The Five Unique Skills Among Top CFOs

This post was originally published in January 2023 in The Secret CFO’s Newsletter.

I’m lucky to have worked with some really good CFOs across my career. The very best have gone onto Chair Boards at large complex corporates.

I watched them closely, took notes, and when I first became a CFO (nearly 15 years ago), I made sure stole the best bits and avoided the worst.

The truth is this…

The best CFOs are all different. Individuals. With different personalities. Some extrovert, some introvert. Some detailed, some big picture.

For those that get to the very top of the profession, the myth of the typical accountant is just that. A myth.

But…

I HAVE noticed a few things that they have in common. Common to those that become great CFOs, yet uncommon to those that don’t. They are the things that set apart the best CFOs.

I have distilled these traits down into five specific skills. They will help you stand out on the path to CFO. But more importantly help you crush it once you get to the top seat

They come more naturally to some, but they can all be learnt.

I’ll start with the most important one:

As a CFO your independence is your most valuable asset. It is the fuel for your judgments; based on fact and rigorous thinking.

But here’s the thing…

Your independence is under radical threat from every angle. There are influences and biases everywhere. Some obvious. Some more subtle.

Being radically independent is harder than it sounds. And is the most rare of the five things we’ll talk about today.

Radical Independence is not about being difficult or obtuse for the sake of it. This is a common pitfall. It’s not independent if you are approaching everything as a “no” man or to be deliberately contrarian. It’s weak and lazy.

It’s about leaving your ego, influences and biases at the door. Forming your independent view based on the facts (and using your experience to fill gaps.)

It’s also about communicating that judgment properly. Making it easy for others to distinguish where you are basing your view on facts vs the opinions of you or others.

Easy in theory. But it was years of operating as a CFO before I truly knew what radical independence meant and had the confidence to apply it.

In my early days as a CFO I found myself in board rooms where I was the youngest by 15 years. With high profile independent directors who had 25 years + as CFO. Quite intimidating. Easy to go with the majority, even sub-consciously.

But by putting reps in month after month in Board Meetings I built the confidence to express judgments properly.

Great leaders tell stories. Great CFOs are no exception.

People respond to stories, they connect with them, and they remember them. Your job as a business leader is to get people to want to do, what must be done.

And to do that you need to address the emotions, before the rational.

The most powerful tool in your armoury for this is storytelling.

It’s also a very rare skill in accountants. Most aren’t good at it, and for those that are, it takes time to get comfortable in it.

Finding the story in the numbers and compelling the business to act is harder than it sounds. By becoming just a 5 out of 10 storyteller, you will be ahead of 98% of finance professionals.

Get good at it.

As CFO you will be the lead on a number of external relationships; investors, banks, insurers, advisors, M&A counterparties, etc.

Depending on your path to CFO, you may not have done much of this at high stakes. So when you get to the big chair, this can feel like a leap. And that’s before considering all of the new internal relationships to develop (CEO, Chair, BoD, etc).

Building high stakes relationships is hard to practice on the path to CFO.

So how can you prepare yourself?

One word. Empathy.

Empathy is the super power in relationship building, and you can practice it any time, any place. In work, or outside.

Accountants are often left brained by default. Many finance professionals have sub-par EQ. Or at least don’t know how to access the EQ they have.

Those that empathize, stand head and shoulders above their peers. They are able to build fantastic teams. Engage across functions. At board level, down to the shop floor. Inside and outside the business.

Empathy and deep listening are super powers for you as the aspiring CFO.

It will make you more effective and more efficient.

Most accountants will wait until they have a full plan before they act.

It’s natural. We are trained in sciences that are black or white. We don’t like wandering in the dark.

Very little decision making in business is like that. It’s almost always a shade of gray. This is especially true of change programmes.

This personality trait means most accountants are slow in driving change. They need to see every step in a journey, before they take the 1st.

This is too slow. It’s a change killer.

A better approach: if you are certain that the direction is right, and clear on what the first step is… take that first step now.

Don’t wait for your boss to confirm they are comfortable with redesigning that process, or that spreadsheet. Chances are they are change adverse too.

If you are certain the change is right for the business, AND you know how to get started; just start. Execute violently, and iterate quickly. You’ll work out the rest of the journey soon enough (whilst others are still building their GANT chart).

When all else is equal in business, the winners will be the best executors.

One thing that has surprised me through my career, is how few people truly understand the levers to drive the P&L and cashflow.

I have seen Presidents of large divisions of businesses, who talk a great game. But when push came out shove, could not move the needle on the P&L.

Those with the best business acumen I’ve seen are entrepreneurs. Whilst not unique to them, I’m yet to meet a great entrepreneur without great business acumen.

The best entrepreneurs I have met have an understanding of their P&L that is instinctive, pure and obsessive.

A great CFO needs to be the same but with cashflow. I’m calling this cashflow acumen.

Whenever something happens in the business, you must intuitively sense the cashflow impact.

No need for a spreadsheet. It’s built in. Innate within your decision making.

The quicker you can process this, the easier it is to drive free cash flow in the operation on a day to day basis. As CFO, you are the cheerleader for cashflow inside the business.

If times are tough, then you need cashflow to keep the business liquid. If times are good you need cashflow to drive shareholder returns.

Growth in shareholder value comes from improving size and timing of future cash flows.

It’s not easy to retune a business to deliver cashflow with the same fury it delivers other KPIs.

If you enjoyed this, please hit ‘restack’ and drop a comment below to tell me what you thought!!