Three Ways To Be A More Strategic CFO

Author

Jeff Thomson

July 18, 2016

The CFO is no longer just the “numbers guy” around the office, according to Dun & Bradstreet CFO, Rich Veldran. Instead, he says, CFOs are perfectly poised to be strategic partners, playing a significant role in revenue growth. This month I spoke with Rich to learn more about the CFOs strategic business contributions and why it’s crucial to not only figure out what to fund, but what not to.

This interview has been edited and condensed.

 Jeff Thomson: You joined business to business data provider, Dun & Bradstreet (D&B), as CFO of its North American operation in 2003, and then served in several other finance functions before becoming global CFO in 2011. What skills have you applied from your previous experiences to help you serve in this global capacity?

Rich Veldran: During the early days of my career, in a world recently scarred by financial scandals such as Enron, finance was primarily concerned with protecting the company through strong controls and risk mitigation. While those are essential, they are only part of the story of what makes a great and value-added finance organization. In those early days, I focused on developing a strategic skill set that I hoped to one day bring to the CFO role. That meant partnering closely with the business and using data to help drive smart business decisions aimed at profitable, long-term, sustainable growth.

One of the things that helped me shift the focus of finance at D&B was looking at finance from the outside-in – taking roles outside of the function that focused on growth and business operations, first as the head of Business Operations Reengineering and next as the Chief Strategy Officer. In leading Business Operations Reengineering, I gained an appreciation of the skills needed to effectively run a business and set it up for future success. In particular, the LEAN principles of data-based evaluation and decision making – knowing when to re-allocate resources to better growth ventures from lagging ones – helped me learn how to drive performance. As Chief Strategy Officer, I was able to practice the art of longer term, “third horizon” thinking: “What does it take to leap frog to the next phase of growth for a company?” But developing effective strategy is not just about “dreaming big.” In the end, it always comes down to data. Strategy is nothing without data to inform it.

Most importantly, my experience in leading these functions for D&B has allowed me to open the aperture on looking at business from “what is” to “what can be,” while still rooting my decisions in data. I gained a new appreciation for what it really takes to drive value creation – taking measured risks to drive growth, ensuring that that growth is profitable through efficient operations, and then ultimately using the cash you generate wisely – all while ensuring that the foundation of controls is rock solid.

Thomson: In a previous interview you stated CFOs should be the champions of total shareholder return (TSR), in part by driving strong revenue growth. Given that many don’t view the CFO as an enabler of revenue growth, what steps can CFOs take to change this perception?

Veldran: The CFO’s true mission today goes well beyond “being the numbers guy” – it is to be the ultimate owner and champion of value creation for the company. The CFO role is unique in that we are really at the nexus of all that is happening in the company and we have no functional biases to stand in our way. At the end of the day, our role is to make sure that every decision a company makes is geared towards increasing TSR. Arguably the most important factor in value creation is revenue growth (along with strong profitability, capital stewardship and rock-solid controls).

When you talk to most people about revenue growth they do not immediately think of finance as a key enabler, given that revenue generation resides in the domain of the sales, marketing and product development organizations. But the reality is that the CFO and the finance team have a critical role to play in helping the company make the right strategic choices that maximize long-term growth. A big part of the role is around portfolio analysis and optimal resource allocation – for example, determining which new initiatives should receive funding, and if there are existing product lines that should be shuttered or sold in favor of others. In a world where funding is limited, helping the company make the right choices is critical. But that is only half the equation; equally important to what we fund is to what we choose to stop funding. In my experience, there are three ingredients required to do this right.

