The Time-Based CFO

There’s No Wrinkle in Time for the Time-based CFO

Each time I read an article telling me to focus more and more on the future, I just roll my eyes. Continually, I’m reading that my peers and I need to be shifting our focus from the past to the future.

This advice is concerning and even misguided because we’re all different. Every person looks to the future, we just process and approach it differently. Accordingly, I believe some of you are past-based CFOs. Others are current-based CFOs. The rest of you are future-based CFOs. Don’t even think about changing who you are, just the desired outcomes.

Just Reporting and Then Walking Away – That’s the Real Problem

I’ve been building financial models for more than 20 years. I’ve even been a VAR for a leading driver-based financial modeling tool. I’ve spent many years teaching others how to peer into the future by projecting it.

Now I’m going to reveal a big secret–I’m a past-based CFO. And I’m not changing. I can’t. That’s how I’m hardwired. This DNA was factory installed at the beginning.

Writers who tell me (and you too) that we need to change our focus to the future are misinterpreting the real problem. Instead, they should be saying to quit walking away after the job of reporting financial or non-financial data based on the past. Reporting and walking away–that’s the problem. Focusing on the past is not.

Bookkeepers report and walk away. Many accounting managers do that. Controllers sometimes do. CFOs? That’s news to me. If they do, then perhaps they are just accountants shrouded with a title unbecoming for them.

Dwelling on the past is not the problem. Reporting and moving on without providing context and/or guidance provides only limited if any value to readers starving for actionable, financial information.

Time-Based-CFO
There’s a myth that CFOs are only future-based professionals. We need past-based CFOs to as the past can reveal much about bad habits and behaviors that need to change. Know your natural instinct when it comes to time and CFOing.

The Past-based CFO

Meet Susan.

Susan is a brilliant strategist. She’s been a CFO for 7 years. Her team includes a controller, 2 analysts, and a department of accountants, bookkeepers, and clerks. That means Susan can focus on special projects and new initiatives.

Susan’s best decision was hiring Bill, Rachel, and Crystal to help implement and create a complex outcome-based financial model using Anaplan. She also had the insight to incorporate an IBM Watsonesque solution to help with creating thousands of stress tests on liquidity 3, 6, 9, 12, 24, and 36 months into the future.

Susan is constantly studying trends, interviewing key resources, and can tell you every single key number on the financials which are delivered on the last day of the month at 11:59 p.m.

Susan met a CFO coach several years ago. Her frustration was that her CEO called her a perfectionist who took too long to complete projects. Susan agreed with this assessment, but she didn’t know what to do until her coach told her something she’ll never forget. “Your 80% is another person’s 100%. Never forget it.”

But the CFO coach reminded her that being a past-based CFO is a gift and to use that talent wisely. “Your past-based focus should always be about driving continuous improvement. That’s your end game. You can still create and innovate, and it’s okay to do so with your past-based perspective,” said the coach.

Today, Susan is one of the most sought-after CFOs in the nation at FP&A speaking events. Her leadership team loves her, and the CEO now only calls her a perfectionist just 2-3 times a year.

The past-based CFO is about one thing–continuous improvement. Susan calls it radical improvement, and she’s earned the right to call it that.

The Current-based CFO

Bill never gets bored. That’s good because his routine rarely varies from year to year.

Bill’s company runs call centers around the U.S. They buy 1-2 competitors every year. Sales go up 11-12 percent annually. Earnings track consistently with revenues.

The balance sheet is dull and boring with almost no debt. It’s one of those balance sheets that lacks drama. But Bill loves it.

And cash flow? Free cash flow is predictable and also tracks consistently with earnings.

Bill doesn’t have a past-based focus. He’s not really focused on the future. Since he performs some of the COO duties too, his focus is constantly on the here and now. Don’t ask Bill how things were going a month ago. Don’t talk to him about next quarter. Bill cares about right now.

He cares about today’s customer complaints, whether or not operating systems are down, and how employees who work on the front stage are being anticipatory of what could go wrong.

Bill’s CFO coach told Bill he didn’t think he could provide value. But the coach dropped a nugget he holds dearly to this day. The coach said he had a Disney-like mindset and fully focused on the customer experience. The coach was perceptive enough to note that Bill is a current-based executive focused on customer service, a great and unique experience.

Bill took that to heart. His focus is still customer service, but he wants to move from a great employee and customer experience to a transformational one. This is also his approach with the 30-something FP&A team he leads.

Bill did something else to make his job easier at the advice of his CFO coach. In the beginning, what should have been routine was all but that. Daily chores were completed haphazardly and inconsistently. Some of his short-term projects were running late and over budget.

His coach advised Bill to hire someone with a past-based, current-based, and future-based perspective with a strong proclivity towards process and systems.

