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The Chosen One

I’d struck gold.

Well… I’d won the mentor lottery, at least.

I was 4 years into my career and had moved to a huge public company 6 months earlier. And HR just assigned me a mentor.

“Meet Tony.”

To call Tony a rising star would be an understatement. He’d accelerated to SVP of Finance faster than anyone else had in the business. And was earmarked as a likely successor to the Group CFO.

This was a $100bn business, and he was still only in his early 30s.

It turned into a groundbreaking relationship for me. He was warm, and generous with his knowledge. But direct. The things I learned from Tony, became the backbone I built my career on.

I remember in one session he leaned in and told me his secret sauce:

“Let’s say there are 30 skills you need to be a good finance pro. Most people try and get to an 8 out of 10 on all 30. I don’t do that. Too hard. I picked 5 skills and got to a 10 out of 10 for those. Then for the other 25, I settle for a 5 out of 10.”

I asked him what the five were.

He responded: “It doesn’t really matter. They are unique to me. And yours will be unique to you. It’s the combination of those five that will make you special. Work it out.”

This idea changed my approach to my own development. I worried less about rounding off my weaknesses and focused more on pushing my strengths.

Turning them into superpowers.

It was career-shifting advice for me.

Meanwhile, Tony has gone on to have an incredible career as a CFO at the highest level.

I’m lucky enough to still speak to him occasionally, and I’m always richer for it.

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This is the start of a 4-week series, diving deep into the skills you need to be a great CFO.

Introducing the T-Shaped CFO

As Marshall Goldsmith once said, "what got you here, won't get you there."

15 years ago, I was good at Excel. I used it to eliminate, simplify, and automate work at scale. This was fundamental to my progression.

But today, I rarely use it for little more than simple tables and models. As a result, my Excel skills have atrophied. If I was a 9 out of 10 fifteen years ago, today I would be a 5… and that’s being generous.

At the same time, there are skills that I have grown over the last 15 years that are critical.

The problem is that no one actually tells you what skills you need to be a CFO. Not beyond a superficial level, anyway.

So allow me to.

Modern leaders need T-shaped skills.

You must be the finance specialist. The subject-matter expert. (More on what this means next week)

But that’s not enough. You also need breadth and general aptitude across other disciplines. Plus, the leadership qualities and soft skills. (We’ll cover this in two weeks time.)

The problem is that you can’t be top of your game in every discipline in finance. You have to make choices.

Most people make these choices unintentionally.

The goal of this series is to help you build out your ‘T’ with intention. To get the result you want.

If you want more theory on T-shaped skills, this piece by McKinsey is a must-read.

The precise skills you need as CFO will depend on the type of CFO you want to be.

But …

There are five skills I’ve consistently seen the best CFOs do every day. So whatever type of CFO you want to be, learn to do these five things:

1. Zoom In/Zoom Out

Some CFOs are brilliant in detail. Some are brilliant strategically.

But only a few are great at both. Even fewer are great at both and know how and when to use them.

Being able to flip back and forth between strategy and day-to-day operations at will is a superpower.

When businesses go wrong, it is normally in the execution of the strategy. This often gets classed as an execution problem. But so often the problem is that there is a disconnect between the big picture and the detail.

CFOs who can zoom in and zoom out stop this from happening.

2. Storytelling

People don’t remember facts, figures, instructions, or opinions. They remember stories. Because they connect with people. There is a reason I start each week’s post with an anecdote from my experience.

If you need to influence people, use stories. As a CFO, it's a brilliant way to manage investors, boards, teams, and customers. Use stories to make your point.

But storytelling isn't a skill that comes naturally to finance pros. That’s a good thing, though. If you can become a 5 out of 10 storyteller, you will be a top 5% storytelling finance pro.

I worked with a (very) introverted Independent Director who was a masterful storyteller.

I found this inconsistency fascinating, so I asked him about it. The answer was simple. He’d worked really hard on his storytelling skills over five decades. It had become the skill he used as a crutch to combat his shyness.

And he’d become brilliant at it.

If someone that introverted can become a 10 out of 10 storyteller, you can get to 5 out of 10.

I recommend Storyworthy by Matthew Dicks if you’re looking to polish your skills.

3. Radical Independence

As a CFO, your independence is your most valuable asset. It is the fuel for your judgments; based on fact and rigorous thinking.

But here’s the thing…

Your independence is under radical threat from every angle. There are influences and biases everywhere. Some obvious. Some more subtle.

Being radically independent is harder than it sounds. Radical independence is not about being difficult or obtuse for the sake of it. This is a common pitfall. It’s not independent if you are approaching everything as a “no” man or to be deliberately contrarian. It’s weak and lazy.

It’s about leaving your ego, influences, and biases at the door. Forming your independent view based on the facts (and using your experience to fill gaps).

It’s also about communicating that judgment properly. And making it easy for others to distinguish when you are basing your view on facts vs. the opinions of you or others.

4. Build lucrative relationships

As CFO, you will be the lead on a number of external relationships. Investors, banks, insurers, advisors, and M&A counterparties come to mind.

To them, you will be the face of the organization. The lead negotiator.

Depending on your path to CFO, you may not have done something this with high stakes. So when you get to the big chair, this can feel like a leap. And that’s before considering all of the new internal relationships to develop (CEO, Chair, BoD, etc).

