Professor Robert Howell, David T. McLaughlin D’54, T’55 Distinguished Visiting Professor of Business Administration at Dartmouth’s Tuck School of Business
It’s time to change the way we think about CFOs—and the way they think about themselves.
By Robert A. Howell
The current view—which gets pushed by business schools and carried into the executive suite—sees finance officers as little more than number crunchers. They settle the books and look after regulatory compliance, without taking any bigger role in steering company strategy. CFOs analyze the financial impact of a company’s moves after they’re made—not when they’re still being planned.
But that approach just doesn’t work anymore, for CFOs or the companies they serve. The world is changing too fast and economic uncertainty is too great to leave finance officers out of executive decision-making. The risk of disaster from an ill-advised move is greater now than ever; think of megamergers that end up costing the acquiring company too much and ultimately destroy shareholder value.
Simply put, the people who have the strongest grasp of a company’s finances need to be part of the strategic thinking from the ground up. Not only should they crunch the numbers on potential moves like mergers, but they should also generate strategies themselves, by analyzing the likely financial impact of industry trends and other big issues. Strategy and finance should be like two sides of a coin—inseparable.
Certainly, some CFOs have already moved in that direction and have been rewarded for it, including succeeding to the CEO seat, but most aren’t in …
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