Monthly Archives: November 2012

Various Roles for the CFO During Real Strategic Planning (Part Two)

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Having helped over 800 clients do real strategic planning, I have had the privilege to work with lots of fabulous CFOs who are a competitive advantage for their companies.  These CFOs are open-minded, constructive, and instructive.   

Because strategic planning should be tailored for each unique company, the role of the CFO changes too.

It’s a joy to do strategic planning with companies that benefit from open minded CFOs. Instead of jumping to conclusions and shutting down discussion, effective CFOs help executives consider expanded options.  The CFO can also ask if they should consider approaches like acquisitions, private investors, an IPO, or franchising to lift off a stubborn plateau, compete more effectively, penetrate a new market, develop exciting products, or pick up speed.  Feasibility analysis and determining optimum pacing for those strategies comes soon enough.

Recently, we helped a client retain the services of an interim CFO. This client was experiencing several behavioral symptoms (blaming, silos, passive aggressive communication, and avoidance) that would sabotage successful implementation of any strategic plan. At the time, we were utilizing our Synthesis ™approach to strategic planning that features a teambuilding process running parallel to the strategic planning sessions. The Controller of this family owned business was an in law who contributed to the continuation of dysfunctional behavior.  They benefited from the Interim CFO’s objective questions, capacity to imagine success, and expansive thinking.  I wasn’t the only person who could envision growth and emphasize leveraging their strengths.

It’s not surprising that the majority of INC 500 companies have CFOs who are optimizers.  They think of ways to find more money, know how to squeeze cash flow, understand currency rates, and have established strong relationships with external resources.  I’ve noticed that the CEOs of highly successful midsized companies, who are guests on my syndicated weekly peer to peer talk show, frequently brag about their visionary CFOs. (Visit www.GrowthStrategistShow.com to access the archive of 300+ interviews.)

Recently, a client needed our Catalytic™ approach to strategic planning which includes a problem solving process that runs parallel to strategic planning.  They had tolerated the chronic recurring problem of generating inadequate gross profit from their primary service way too long.  The CFO played a key role in the success of both the problem solving and the strategic planning.  She dove in and captured the necessary data, provided reports to help the account managers and department head, and participated in executive level decision making.  Compiling financial data, creating reports, and participating in decisions are central to the CFO role, but you would be mistaken if you assume that all CFOs would have risen to the occasion as well as she did.

There has been great progress, but unfortunately…fabulous, optimizing, open minded CFOs are still not the norm. Too often, CFOs play the role of “naysayer” during strategic planning.  The Marketing VP starts to talk about new products or expanded markets and the CFO is the first person to say why the company shouldn’t even consider expansion.  The CIO shares the observation that the company will need to “go to the cloud” to serve clients better and/or reduce downtime and the wet blanket CFO asks about cost too soon.  The Sales VP shares information about how/why competitors are landing larger accounts and the grouchy CFO complains about the current high cost of account acquisition.  Or the negative CFO becomes condescending when the HR Director suggests that the company may need more career advancement opportunities or increase compensation formulas.  The lingering period of uncertainty that has followed the 2008 recession doesn’t help.

Usually such pessimism develops in CFOs when:

  • they are really Controllers and not trained to think strategically,
  • their informed advice is discounted too often,
  • they are overburdened with too much day to day accounting so their minds are preoccupied with details and reports, or
  • the CEO/CFO relationships push the CFOs into the negative role.

A company clearly increases its growth potential when the CFO addresses the causes of any negativity before the next round of real strategic planning should start.  Having a bright, open minded, optimizing, instructive, constructive CFO is a competitive advantage for any company.          

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST®. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB clients get on…and then stay on…the published lists of the fastest growing privately held companies. She owns and operates a suite of companies that help privately held midsized companies achieving accelerated growth with sustained profitability® through opportunity & resource analysis, 4 approaches to strategic planning, executive advisory services, growth financing, and targeted search.  2012 is Ambler’s 8th year hosting a weekly peer-to-peer-to-peer syndicated on line talk show that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. An archive of over 300 interviews is available at www.GrowthStrategistShow.com. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.    

[video] Various Roles for the CFO During Real Strategic Planning (Part Two)

Various Roles for the CFO During Real Strategic Planning (Part One)

Having helped over 800 clients do real strategic planning, I have had the privilege to work with lots of fabulous CFOs who are a competitive advantage for their companies.  These CFOs are open-minded, constructive, and instructive.  

