Etude
During a transformation, a Chief Financial Officer is often required to wear multiple hats. Chuck Whitten, a partner with Bain's Transformation practice, discusses the five critical jobs a CFO must perform to lead an effective transformation.
Read the transcript below.
CHUCK WHITTEN: The CFO plays a critical role in a transformation. And the CFO has to wear multiple hats. So the first is as a resource allocator. If you think about attempting to change the strategic, operational and financial position of a company, the future's got to look very different than the past. And that means the way you allocate resources has to change substantially. So the CFO's first job is to make sure that capex and opex [are] aligned with the new vision of the company, and that the balance sheet and cash flow characteristics of the company align with that new vision.
The second and related task of a CFO is to set the targets and incentive structure for the business. The challenge in a transformation is often adjusting the biorhythms of the company. You need people in teams to do things differently than they've done, and that means how they're [incentivized] and how they're measured matters a lot.
The third role a CFO plays is as the face to investors. So, particularly in this age of activism with activist investors scrutinizing every transformation, having a clear and concise investor strategy that paints the picture of the future and brings them along during the transformation journey is critical.
The fourth, some transformations have an M&A component. And so that means a merger, an acquisition or even divestitures will reshape the portfolio shape of the company. And the CFO often has to execute those types of things with a lot of hyper-speed. There's a lot of pressure to do it quickly, so that can be a role.
But I think maybe the most important job of a CFO in a transformation is as a leader in the business. The most successful transformations are led from the C-suite and the board, and it's their number one priority. And so employees and investors are looking at the CFO to understand the commitment to the transformation and how it's going.
First published in juillet 2016