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In my first BU CFO role, I had to speed-run the finance maturity of a $1B revenue business that had outgrown its hamstrung function. After eighteen months, the bedrock was in place. Applying the lessons I shared last week.

A specialist FP&A team bringing forward-looking insight and real decision support. A more robust accounting function underpinning the numbers. We were finally looking out the windshield.

It was exciting. We could now get into the business and actually help. Find price and volume opportunities for the sales team. Help procurement drive cost out. Surface every day efficiencies on the shop floor with operations.

There was just one problem… none of them wanted the help.

They had evolved to be ‘self-sufficient’ (their words, not mine). Executing well, but often against mediocre decision-making based on poor-quality information (local systems, with poor data hygiene and no connectivity to the P&L). They weren’t used to finance “poking their nose in.”

A siloed finance function is usually a symptom of a siloed business. There are walls to break down.

Welcome to part 4 in this 5-week series on scaling the finance function:

This week, we are moving one stage further up the maturity curve, from a stage 3 ‘specialized’ function to a stage 4 ‘connected’ finance function. 

At this stage, we bring finance and the business much closer together. This is the stage at which decisions get decentralized into the business. Unlocking new power and speed as the business reaches a size and complexity that will bring it to a halt if every approval and decision has to come up and down the chain of command.

If a Stage 3 - Specialized function is about finance doing finance well, then a Stage 4 - Connected function is about finance helping the business do finance well.

Instead of decision-making flowing in and out of gates with finance standing at the door, finance now builds the guardrails and focuses on managing the environment in which decisions get made.

A big part of this is the control framework. It needs to be robust enough to shape behavior and decision-making, but light enough to keep the business moving. Harder than it sounds. Controls have to cater for edge cases. If you are going to distribute spending decisions across the business, a PO system with unlimited spend authority in one corner will get found and abused fast.

A small crack in the corner of a dam eventually brings the whole damn thing down. Controls work the same way. You are only ever as strong as the weakest point.

Another defining feature of this stage is the emergence of true finance and operations crossover roles. Pure business partnering, embedded in the operation. Business partnering itself is not new at Stage 4, but until now, it has been delivered in a kind of top-down way. Senior finance supporting the biggest decisions on a kind of 80:20 basis.

But at this stage, you unlock the capability to make the micro decisions in the same way, with finance and operations working closely together at a shop floor level:

The small calls that add up to real money can now be made through the lens of the P&L and cashflow. This is not without problems… but more on that later.

You can, of course, attempt to do this at earlier maturity stages, but without that connective tissue between finance and the business, it will likely feel clumsy and fractious.

This closeness between finance and operations makes variance analysis far more granular. Instead of broad brush insights like “we need to improve gross margin by 2 percent to get back to budget,” you can get to something like:

“Product mix shifts in this channel are causing a twelve percent margin drag in category X, which is pulling total margin down by two percent. We can fix this with a redesign of our seasonal promotion strategy in that category. But that will likely cost us sales, so we might decide there are better ways to plug the gaps. Here are some ideas...”

The atomic unit of measurement and detail is smaller. That matters because at this stage, the details often equal big dollars. A seemingly trivial spend line in a giant company might be a ten-million-dollar category (even if only a few basis points of margin). Reduce it from ten to eight million, and in a business valued at fifteen times EBITDA, you just created thirty million dollars of shareholder value.

The Food Marketing Institute in Washington, DC, recently reported that shopping cart theft costs retailers around $800m a year globally. Not the goods inside the carts… the cost of the theft of empty carts themselves. A perfect example of a problem that sounds ridiculous, but is absolutely worth solving at scale. You can bet there is someone at Walmart paid a salary to figure out how to keep shopping carts on-site, and a finance person on hand to make sure whatever solution they come up with actually makes financial sense.

So, there is a sweet spot. Finance has the maturity to connect with operations at the ground level. The business is big enough for that investment to matter. And, crucially, the business actually wants the help.

That is what “Connected” looks like.

A Specialized (Stage 3) finance team done well is a great thing. You have finance organized into specialist sub-teams working together to deliver a highly capable function: strong systems, robust controls, an FP&A team delivering real insight. And a CFO who glues it all together and drives the business forward.

The real question is: Do you actually need more?

The default answer should be no. Unless there’s a compelling reason to evolve to the next stage, the right move is often to double down on building the best, most efficient, most automated Stage 3 finance function you can. You can grow a very large, very successful business on a well-executed Specialized finance team.