Because strategic planning should be tailored for each unique company, the role of the CFO changes too.

We use what we call our Insight™ approach to strategic planning with executives who realize that they have been making very important decisions based on outdated or insufficient information.  Nine times out of ten, it’s updated market research that is needed because customer needs and preferences are changing so rapidly.  During a recent Insight™ strategic planning assignment, the client was fortunate because the CFO was genuinely curious about the significance of buying patterns and factors that influence customer satisfaction.  This CFO was interested in causal factors and not just bottom line results after the fact. The CFO was one of the reasons this company could fully embrace the goal of quickly tripling gross revenue while only doubling operating expenses.

When real strategic planning is indicated, a capable CFO can serve as an important sounding board, teacher, and advisor for other members of the executive team.  He/she can help fellow executives tweak and rehearse their presentations.  If the proposals of the Marketing VP cannot be understood by a bright CFO, the presentation is not ready for the entire executive team.  The CFO can help the VP Client Services make sure that his/her ideas can generate the necessary gross profit.

The executives in one of our client companies affectionately refer to their CFO as “Guru.”  He is well versed in projections, budgets, financing, ways to increase profitability, etc.  Plus he is bilingual.  This CFO can speak both “Accountese” and English.  The best part is that he respects people.  He can patiently explain which factors impact gross profit to a department head with no previous training in accounting … without any condescension in his voice. We led our Accelerate™ strategic planning process with this client and the CFO has been a trusted teacher and advisor for just about every member of their executive team.

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST®. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB clients get on…and then stay on…the published lists of the fastest growing privately held companies. She owns and operates a suite of companies that help privately held midsized companies achieving accelerated growth with sustained profitability® through opportunity & resource analysis, 4 approaches to strategic planning, executive advisory services, growth financing, and targeted search.  2012 is Ambler’s 8th year hosting a weekly peer-to-peer-to-peer syndicated on line talk show that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. An archive of over 300 interviews is available at www.GrowthStrategistShow.com. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.                 

 

[video} Various Roles for the CFO During Real Strategic Planning (Part One)

Do You Need Strategic Planning This Year or Just Tactical Planning?

Want to make an experienced CFO angry? Ask him/her to prepare specific budgets, change cash management systems, and secure new financing when clear strategic direction and priorities don’t exist.  Or waste his/her time in meetings about strategy when the company is clearly deep in the process of implementing a strong strategic plan and he/she could be finalizing a bank deal or providing valuable information to optimize capacity utilization.

Does Your Company Need Updated Tactical or Strategic Planning?

One technique to test if your company should just update its tactical plan or do real strategic planning is to convene the executives and pose the question:  “Could we triple gross revenue while only doubling operating costs?”  The leaders of most companies do not actually commit to tripling, but posing what we call the Triple/Double Option generates some great questions and insights.  The discussion surfaces the full range of growth goals and ambition within the leadership team.

Since so many executives assume that the question means “triple quickly,” the discussion surfaces any concerns about ineffective or insufficient systems, limited production capacity or quality control, etc.  That’s important information to hear and address through stepped up tactical planning focused on operational improvements. The primary strategic question would be about pacing. How fast or slow should those operational improvements be made?

Real strategic planning is clearly needed when posing The Triple/Double Option ™cues the executive team to express:

  • questions about whether the market is now saturated or is changing too fast
  • worry about industry consolidation, rollups or competition
  • confusion about why net promoter scores (customers recommending the company to others) have been going down
  • frustration that the sales cycle is growing while the closing rate is shrinking
  • disagreement with orno excitement about existing strategy, priorities, plans,
  • lack of confidence in leadership
  • pessimism that the company can lift up off of a stubborn plateau and/or
  • concerns about the company’s capacity to attract bright talented employees.

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST®. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB clients get on…and then stay on…the published lists of the fastest growing privately held companies. She owns and operates a suite of companies that help privately held midsized companies achieving accelerated growth with sustained profitability® through opportunity & resource analysis, 4 approaches to strategic planning, executive advisory services, growth financing, and targeted search.  2012 is Ambler’s 8th year hosting a weekly peer-to-peer-to-peer syndicated on line talk show that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. An archive of over 300 interviews is available at www.GrowthStrategistShow.com. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.                 

