The document discusses the role of the CFO and their alignment with corporate strategy. It outlines that CFOs can take on different styles such as navigators, executors, turnaround surgeons, or business transformers depending on the company's profitability and strategic focus. The board now expects CFOs to not only manage finances but also advise on strategic planning and ensure investment decisions consider all risks. As the owner of the decision making process, CFOs should implement techniques to improve debate quality and ensure decisions are made objectively rather than being influenced by individual biases.

1. The Activist CFO—
Alignment with Strategy;
Not Just With the Business
Eyad Ramlawi
Dubai – May 13, 2012

2. Agenda
• Business Objectives and Current Status
• CFO Styles and Profiles
• CFO Relation with the BOD and Expectations
• Strategy Alignment & Managing the Process

3. Objectives in terms of Level of Specificity
Capability
Business Goals
Performance Objectives
Key Performance Indicators
Metrics & Measures

4. Where does Corporate Strategy Occur?
Where does corporate strategy take place?
Corporate Corporate
Strategy Head Office
Business Division A Division B
Strategy
R&D R&D
HR HR
Functional
Finance Finance
Strategies
Production Production
Marketing/Sales Marketing/Sales

5. Current Status
Redefine industry
expectations by giving the
Increasing strategic impact
company an operations
advantage
Stage 4:
Best in
Competitive
industry with
“Best Practices” advantage through
Making the company
operations
Stage 3: Link
as good as its strategy and
competitors
operations
Stage 2:
Holding the Adopt best
company back
practice
Stage 1: Fire
fighting mood
Increasing operations capability

6. CFO Styles

7. Navigators
High Profitability – Internal Focus
• CFOs who work closely with CEOs to map out
an aggressive course to profitable growth
through acquisition or organic channels.
• Top-line growth, not cost containment, was
the primary driver of future performance

8. Executors
High Profitability – External Focus
• CFOs who focus on operational excellence
and instill in their companies a value
discipline that enables them to do more
with less.
• They focus on continued improvement, not
dramatic change in the future.
• Board’s satisfaction with company
performance.

9. Turnaround Surgeons
Low Profitability – Internal Focus
• CFOs who step in with the goal of restoring
ailing companies to financial health.
• Board dissatisfaction, a need to restructure
and stabilize the company, high turnover
among top management, and an overhaul of
the company’s operating model.

10. Business Transformers
Low Profitability – External Focus
• CFOs who identify and take advantage of
opportunities for strategic innovation; focusing
on their companies’ business models.
• Board expecting change in the long term for an
overhaul of the company’s operating model.

11. New Expectations of the Board
Performance
Expectations
Measures
Advisor on strategic
planning
Increase in their “&”
value!!! safe-guardian of
investment decision
process

12. Relationship with The Board
• The CFO is particularly well placed to provide the Board with
information on the strategic planning, the process by which it
was developed and the process for monitoring progress
against the plan.
• In organizationsactively promote theplanning process, and
that have no strategic the
CFO should development
implementation of such a process.
• The CFO contributes to the internal resource analysis by
providing financial information (historical and projected) on
the organization’s capacity to take risks in achieving its
strategies

13. The Board & The CFO

14. Advisory role of the CFO:
Critical Evaluation of Strategic Plan
Strategies
Alignment
Actions
Assumptions
Taken
Processes
&
Adequate
Resources
Financial Significant
Projections Risks
Allocation
of
Resources

15. In a Nutshell – Board Expectations
• CFOs contribute important financial information and expertise
to the development of the strategic plan.
• CFOs play a critical role in determining the organization’s
financial capacity to deal with risks related to its strategic
objectives.
• CFOs make a major contribution to establishing guidelines
and procedures for strategic planning.

16. In a Nutshell – Board Expectations
• CFOs contribute to the internal resource analysis by providing
financial and capital market information on the organization’s
capacity to take risks in achieving its strategies.
• CFOs have the ability to translate the words of the strategic
plan into measurable and quantifiable financial projections.
• CFOs should attend Board / Committee Meetings & should
be involved in the preparations and review of their reports
and minutes.

17. When Influencing is not Enough
If for any reason the CFO has a material concern,
believes that a material risk has not been given
due consideration or that key assumptions are
materially misrepresented in the strategic plan,
the CFO has an obligation to make those matters
known.

18. Process Owner
Why aren’t CFOs better at using their position to
improve the quality of decision making?
Process Owner
&
Decision maker
Process matters in decision making because we
can’t learn from our mistakes the way we think
we can.

19. Decision Maker
Objective of the firm in undertaking its investment, financing and the
payment of dividends is to maximize the wealth of its shareholders.
Decisions
Investment
CFO is expected
to make critical
decisions from
Corporate
Finance POV
Dividends Financing

20. CFO Should
• Consider their mandate from the board of directors &
carefully consider how to pursue it
• View himself: neither as the impartial, cool- headed
adviser of the CEO, nor as the executor of the mechanics
of a decision, but primarily as:
The owner of a safe and sound decision-making process—
which is a role that no one else plays.
As CFO, your goal is to ensure that the biases of
individuals weigh less in the final decision than
the things that should weigh more—like facts

21. Technical Process
CFOs already rely on processes to manage the technical
systems “valuations”; yet, it’s very easy for people to subvert
technical systems to get the answer they want.
If the CFO already own the technical processes, he can build on
them to improve the quality of debate, for instance by
adjusting the agenda, attendees, and protocols of key decision
meetings.
Did the due-diligence team
Did anyone voice a point seek out information that
of view that was contrary would contradict the
to what the CEO wanted to investment hypothesis, as
hear? opposed to simply building
a case for it?

22. Techniques to Enhance the Decision
Making Process
• Field two deal teams, at least at some stage in the
process
• One to argue for the deal
• Second to argue against it
• Ask people to deal has themselves into the future and to
assume that a
project
failed.
• Write a memo explaining why the CEO should not do a
deal, including the things the CEO would need to believe
to not do it.

23. Finally
If you fly an aircraft, you don’t say,
“The weather is really bad and we’re already
behind schedule, so let’s skip the takeoff
checklist.”
You say,
“This is a flight like every other one, and we’re
going to use the checklist— that isn’t
negotiable.”
“It is never too late to become
what you might have been.”