The goal is not to build the most advanced finance function possible. Great CFOs know that. The job is to build the best business possible and then build the level of finance maturity that enables it.

So here are the signs that Specialized might be exactly the right ceiling for your business:

1. Decision-making is intentionally centralized:  If 90 percent of value-driving decisions sit with the CEO, COO, CRO, or their immediate teams, embedding finance into the edges won’t add meaningful value.

2. The business runs on a small number of big levers, not thousands of micro ones:  Connected finance pays off when tiny optimizations compound. If the game is driven by five big levers, Stage 3 is usually enough.

3. Cultural maturity isn’t ready for daily finance partnering:  Connected works when functional leaders actually want to empower their teams and take on more decisions. Some organizations are ready for that shift. Others aren’t.

4. You are in a “growth-dominated” environment:  A Connected function is most powerful when optimizing trade-off decisions. The more the business is focused on a single priority (like top-line growth), the less the micro trade-offs matter. The big ones do, and a Specialized team can handle those.

5. Controls work well and are proportionate:  If nothing is breaking or creaking, don’t burden the business unnecessarily. A good Specialized function can keep things tight without embedding finance everywhere.

6. Limited cross-functional dependencies:  If the business runs in clean siloes with simple handoffs and no recurring friction, those siloes act as their own form of embedded control. Connected finance adds less incremental value.

7. Unit economics are still volatile:  If unit economics are still stabilizing, the business isn’t ready for the discipline that a Connected function brings. Stage 4 is about optimizing unit economics inside an established framework, or evolving that framework, but not building it from scratch.

If these sound like your business, then a strong Specialized function is good enough for now. Not a consolation prize.

If your Stage 3 finance team feels like it’s creaking, the first question should always be: Are we really executing Stage 3 properly?

Not: Is it time to jump to Stage 4?

That distinction matters for two big reasons:

But here are the signs your Specialized (Stage 3) function has hit its limit, and you’re ready for Connected (Stage 4):

The priorities at this stage center on balancing control with decentralized decision rights. To accommodate that, things start to look more corporate:

Using the same framework as the last two weeks, let’s break down what it takes to build the three muscles (People, Tools, and Data)  that unlock a Connected finance function. 

The People Muscle

The good news is that by the time you reach this point, you have already done most of the heavy lifting on the finance side of the people muscle.

Your team is now big enough, skilled enough, and varied enough to create real development pathways. That lets you keep leveling up and gives you a fighting chance of attracting and retaining the best talent. Yes, compensation matters, but what top talent want even more is a sense that there is somewhere exciting to grow.

One practical decision you will need to make at this stage is the type of people you want in those operations–finance crossover roles. You can fill them with finance people who have built a deep understanding of the business. Or you can take operators who are naturally numerate, good with spreadsheets, and curious enough to try something new. The latter can work brilliantly if you invest in the right training.

What has worked best for me is building a business partnering team that blends people from both backgrounds. They learn from each other. They see the world differently. And together they create a level of insight that neither group could produce on their own.

I was once in one of these roles (from the finance side). One of the other guys had been in operations for fifteen years. He moved sideways into finance because he was the guy on the shop floor who was good with numbers. He was one of the best business partners I’ve ever worked with. Completely fluent in how the operation actually worked, but with an instinct for the numbers. He eventually moved deeper into finance, and today he’s the CFO of a sizable business.

You will also need some technical depth in places you may not have needed before. Once decision-making is distributed, the risk profile goes up (and so does scale). That often means bringing in an internal audit, a more sophisticated tax capability, or a proper corporate development resource.

But honestly, none of this is hard to build once you’ve reached this stage. If you’ve got the culture, the systems, and the ways of working right, adding technical expertise is the easy part. 

The… Other… People Muscle

Now for the bad news: What you can achieve at Stage 4 is unlikely to be limited by finance capability. After all, you wouldn’t have gotten to the edge of Stage 3 without capable finance. You will now be limited by the strength of the people muscle in the rest of the business.

You need a business that is ready to operate with more trust, more empowerment, and more interdependence. Stage 4 finance only works in a company that can behave like a matrix. It requires functional leaders who collaborate, trade off, and trust each other.

This is much more complex than hiring specialists. It is cultural work. And it draws heavily on your role as an executive leader, not just as CFO.