 

[video] Do You Need Strategic Planning This Year or Just Tactical Planning

[video] Moving Past the Plateau Caused by Longterm Tolerance of a Significant Problem

Can You Blast Past a Plateau That Was Created by Long Term Tolerance of a Significant Problem?

Tolerance of a chronic or recurring problem often means that there are conflicting interests within the company’s leadership.  For example, when a relative does not carry his/her weight in a family owned business, at least one person in the family views the primary purpose of the business as providing income for relatives regardless of their contribution. Another family member may think that employees should all do their part and earn the income paid to them. Not resolving the matter over a long period of time means that both individuals value not upsetting family members over the business.  Now there is an internally created plateau!

Having a family council helps companies facing this kind of situation. What is the philosophy of the family?  What is the purpose of the business? Who gets to make the important ethical decisions?

I have seen family councils change the rules regarding the salaries paid to relatives. One company started to pay relatives at the same pay scale they use for non relatives… and job performance was considered when raises and bonuses were considered. If they wanted to make sure that a particular family member had more money, the family trust could be utilized.  But the business wasn’t burdened with unfair compensation.

I have seen family councils establish separate businesses.  Sometimes the patriarch must announce his successor so everyone knows who now has authority.  I’ve seen some families bring in psychologists or family therapists to help them move beyond the fear of “upsetting” one another… because they did not want behavioral problems to stunt the growth of their business.

There are other versions of tolerating significant problems too long.  Frankly, it’s been rewarding to see more women business owners attending seminars like “Accounting for Non Accountants” so they can move past that self imposed plateau.

 

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST®. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB clients get on…and then stay on…the published lists of the fastest growing privately held companies. She owns and operates a suite of companies that help privately held midsized companies achieving accelerated growth with sustained profitability® through opportunity & resource analysis, 4 approaches to strategic planning, executive advisory services, growth financing, and targeted search.  2012 is Ambler’s 8th year hosting a weekly peer-to-peer-to-peer syndicated on line talk show that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. An archive of over 300 interviews is available at www.GrowthStrategistShow.com. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.     

A Classic Barrier to Growth – Intense Competition

Don’t you just want to laugh when you hear an executive of a mid-sized company say that they have absolutely no competition? Yeah right!  Even if specific companies don’t appear on industry lists, competition comes in so many forms.  Get used to it.  Competition is everywhere.  Pirates (copycats).  Advances in technology. Mood changes. Generational preferences.

City zoos aren’t just competing with other zoos or museums.  They compete against lakes and swimming pools.  They compete against shopping malls.  They compete against the electronic gadgets in the hands of today’s children. Zoos compete with the Discovery channel on high definition and 3D television that conveys such clear images of animals that children are convinced that they have experienced all that can be seen and heard about gorillas, tigers, and elephants.

If you lead a midsized service business, you realize that the benefits of your services are about words like faster, easier, and more fun. So although it is important to know what major competitors are doing, it is more important to find out what your customers need to go faster, be easier, and/or be more fun. Old fashioned simplistic customer satisfaction surveys don’t do it anymore.  It pays for most of us to invest in learning which websites our customers visit and how their budget priorities are shifting.

Those of us who lead B2B companies need to know where our clients are headed, what keeps the leaders up at night, and what problems they are addressing…even if the relevance of those problems to the services we provide isn’t immediately clear.  One of our strategic planning clients has been looking for more affordable manufacturing options. Although I am an owner of a suite of companies that helps mid-sized companies keep growing, none of them specialize in locating manufacturing plants.  But I sure am glad we knew what our client needed.  It turned out that a guest on my weekly on line peer-to-peer talk show was a great source for a plant in Vietnam. Who knew?! Our networking saved that client a ton of time, money and frustration, plus the show guest got a buyer for his underutilized plant.  That helps us retain clients while other strategy firms worry about competitors.  

 

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST®. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB clients get on…and then stay on…the published lists of the fastest growing privately held companies. She owns and operates a suite of companies that help privately held midsized companies achieving accelerated growth with sustained profitability® through opportunity & resource analysis, 4 approaches to strategic planning, executive advisory services, growth financing, and targeted search.  2012 is Ambler’s 8th year hosting a weekly peer-to-peer-to-peer syndicated on line talk show that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. An archive of over 300 interviews is available at www.GrowthStrategistShow.com. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com

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