

Whilst this may seem almost a carbon copy of Deloitte’s idea, I feel that there is subtle enough difference for this Arbiter of Change category to exist as a concept. The Deloitte author seemed to imply that the CFO simply acts as the King’s Hand with little emphasis on their input in the creation of a roadmap. My experience grants me that CEOs are usually clever enough people to take input from the rest of the board, including our modern CFO, in informing whichever overhaul the business needs rather than simply playing the Great Dictator. This might seem like splitting hairs on my part, but I believe in minding the details.

 

Devil’s Advocate

Unlike the Deloitte article, I don’t feel that there should be a distinction between the ‘Challenger’ and ‘Architect’ category. Trying to find an optimal strategy is all part of being a successful business leader so playing “Dr No” or “Finding a path to yes” is all one and the same; hence I feel that the Devil’s Advocate suits this category best. Inevitably, a great CFO will find a way to execute to the best of their ability a business’s roadmap so this category essentially encapsulates a confident modern CFO who is willing to advocate and challenge opinion in order to best serve the greater good.

What’s the difference between the two? It seems with the Chief Financial Officer that it is less down to the individual themselves, but the team around them and the business that they serve. In industries where there is great room for expansion or the ability to implement needed or wanted change, Arbiters of Change come into play; where a CFO simply needs more to add their input to help guide the ship as best as possible, you have the Devil’s Advocate.

These ideas only serve the now though. What waits around the corner will, I’m sure, interest us all as I think there’s big change in store for all executives as the century goes on.

Strategic Business Partnering: CFO Roles

Shape your Strategic Profile - 5 Areas of reflection

1) Seven Tips for Strategic Finance

 2) As a rule, CFOs are rational individuals. Adept at thinking in terms of logic and numbers, they tend to look for quantitative explanations for the ups and downs in the valuation of their companies and of markets as a whole. They’re likely to assume that reality will conform to those models.

3) Strategic Planning is about Talks and Figures

A ‘financial’ strategist is a strategist first, and a financial second. For decades financials have been applying solutions to become a strategic business partner for the C-suite, from financial engineering and tax planning, to centralising (global) operations and deep analytics today. To avoid drilling deeper and still find nothing, reverse engineering the strategic role of the financial will show another route to be of value and increase the yield on IRR or profits with double digits…  

4) STRATEGIC ROI: 3 Unfair Advantages of Finance Professionals

Organizations are running away from a vague “gut feel” to a fast analytical and experimentation ledstyle of leadership. Never before has analytics been so important. A survey of Fortune 1000 CFO's also found that the vast majority—81%—felt they worked at companies that viewed their finance operation as a vital “strategic business partner,” involving Finance in top-level decision-making. They are seeing this across every industry where finance teams are heavily involved in strategy, tasked with not only modelling growth opportunities, but cost benefit analysis and cost cutting exercises. Leading companies that are embracing analytics are making decisions based on data and this is giving them an advantage in the market –Why aren't you? 

5) Story Telling in Finance

6) Strategic Tips 

Andrew Codd must read in Finance

Must read in Finance

 

Whilst there are very few books out there on Finance Business Partnering there are so many others available that detail the broader business skills necessary to be a successful finance business partner. So where does an aspiring Finance Business Partner begin their search for knowledge? I recommend the following 5 books that I consider as the best bang for your buck to start with. Happy Reading

if you are so succeful why are you working long hours?

“I really became a robot,” a manager at an accounting firm explained. She and her colleagues worked extraordinarily long hours, but, she said, “I thought it was normal. It’s like brainwashing. You are in a kind of mental system where you are under increasing demands, and you say to yourself that it doesn’t matter, that you will rest afterwards, but that moment never comes.”

Through my research, I’ve heard stories like this over and over again from people in accounting firms, law firms, consulting firms, and other white-collar jobs. We all know that chronic overwork is bad for our mental and physical health and can seriously jeopardize the quality of our work. We wish we could change the way we work, but we don’t really know how.

Long hours are most common in managerial and professional occupations. This is something of a recent trend. In the old days, if you were a white-collar worker, the deal was that you worked as hard as you could at the start of your career to earn the right to be rewarded later on, with security of tenure and a series of increasingly senior positions. In professional organizations, such as law firms, accountancy firms, management consultancies, and investment banks, the prize was partnership. The competition was relentless, but once you won the prize, it was yours for keeps. Partners had autonomy to choose how and when to work and what to work on. Of course, some senior partners spent a surprising amount of their “business development time” on the golf course, but that was OK because they had already paid their dues to the organization.

This is no longer true. As a director of HR in a leading accounting firm told me, “The head of audit is in the office regularly from 5:30 AM until 10 PM, on weekends, too. So is our managing partner. This is not exceptional. The rest of the firm sees the senior people working these hours and emulates them.”