I have seen this many times. When a finance team lifts its behavior to a higher standard and shows it consistently, it catches. Too often, leaders think cultural change is achieved by gathering everyone in a room, writing down values, and hoping alignment magically appears. In reality, the better answer is much simpler. Live the standards you want to see, and demand that others around you do the same.

I once heard a quote that said something like “company values are simply the 90 day moving average of the things you actually do.” I’m paraphrasing ,but it’s wonderful. If you know who said it and where, please hit reply and tell me. To make the point, in 2000 Enron’s corporate deck said their core values were ‘integrity, communication, respect, and excellence.’ Lol.

The Tools Muscle

One thing is guaranteed. The tools you need now will have to be much more sophisticated. And that is where it gets tricky. Flood the business with complex systems, and you will destroy trust. Do too little, and you leave a crack in the dam that will burst the moment the pressure builds.

There are lots of things I could say about building all of the tools that help operations and finance work together, but they will be specific to your business. Plus… despite what many people say, delivering the insight at the front end is the easy bit. I’m afraid the difficult bit at this stage is a bit less exciting …

The hardest part at this stage is building appropriate controls. Too many CFOs design control systems that stop things from happening. Your job is to build controls and systems that speed up the right things, stop the wrong things, and escalate the ambiguous things to the right place.

Crude on paper. Incredibly difficult in practice. A real skill.

You are likely moving toward best-in-class software. Some will be off-the-shelf. Some will need bespoke development, in-house or outsourced. But with more fingers in more systems, the risk of losing control is huge. I always laugh at the people who gnash their teeth when a big company announces a major accounting error. “How could this happen?” followed by a bunch of conspiracy theories.

Like the Macy’s example last year:

Of course, it should not happen. But in large organizations, complexity grows exponentially. Big mistakes happen easily unless a very strong controlling and internal audit function is sitting on top of it.

So here is the single most important practical tip as you develop the tools muscle. You are about to create an explosion in the number of people who have a touchpoint with the numbers you present to your board each month. Assume things will go wrong badly unless you obsess with building the controls to stop them from going wrong.

How?

The beauty of double-entry bookkeeping is that, if there’s a mess, it has to go somewhere. If there’s a dead rat in the kitchen, it’s not long before it stinks. And that somewhere is the balance sheet. When responsibilities move from one team to another, or when you implement new software or introduce new controls, watch the balance sheet like a hawk. If something is breaking, it will show up there.

It is not a preventative control. But it is a reliable backstop. So if you are on top of your balance sheet reconciliations, especially during these key moments, things can only ever get so far out of hand.

I got in the habit of deploying internal audit to man-mark balance sheet reviews before, during, and after any major process or system shift. It saved me more than once.

It’s possible that by this stage, you are dealing with an audit committee, or are on your way towards it, and maybe even laying the groundwork for SOX compliance. There is a lot to think about here. I wrote a whole series on financial control a while back.

The Data Muscle

For Stage 4 to work, your data capability has to be seriously sophisticated. This model collapses if you have armies of people hand-cranking things into CSVs just to make information usable. It’s too slow, too fragile, and too risky.

The good news is that if you’ve already automated your accounting flows, built clean operational data streams, and your IT team is maintaining a proper data warehouse, you’ve laid a lot of the groundwork.

But data integrity and governance are a daily battle in any business. Even where it works well, it only works because the culture demands it. If you haven’t embedded that mindset across the business, Stage 4 finance maturity will be out of reach.

The minute your frontline partners are asking whether labor hours should come from payroll, the GL, or the ops system, you’re done. Those people may show up on an org chart as “business partners,” but in reality, you’ve just distributed manual reconciliation into the organization. (Remember the turd in the blender?)

To wrap up, here are some common traps to avoid as you shift from a Specialized to Connected finance function:

Another crucial watch out at this stage, as you build a finance function capable of optimizing the business, is to watch out for what you optimize for. Finance gets good at optimizing for short-term efficiencies. But those salami slices can cut deep over time. Understanding where cost is fat vs where cost is muscle is critical, rather than blindly optimizing cost out. This example from behavioral science and advertising guru Rory Sutherland is wonderful:

If you’ve got as far as a ‘Connected’ finance function, it’s something to celebrate. It means you must have a business that is sufficiently scaled to merit it, and it’s incredibly difficult to build a finance function to do it well.

There is one final frontier, though - Stage 5 of the Secret CFO Finance Maturity Framework. We’ll explore that next week.

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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.