It is an old question that is certain to acquire new urgency in 2011: How will CFOs step up their game and provide more of the hard-edged strategic insights that their companies will need in order to grow again?
As challenging as the recession has been and will continue to be, it has also offered CFOs a silver lining in the form of renewed respect for their skills and expertise. In a September 2009 CFO survey, about one-third of senior finance executives said that the recession had improved their positions within their companies by highlighting their skills and providing the finance-specific challenges that enable them to both demonstrate and refine their talents (or, in some cases, enhancing their appeal in the job market). And when we asked which specific skills had proven most important at that point in the recession, two-thirds cited their “management/leadership ability” and nearly 40% pointed to their “ability to think strategically.”
That would seem to leave CFOs ideally positioned to capitalize on the higher profiles they have earned. And no doubt many would love to move away from the relentless focus on cost containment and instead think about ways to reinvigorate their companies. But rather than leave one priority behind in favor of another, CFOs seem far more likely to have to figure out how to manage costs and help drive growth. As Darden Restaurants CFO Brad Richmond says, CFOs will have to balance “traditional responsibilities with the ability to provide analytical truths and points of view that help shape overall strategy.”
Or, put another way, it’s not enough to simply collect and report on financial data — you also have to figure out how to help your companies capitalize on it.
That’s what Richmond is doing. His company operates the Olive Garden, Red Lobster, and LongHorn Steakhouse chains, among others, a $7.2 billion restaurant empire that is virtually ubiquitous in the United States. Where to go from there? The Middle East. In 2010, Darden made an agreement with franchise operator Americana Group to develop at least 60 of its restaurants in Bahrain, Egypt, Kuwait, Lebanon, Qatar, Saudi Arabia, and United Arab Emirates.
Although Richmond’s analysis of customer data revealed that casual dining within the United States still presents strong growth opportunities, it also indicates that this growth will decline from historical norms. “Using predictive insights, we saw the opportunity to capitalize on nontraditional growth areas to help capture the full potential of our brands,” he says. “The Middle East market is growing and has a strong affinity for American dining brands. International expansion to this region and others is one of a number of strategic initiatives we’ve vetted and are beginning to play.”
Redefining the Role
Many CFOs would love to lead exactly that kind of charge, and often they can. When they can’t, it is frequently because their companies have limited them, almost literally. “CFOs do what the job description tells them to do, and it often says to focus on the numbers,” says John Kotter, professor emeritus at Harvard Business School and author of the new book Buy-In: Saving Your Good Idea from Being Shot Down. “They become very good at this, and at all the sub-aspects of finance, but that makes them specialists, much like chief technology officers.” And, Kotter adds, an ill-conceived job description leads inexorably to the CFO becoming “the ‘numbers person,’ simply because this is what is expected of him or her — and, thus, the stereotype.”