Bruce Felt, Chief Financial Officer, Domo, discussed how a CFO can help a company execute its long-term strategy in his presentation to Argyle's CFO membership at the 2016 Chief Financial Officer Leadership Forum: Fall Event in Chicago on Nov. 17. In his presentation, "Bridging the Gap Between Strategy and Execution," Felt discussed some of the key challenges that a business may face as it tries to execute a strategy, along with how CFOs can help their respective companies overcome such challenges.
According to Felt, between 40 percent and 60 percent of a business strategy's value is lost in its execution. However, CFOs can play a key role in the development of a business strategy and its execution. CFOs also can ensure that all employees can stay on the same page to transform a business plan a long-lasting success.
Ultimately, today's CFO plays a strategic role in organizations worldwide. As such, the CFO can collaborate with employees in multiple departments and get the buy-in needed to deploy and execute a strategy.
"We, as CFOs and finance heads, are being asked and being pulled into being so much more strategic," Felt noted. "I can't imagine anything more strategic for us than bridging the gap between strategy and execution."
How a CFO defines the differences between a strategy and execution is paramount.
"Some people believe execution is the strategy. This just can't be true. … Strategy without tactics is the slowest road to victory."
Felt pointed out that CFOs sometimes view strategy and execution as interchangeable terms. Conversely, CFOs must be able to identify the role of execution in ensuring a strategy's success and dedicate the time and resources needed to guarantee a plan is executed flawlessly.
"Some people believe execution is the strategy," Felt said. "This just can't be true. … Strategy without tactics is the slowest road to victory."
Furthermore, a CFO must be able to develop a strategy and the techniques needed to execute a strategy successfully. This will ensure that a CFO can develop immediate and long-term goals as well as determine the steps needed to accomplish these aspirations.
"If you have a good strategy and reasonably good tactics, you can get there. But if you have the wrong strategy, you can execute as well as possible and never get there," Felt pointed out.
A business strategy requires a day-to-day commitment. Today's business world changes rapidly, and CFOs must be ready to modify a business plan and adapt it to the current business landscape as needed, Felt said.
"Every time you have a big miss, you need to rethink what's going on with your strategy," he stated. "It is not a one-year plan and forget about it. As you're executing [your strategy], you need to address your strategy much more frequently than once a year."
In addition, Felt said CFOs must be able to identify the key challenges relative to a business strategy and its execution, including:
1. Articulation of Strategy and Goals
Outlining a business strategy and defining business goals is essential, regardless of a company, its size or its industry.
"If you have a good strategy and reasonably good tactics, you can get there. But if you have the wrong strategy, you can execute as well as possible and never get there."
CFOs who are able to understand a business strategy can plan accordingly and share information about this plan with all members of an organization. Thus, CFOs may be able to get buy-in from employees at all levels if they can articulate a business strategy and a business' goals consistently.
"My suggestion is to get one piece of paper out and write [all of your goals] down," Felt said. "What could be more important than just telling the company what you do?"
2. Using the Right Metrics
No two companies are identical, and the metrics that a company utilizes may dictate its short- and long-term success.
Felt said CFOs must determine which metrics can be used to measure the success of a business strategy. By doing so, CFOs will be able to establish realistic expectations and find the best ways to help a company thrive both now and in the future.
"We have to make [strategy] measurable," Felt stated. "Have you thought about what metrics you could have to help the company achieve its objective? … You have to be really thoughtful about this."
3. Driving Metrics Across All Levels of an Organization
After CFOs develop metrics, these professionals must be able to promote the use of department-based metrics across an organization.
Department-based metrics empower employees at all levels to understand how they can help a company drive revenue growth. CFOs may need to adjust various metrics based on a company's results, but these metrics can help a company discover the best ways to extend its reach, increase its earnings and more.
"You have to break [metrics] apart and push them down. That is much more meaningful and impactful than big numbers that are out there that [employees] either don't understand or have control over," Felt stated.