My research, published in my new book about leadership in professional organizations, shows that our tendency to overwork and burn out is framed by a complex combination of factors involving our profession, our organization, and ourselves. At the heart of it is insecurity. As one senior business unit leader in a law firm admitted to me: “I just come in here and work as hard as I can all the time. I feel like I’m doing a good job, but it’s hard to measure. That’s the nature of what we do: It’s feast or famine. And we all tend to be such insecure people that we’re all scared all the time.”

The 500 interviews I conducted for my book showed a pattern: A professional’s insecurity is rooted in the inherent intangibility of knowledge work. How do you convince your client that you know something worthwhile and justify the high fees you charge? The insecurity caused by this intangibility is exacerbated by the rigorous “up or out” promotion system perpetuated by elite professional organizations, which turns your colleagues into your competitors. How do you convince your boss that you’re worth more than your closest colleague? There is no chance for a professional to rest on their laurels — or even to rest.

Exacerbating this problem, elite professional organizations deliberately set out to identify and recruit “insecure overachievers” — some leading professional organizations explicitly use this terminology, though not in public. Insecure overachievers are exceptionally capable and fiercely ambitious, yet driven by a profound sense of their own inadequacy. This typically stems from childhood, and may result from various factors, such as experience of financial or physical deprivation, or a belief that their parents’ love was contingent upon their behaving and performing well.

As the recruiters I interviewed explained, these individuals are immensely attractive to elite professional organizations because they are entirely self-motivating and self-disciplining. The firm in effect tells the insecure overachiever, “We are the best in the business, and because we want you to work for us, that makes you the best, too.” But upon joining the firm, insecure overachievers discover that the rigorous up-or-out policy exacerbates their insecurity and their fear of being “exposed” as inadequate — and ultimately rejected.

In the short term, insecure overachievers respond by delivering exceptional performance. As the chair of a consulting firm told me, “My theory is that the best client relationship builders in our firm are insecure. They are so hell-bent on making their clients feel good about them that they work overtime. Clients feel their passion and respond to that.”

The tendency to hard work is reinforced by the strong culture of social control created by elite professional organizations. On the one hand, this is comforting. Some professionals I have studied refer to their firms as being like a “family,” or something even more intense. As one consultant described it, “When I first came here, I thought, This place feels like a cult. But now I have been here a while, I think it is great.” Taken to extremes, the insecure overachiever’s sense of commitment can lead to extreme conformity and the normalization of unhealthy behaviors.

Paradoxically, the professionals I studied still believe that they have autonomy and that they are overworking by choice. They do not blame their organizations, which after all have invested in work-life balance initiatives and wellness programs. Instead, they blame themselves for being inadequate. Their colleagues seem to be coping, and they take that as further evidence of their own inadequacy. They do not talk honestly to their colleagues about their problems, thus perpetuating the myth of the invincible professional, which encourages their colleagues to feel inadequate in turn. If they suffer burnout, they think it is their fault. Their organization and its leadership are absolved of responsibility, so nothing fundamental changes.

As a result, by the time insecure overachievers become leaders of their organizations, they unconsciously replicate the systems of social control and overwork that helped to create them.

If you are a leader who is wondering “Why am I working harder than ever?,” take a good look at yourself, the organization that has created you, and the organizational practices you are perpetuating. Working hard can be rewarding and exhilarating. But consider how you are living. Recognize when you are driving yourself and your staff too hard, and learn how to help yourself and your colleagues to step back from the brink.

Your insecurities may have helped to get you where you are today, but are they still working for you? Is it time to acknowledge that you have “made it” and to start enjoying the experience a little bit more? And if your boss is an insecure overachiever, recognize how they are projecting their insecurity onto you — how they make you feel insecure for not being able to keep up with them.

Work exceptionally long hours when you need to or want to, but do so consciously, for specified time periods, and to achieve specific goals. Don’t let it become a habit because you have forgotten how to work or live any other way.

And notice how you judge colleagues who are working less hard than you — they may have discovered something you need to learn.

If you are a leader, you have a responsibility not just to your firm but to the people who work within it. Help your colleagues to achieve their full potential, but do not allow yourself to exacerbate and exploit their insecurities. And remember that your ultimate “duty of care” is to yourself.


Laura Empson is Professor in the Management of Professional Service firms at Cass Business School, University of London, and Senior Research Fellow at Harvard Law School.  She has devoted the past twenty-five years to researching and advising professional service firms on leadership, governance, and organizational change.  Her most recent book, Leading Professionals: Power, Politics and Prima Donnas (2017) is published by Oxford University Press.  Prior to becoming an academic she worked as a strategy consultant and investment banker.