Strategic Decision Making and The Modern Day CFO
Strategic thought matters in modern leadership ventures. Here are the few things that are critical for a CFO to keep in mind when it comes to strategic decision making.
Strategic thought matters in modern leadership ventures. Modern CFOs need to chart eloquent course of actions while wading through waters that could very well be defined as murky. The context can be quite dynamic in this regard, from unfavourable union budgets to unpalatable price cuts from the competition, there are a multitude of factors that could easily make a CFOs life difficult. An enduring conviction to solution oriented thought is key here. As a CFO, a critical part of your job ought to be rational thought. When you combine rationality with strategy, something wonderful happens; you create a brief lakuna of opportunity from which solution will tumble forth. For a CFO these judgement calls are all the more important because finances become a critical part of the discourse. In today’s world a botched decision in regards of money can easily become the worst one you will ever make. Here are the few things that are critical for a CFO as far as strategic decision making is concerned.
Making Good Use of Your Vantage Point
Corporate hierarchy is a well structured machine. Parts interact with each other for very specific goals and each of those goals come together to realise a larger vision that is charted by the CEO. The CFO is uniquely positioned in this theater of internal cogs that function in highly specific ways for the purpose of finding blanketed growth. This is because her/his job revolves around not only helping the CEO successfully conceive a course for the company to move but also in communicating with the lower tier employees about the micro strategies they need to adopt as part of their work culture. A CFO is also responsible for coming up with finance structures that are safe and reliable to follow in the long term. She/he can also play an instrumental role in indulging in knowledgeable conversations with shareholders and investors about the state of the company’s finances. Essentially, a CFO is a key element of an intricate web. The CFO because of his/her position has a very macro view on the inner workings of the company that they work for and this advantage that corporate hierarchy provides should be intelligently utilised to make strategic decisions that are financially sound as well as future proof.
Communal Decisions: The Good Kind
As much as we give credence to scientific thought and coherent ideas, at a microscopic level we are all the sum total of the biases we have attached within our personalities, right next to the construct of rationality. It is impossible as individuals to completely rise above your own biases. This is why smart decision making is always likely to emerges from collaborative efforts. We are all individuals who nurse these rational biases at some level or the other. Synergy is the best way to cancel out individual biases that might result in negative consequences. As a CFO using other people as a sound board is very positive way of gaining objective perspective on the decisions you are about to make. This can help neutralize the biases that might have set in the decision you were thinking of making. Understanding that the growth of your organisation depends on collective intelligence rather than individual brilliance will go a long way in establishing yourself as the consistent purveyor of rational thought.
The Thin Line Between Data and Instinct
Instinct is a spectacular commodity to have in your possession while you help chart the financial stability of your company. It is something you grow to trust as you build experience. The problem, however, is that as you become accustomed to making correct instinctual decisions over the years, it becomes hard to confluence raw data with your own thought processes. This is a decision making trap that can easily lead you astray as a CFO. A clear demarcation needs to be laid out between instinctive thinking and empirical data. The critical part of this process should involve retaining your objectivity enough to not read the data at hand in favour of your personal instincts on the matter at hand. There is a very fine line of rational thought that is smack right in the middle of instinct and cold objectivity. Finding it would be key to improving yourself as a leader and devising successful data driven strategies that are intelligently conceived.
How Much Innovation Is Too Much?
Modern corporates travel forward in breathtaking speeds. Technology fuels too many innovations at timelines that were hard to imagine just a few decades ago. While systematically empowering your company with the technology that is available in the market should be a core priority, it is equally important to not lose sight of what you are leaving behind. The processes as well as individuals that were part of now obsolete systems should not be disbanded without some qualitative thought applied on the matter. Introduction of new technology simply means that there would be an investment laid on the future where better output is expected. It is not possible for this expectation to be delicately designed once the said investment is already made. A thorough study of the quantitative output of the innovations your company is planning on introducing should be held. As a CFO, it is important to be not too eager in stepping on to new technologies as they become available. Settling your company into a stable channel that provides consistent growth patterns should be priority.
The modern CFO is a prospector of sorts. He pioneers innovative paths that are not only less travelled but often unexplored. This kind of responsibility requires guile as well as strategy in equal amounts. It is a intricate balancing act that takes into consideration a multitude of small factors that make a corporate function as a unit. A CFO in essence, is the fluid that lubricates the machine into functioning effectively.