Going beyond the conventional wisdom. Approach the job differently.
“The person who follows the crowd will usually go no further than the crowd. The person who walks alone is likely to find himself in places no one has ever seen before.” — Albert Einstein
“If your behavior is conventional, you’re likely to get conventional results—either good or bad. Only if your behavior is unconventional is your performance likely to be unconventional, and only if your judgments are superior is your performance likely to be above average.” ― Howard Marks
Entrepreneurs are encouraged to think differently, be passionate, and take risks. Finance leaders are supposed to follow convention, be conservative, and reduce risks.
I disagree with this black and white image. Great finance leaders need to have the characteristics of successful entrepreneurs.
Going beyond the common requirements found in most job descriptions and thinking outside the box will lead to both greater job success and career satisfaction in the roles. The hard part is finding an organization and an executive recruiter that will seek that out in a CFO.
Principles for a Successful and Interesting Finance Career
- Create your own scorecard.
- Always be learning.
- Think really long-term
- Focus on the ‘hidden metrics’
- Take risks.
- Foster trust.
Let’s dive into each principle in a little more depth.
Create Your Own Scorecard
Conventional Wisdom: Focus on the financial metrics. These metrics matter most to investors.
Differentiated Approach: Seek out non-traditional metrics that if met will serve all three major constituents — customers, employees and shareholders. I am a huge fan of the story about Alcoa, and how its new CEO, Paul O’Neill chose to focus on employee safety as the keystone metric.
The CFO role is to balance the needs of customers (who must see value in the short term to be a promoter of the product), employees (who hope to see career benefit in the medium term – within 1 year), and investors (who ought to be patient and think long term – 3+ years.)
Always Be Learning
Conventional Wisdom: Be a specialist. Develop deep technical expertise.
Differentiated Approach: Take a deep interest in other functions. Think like a general manager. Look for connections and insights from other business models or industries that could be applicable to your organization.
Do your best to view the world through the lens of your customers and your employees. If you can understand what they really want, and what they want to avoid at all costs, you will be a better executive. “Invert, always invert” is advice from Charlie Munger on how to approach what seem like intractable problems.
Think Really Long-Term
Conventional Wisdom: Strategic finance focuses on the future — the next quarter and the next year.
Differentiated Approach: Due to the requirements of quarterly and annual reporting, calendar dates generally receive too much importance in business. Focus on trend lines and changes over a longer period of time, regardless of whether it meets a quarter end date or not.
Take a longer term view of the future, so you can compete differently. I like this quote from Jeff Bezos from 2011 on that topic.
“If everything you do needs to work on a three-year time horizon, then you’re competing against a lot of people. But if you’re willing to invest on a seven-year time horizon, you’re now competing against a fraction of those people, because very few companies are willing to do that. And just by lengthening the time horizon, you can engage in endeavors that you could never otherwise pursue.”
Focus on the Hidden Metrics
Conventional Wisdom: Measure what matters. The most important metrics include demand generation, closing deals, and hiring key people.
Differentiated Approach: We tend to focus on the metrics that are easiest to measure and compare across organizations. This leads to an excessive focus on acquiring customers and talent.
And not enough focus on providing value to and retaining said customers and employees. Find ways to create, track, exposure and influence metrics on satisfaction and value (both received and contributed.)
Take Risks
Conventional Wisdom: Identify hidden risks. Reduce risk wherever possible. Focus on efficiency.
Differentiated Approach: Sustained success requires taking risks. Not simply focusing on efficiency. CFOs need to nurture thoughtful risk taking by actively encouraging new approaches or ideas for go-to-market channels, products, and hiring. Acknowledging that many experiments will fail, but those that work should be able to produce outsized returns.
Foster Trust
Conventional Wisdom: Drive performance improvement by showing tough love and holding people accountable.
Differentiated Approach: Create trust through the acceptance of mistakes, the reality of learning, and the desire to hear the opinions of all people, regardless of level.
Increase trust by stressing the importance of learning. Model this value by being a teacher where you can connect the jobs done by different teams to the overall company mission, the value received by customers, and how that drives investor returns. Invest in people so that they can achieve their fullest potential, while simultaneously contributing value to the organization.
Empower people and delegate as much as reasonable. Err on the side of fewer controls, recognizing that some are needed and more ought to be added as an organization grows.