  1. You have to really know the business and care about it at an intrinsic level. Smart business decision-making is not simply a math exercise, but an enterprise that demands that you have a deep understanding of the market, your value proposition, the competitive landscape, etc., and that you are invested in finding ways to help the company win each and every day. That’s why the most important factor I look for when hiring people is intellectual curiosity – the desire to learn, to improve and to make a positive difference.
  1. Be a true business partner and to be visible. You cannot make a difference sitting in your office or cubicle studying spreadsheets. Our finance team spends time out working with the business partners every day; they are our comrades in arms. That said, it is also essential to be comfortable with conflict as it is part of the terrain. Every project that is rejected or shut down is owned by someone in the company who has put a lot of work into it and cares deeply about it. Knowing when (and how) to say “no” is an art requiring a proper mix of both resolve and empathy, and backed up, of course, with data.
  1. Having the attitude and aptitude to properly balance the trade-off between risk and reward. Risk-taking, and therefore uncertainty, is essential for growth; yet as finance professionals, we live in the domain of data and carry the ultimate responsibility for risk mitigation in the company.

Balancing the priorities is probably the most important thing we do in helping the company create value. The key here is to maintain an open mind and actively listen to all sides and then to ultimately weigh the decisions through the lens of long-term value creation. You’ll never get every decision right, but through active listening and leading with value creation in mind, you’ll certainly improve the odds.

Thomson: As a global CFO, you have unique insight into the issues finance leaders across the world face. What are the most pressing challenges currently confronting both you and other CFOs? Do these vary by region?

Veldran: In today’s global economy the role of a CFO is more complex than ever before. Successful CFOs must be able to operate in markets all over the world with different currencies, cultures, time zones, tax structures and regulations. I think all global CFO’s are living with the same strategic challenges: near constant market volatility, an ever-changing regulatory landscape and having the right talent in place that can help manage these global risks. And while individual risks may vary by region, recent events in Europe have shown that no region is without risk.

We live in a world where the actions of one employee could cause enormous financial upheaval for a company, so CFO’s must make sure they have a robust system of controls and oversight in place. Enterprise risk management has to be embedded in every function throughout the company, reaching well beyond the traditional finance and legal owners. Business leaders across the company must be accountable for managing these risks to achieve their performance goals.

With such high stakes, it is more important than ever that you have a team that is both educated and accountable. Talent retention is of the utmost importance, especially in large complex global organizations. The challenge of acquiring the best talent, developing the individual employees, and having measures in place to retain them for the long term is common for most CFO’s I encounter.

Thomson: It would seem these challenges aren’t easily solved in the nine to five workday. Can you expound on that? Do these challenges affect the ability to have a good work/life balance?

Veldran: We live in a hyper-connected world, so naturally, issues may come up at odd hours or over the weekend; I think that’s likely the nature of most business these days. Finance can be fast-paced, but I don’t think that necessarily has a negative impact on a good work/life balance. In fact, our ability to stay connected anywhere – while sometimes too much of a good thing – is also what allows me to be at family events or wherever I need to most.

What’s really important, and it’s something that I look for in new hires, is intellectual curiosity and the passion to make the company win. When you have a true passion for what you do, challenges or work that may fall outside of the traditional work week, are motivators, and don’t seem to interfere too much. It’s just life!

Thomson: You were awarded CFO of the Year by NJBIZ not long after you assumed your role as global CFO. What do you feel contributed to this achievement, and what advice do you have for other CFOs who wish to be recognized as growth leaders?

Veldran: I was very honored (and surprised) to win NJBIZ CFO of the Year award.  To me, the award was far less about me and more about the evolution that the finance team here at D&B has undergone over the past five years, as we’ve shifted our mandate from risk-inhibitor to one primarily of growth-enabler.

D&B celebrates our 175th anniversary this year, yet our real focus is on evolving and innovating for the next 175 years. For us, this has meant leveraging the things that make us great while modernizing to keep moving the ball down the field. A significant part of my mandate, and what was recognized by NJBIZ, has been on shifting the finance team’s focus and resource balance away from more transactional activities (enabled through automation and the creation of global “centers of excellence”) towards more value-creating activities in the areas of business analytics and capital deployment.

My advice for other CFOs is to not be afraid to break the mold. With our deep history, we’ve taken great strides not to be hindered by “the old machine” – things and systems that were in place for years, but inefficient, But we made the decision to change, and reinforce that decision every day through our actions; deciding to evolve is half the battle – the rest is just execution.

This article was written by Jeff Thomson from Forbes and was legally licensed through the NewsCred publisher network.

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