Making friends is the easy bit.

Building relationships that can deliver on a big ‘ask’ is hard.

Different people do this in different ways. Some throw their weight around. Others ask nicely.

I rely on the law of reciprocity.

My style is to be consistently generous, transparent, and helpful. Always putting ‘credits in the bank.’ Over a long period of time.

And I rarely ask for anything…

Until I do. And then I make sure it is infrequent, big, and valuable. Then I look them in the eye and tell them exactly what I need and why. Cashing in my chips.

This is a skill I’ve only developed in the last five years or so. It’s come with maturity. I wish I learned it earlier.

It takes time, patience, and discipline, but it’s worth it.

5. Connect the business to the numbers

I'm always surprised by how few people truly understand the levers to drive the P&L and cashflow.

I have seen Presidents of large divisions of businesses, who talk a great game. But when push comes to shove, cannot move the needle on the P&L.

Those with the best business acumen I’ve seen are entrepreneurs. Whilst not unique to them, I have yet to meet a great entrepreneur without great business acumen.

The best entrepreneurs I have met have an understanding of their P&L that is instinctive. It is pure and obsessive.

Jack Welch called this ‘running the corner grocery store’. You buy something at a price, you sell it for more, and there is a cost of making that conversion. Getting these dynamics working in your favor is what makes a business.

As businesses get bigger, people often forget, or over-complicate these fundamentals.

Finance functions are often the biggest culprits. Great CFOs are good at communicating the economics of the business in a simple way. 

Skill Stacking

Whilst the five things above are common traits of great CFOs, that’s not all you need.

My first mentor Tony said there were 30 skills a CFO needed. I think there are more (I’ll share these over the rest of the series)

But don’t worry. You don’t need to master them all.

As Tony said, you need a minimum standard in all, and then a handful you excel at.

Get this right, and you will create a category of 1. And make yourself a more valuable CFO.

Allow me to explain:

Is Taylor Swift the best singer on the planet? No. And the estates of Otis Redding and Aretha Franklin would like to have a word with you…

The best guitarist? Jimi Hendrix would turn in his grave.

Songwriter? No.

Businesswoman? Close, but still no (although she has buoyed the US economy, according to experts).

But she is top 0.1% at least in all of those.

And when you put those ingredients together in a unique cocktail, you have someone that is truly 1 in 8 billion.

This is skill stacking…

Few people actually think about this consciously, though. In fact, many try and be as broad as possible.

When I interview CFOs, 9 times out of 10 they are not specific enough on their specialism. "I am looking for a CFO role of a $500m+ business unit of a public company." Yeah, you and thousands of others.

I pitch myself as a CFO for a specific sector, size, situation, market, finance team maturity, life cycle stage & CEO/board type. Not ‘or’. ‘And.’

That rules me out of all but about ten roles. But when one of those roles comes up, I’m the first person the recruiter calls.

It’s a bit like a business strategy. Pick a niche where you have an unfair career advantage.

For example: you could become the CFO for mid market PE backed turnarounds of chemical engineering businesses.

I'm encouraging you to think about your skill stack in the same way. Yes, you must collect your CFO ‘stamps.’ But also focus on how you can cherry-pick some of your skills and package them in a way that makes you unique.

Build your skill stack.

And put yourself in a category of 1.

Next week (week 2) we will run through the finance/technical skills you need (the vertical line in the T). And March 16th (week 3) we will share the broader business skills you need (the horizontal line in the T). In the final week (March 23rd) we will bring this all together and help you benchmark yourself.

QUESTION

Boarddreamer from Zurich, Switzerland asked:

I hope to retire in around 10 years, following a 35-year career in finance in the UK and US multinationals - I’d love to then switch to a portfolio NED career - any tips for what to do in the next 10 years to be ‘board ready’ when I retire (my employer does not permit me to sit on a board as a NED while I am employed by them)?

ANSWER

Hi Boarddreamer, thanks for the question.

Non-executive director roles are chalk and cheese with exec roles. So a long and illustrious exec career is not necessarily enough on its own to prepare you for independent directorships.

Boards are looking for deep industry experience, functional expertise, and an outside perspective. Diversity of background is huge consideration in board hires too

The best way to get a good NED role is by knowing the chair (or another senior board member) and being hand-picked to fill a vacancy. So, think of this as a networking task. Especially as you have 10 years to prepare. There is no reason you can’t build the path to your dream NED roles.

Focus on an industry you know well, and get to know the key players. Be part of the conversation, attend industry events, speaking events, etc. Become one of the faces and names known around the industry.

At the same time be brushing up on your corporate governance skills (director’s duties etc).

Do that for long enough and the right roles will fall into your lap.

Finally, your contract doesn’t permit you to take NED roles. But that can always be waived with the correct permissions. It can’t hurt to ask.

If you would like to submit a question, please fill out this form.

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And Finally

Next week we will run through the finance/technical skills you need (the vertical line in the T).

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Stay crispy,

The Secret CFO

Disclaimer: I am not your accountant, tax advisor, lawyer, CFO, director, or friend. Well, maybe I’m your friend, but I am not any of those other things. Everything I publish represents my opinions only, not advice. Running the finances for a company is serious business, and you should take the proper advice you need.