The Strategic Role of CFOs in Sustainable Business Leadership

Introduction

Recently, Lagos Business School hosted a leadership summit for Chief Financial Officers (CFOs), focusing on “The CFO as Strategic Architect – Maximizing the CEO-CFO Strategy.” Among the insightful presentations, Dr. Ayo Adepoju, the Group CFO of Ecobank Transnational Incorporated, delivered a compelling paper titled “Beyond Numbers: The strategic role of CFOs in sustainable business leadership.” I found his presentation exceptionally enlightening and believe it offers valuable insights for finance leaders everywhere.

Based on his address, I have outlined below the five core principles for being a Strategic CFO, utilizing a simple and memorable approach using the letters A – E, known as the A, B, C, D, & E Principles.

Alignment – the place of strategy

The importance of alignment in strategy cannot be over-emphasized. Walking together is better than walking alone; therefore, the CFO needs to align with the CEO in achieving the organisation’s strategy. The 'goalpost phenomenon' ensures that everyone is focused on the set goal. Speed without direction is meaningless. To achieve this alignment, CFOs should play a key role in strategy formulation and monitoring. Implementing a balanced scorecard with curated Key Performance Indicators (KPIs), leading transformation initiatives, and making informed capital allocation decisions are essential steps in achieving strategic alignment.

Business mindset – Follow the money

CFOs must have a business mindset and 'follow the money' to provide valuable advice. They cannot give advice on what they don’t understand and hence need to leverage a helicopter view. To cultivate this mindset, CFOs should foster partnerships through regular interactions with the business, be proactive advisors with value-driven reporting, act as the Chief Performance Officer, and communicate financial insights with clarity.

Credibility & Confidence

Credibility and confidence are paramount for CFOs. Credibility is more important than the numbers, and a CEO needs a CFO that can be trusted and commands respect. To build credibility and confidence, CFOs should master their craft, foster personal growth and avoid stagnation, build trust through actions and reliability, and seek mentorship for continuous improvement.

Doctor-mentality

Drawing an analogy between CFOs and doctors highlights the importance of providing insightful diagnoses rather than merely presenting data. The emphasis is on the need for open and honest dialogue within the organization, acting as the Chief Diagnostic Officer, providing constructive feedback and insights, and addressing problems promptly as issues do not age well.

Evolution-mindset

It is important to adopt an evolution mindset, recognizing the constant changes in the business world, the transformative impact of technology, and the lasting theme of sustainability. CFOs should anticipate changes and stay relevant in the evolving operating environment and market, prioritize a long-term view over short-term gains, build the right team for sustainable growth, and actively participate in key transformation initiatives.

Conclusion

The presentation underscores the critical role of CFOs in driving sustainable business leadership beyond traditional financial responsibilities. Adopting these core principles can empower CFOs to be strategic architects, adding value to their organizations and fostering long-term success.

Stay tuned for part 2, where I will conclude the remaining insights and recommendations from the presentation.