Once Bill found Carol to fill the process manager role in FP&A, his stress levels went down. At last count, there were 100-plus Geckoboards displaying every key vital centering on customer service throughout their main facility. In Bill’s words, “Nothing ever falls through the cracks anymore. Our customers love us. Callers love us. Our staff loves us.”

The current-based CFO is about one thing–customer service. Bill prefers, “Nirvana right now for every stakeholder.” I’m okay with that too.

The Future-based CFO

When I met Steve, I was blown away. On Monday, Steve has 10 great ideas. On Tuesday, there are 10 more. Friday is a bad day–just 6 really good ideas.

Sometimes, Steve drives his team crazy with his fast-paced mindset. Yet, they are energized by his presence and his element of responsible risk-taking. When he points to the direction his team will be moving toward, everyone hitches their wagon to Steve. He seems to always deliver.

Steve is always looking ahead. He’s one of the most decisive CFOs I’ve ever met. When I first met Steve, I pointed these traits out to him. He told me that’s the way he’s always been.

Steve went out of his way to reach out to me seeking input. He told me his team was having a hard time keeping up with him. While he considered himself a patient person, he admitted to having an everything-is-due-last-week mindset. I was too much of a wimp to say ‘last week’ was more like 3 weeks ago.

I think I shocked him when I told him not to change. Instead, I asked him not to be blindsided. “What do you mean?” Steve asked.

An entrepreneurial mantra at the Strategic Coach is ‘Make it up, make it real, make it recurring’ and that’s always stuck with me. Accordingly, I told Steve he needed someone on his team to make sure his best ideas were being vetted. And the best ideas had to become real by passing them on to a process manager within his accounting and FP&A team. Check on both.

I reminded Steve that being a future-based CFO is about one thing–innovation. Innovation is the end game for this particular type of CFO. Steve prefers creating a much bigger and better future for his company and customers. I like that too.

The ING Words for the Past-based CFO

Since the words ‘past’ and ‘historic’ appear to be out of fashion these days, I want to add a few more comments about what makes the past-based CFO hum.

Remember, this time-based CFO is about continuous improvement, that is, changing what’s been happening to something far better. They have a ‘from this’ to a ‘to that’ mentality based on research, probing, and investigating facts.

Accordingly, their ING words are (or should be) in this order:

  1. Investigating
  2. Reporting
  3. Analyzing and interpreting
  4. Suggesting and recommending a new course of action
  5. Supporting (their position)
  6. Challenging (the past practice) and changing (to something new and better)

I will not argue that some professionals with a natural past-based instinct stop after number 1 and 2 above. That’s reporting and walking away.

If you are currently a CFO or FP&A manager with a past-based focus, use the ING list above for self-coaching. Remember, your end game is continuous improvement or radical change.

If you are a current-based CFO or future-based CFO, I need to apologize. You don’t get a list of ING words. Past-based CFOs are picked on the most these days, so we need a mental model for them that validates how they approach the future.

What’s Your Time?

The majority of the CFOs I meet are past-based CFOs. There’s nothing wrong with that. And I’m glad to say that those same CFOs are all about continuous improvement. It’s as though they have this ‘from this to that’ mentality.

Fortunately, many of these past-based CFOs work with CEOs who are future-based CEOs. That’s a synergistic relationship.

I’ve given you a rough and even imperfect method for helping you to identify which type of CFO you might be. Now what?

  1. Know your limitations by being self-aware at all times. In my CFO practice, my goal is to work with future-based CEOs. They need me, but I need them. We both want innovation. We just approach the end game differently. We both want continuous improvement. Likewise, we approach that end game differently too. That’s self-awareness.
  2. Don’t try to be someone you’re not. If you are a current-based CFO, embrace it. Don’t even be afraid to consider other roles that more closely match your time focus. Use the gifts freely given to you and take them to the max.
  3. Make sure you are surrounded by peers and staff having a time focus different from yours. If not, you’ll be working with clones. Is that what you want?
  4. Remember, there’s always an end game. For the past-based CFO, it’s continuous improvement. For the current-based CFO, it’s customer service. For the future-based CFO, it’s innovation.

Next time you read that you shouldn’t focus on the past, how are you going to respond?

For Further Reading

Frustration led me to write about this topic. But I couldn’t have done it without a book that I read annually. It’s called Conative Connection: Uncovering the Link Between Who You Are and How You Perform.

And what might conation be you ask? Kathy Kolbe has been researching conation for 40-plus years. I’m stepping aside to let her tell us through these noteworthy links:

For FP&A Managers and Directors

Do you run an FP&A team? Are you getting the most out of your staff? Do your constituents concur with your assessment?

Change the role CFO with FP&A as such:

  • The past-based FP&A professional
  • The current-based FP&A professional
  • The future-based FP&A professional

Can you place a name next to each time-based professional? If so, what do the results look like? Is there an imbalance?

If you would like to learn more about building the ideal FP&A team with proper time frames, feel free to ping me on LinkedIn. I’m a pretty decent listener.

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