CFOs with diverse backgrounds and experiences bring valuable perspectives and skill sets that can drive strategic decision-making, improve communication, foster innovation, and enhance risk management.
On January 19, 2024, Amazon Web Services (AWS) announced John Felton, Amazon’s former operations and logistics leader, as its new CFO.
Felton’s appointment as CFO is a testament to his nearly two decades of experience with Amazon, where he has honed his skills in operations, logistics, and finance. His deep understanding of Amazon’s operations will be invaluable in his new role, where he will be responsible for overseeing AWS’s financial operations.
“Operations has always been about how we get to world-class in safety, speed, cost, quality, and innovation,” Felton said. His operational expertise will undoubtedly inform his financial decision-making, enabling him to drive efficiency and innovation in AWS’s financial operations.
Industry experts echo this sentiment. Ankur Agrawal, a partner at McKinsey, emphasises the importance of diverse operational experience in the CFO role.
He suggests that “technology should be an enabler, not the be-all and end-all,” highlighting the need for CFOs to have a comprehensive understanding of all aspects of the business, not just finance.
The role of the CFO has undergone a significant transformation in recent years. Traditionally focused on financial activities and adherence to standard procedures, the modern CFO is now expected to play a strategic role in driving growth and innovation within organisations. This shift is particularly evident in the increasing demand for CFOs with cross-functional experience
In the past, CFOs primarily focused on financial activities such as monitoring cash flow, controlling accounting processes, and ensuring compliance with standard procedures. While these responsibilities remain critical, they are now seen as secondary to the strategic roles CFOs are expected to play.
As businesses navigate a rapidly changing landscape, CFOs are being called upon to take a more forward-thinking and growth-oriented approach to their role.
According to a 2022 survey by Accenture, CFOs now spend most of their time spearheading company-wide efforts to transform and optimise business operations, with a specific emphasis on accelerating revenue and profit growth.
This shift in focus reflects the growing recognition that CFOs possess the unique skills and perspective needed to drive strategic decision-making and shape the future direction of organisations.
One of the key advantages of having cross-functional experience in the CFO role is the ability to make better-informed decisions. With exposure to different departments and their unique perspectives, cross-functional CFOs have a broader understanding of the organisation as a whole. This enables them to gather insights from various sources and apply a multidimensional approach to financial decision-making.
Cross-functional CFOs often also excel in promoting better communication and collaboration between departments. By breaking down silos and encouraging employees to work together towards common goals, they create synergies that lead to increased efficiency and reduced errors.
For example, working closely with the sales team allows CFOs to gain a deeper understanding of the business drivers behind projections, enabling them to adjust financial plans accordingly.
The diverse experiences and perspectives brought by cross-functional CFOs contribute to increased innovation within organisations. By fostering collaboration between different departments, these CFOs create opportunities for employees to share ideas and work on projects together. This cross-pollination of ideas often leads to creative problem-solving and the development of new approaches to challenges.
Collaboration with different departments also strengthens a CFO’s ability to identify and mitigate risks. By working closely with teams across the organisation, they gain a holistic view of potential risks and can take proactive steps to manage them effectively. For instance, collaborating with the legal department helps CFOs stay up-to-date on regulatory changes, minimising the risk of compliance issues.
In addition to leveraging their cross-functional experience to drive strategic decision-making, CFOs often find themselves directly responsible for overseeing various departments within the organisation. The size and structure of the company determine the extent of their oversight.
CFOs with cross-functional experience often play a significant role in HR management. They recognise the strategic importance of developing a well-structured organisation and fostering effective communication and collaboration among teams. Responsibilities within HR may include overseeing employee benefit programs, managing employee agreements, and maintaining equity-based compensation plans.
In companies without a General Counsel, CFOs with cross-functional backgrounds often find themselves managing legal functions. This involves ensuring compliance across the organisation, standardising contracts, and mitigating potential legal risks. CFOs take a proactive approach to risk management, leveraging their understanding of the organisation’s financial health to make informed decisions.
While CFOs are typically associated with financial management, those with cross-functional experience may also assume operational responsibilities, especially in smaller organisations without a Chief Operating Officer (COO). By closely aligning financial goals with operational objectives, these CFOs contribute to the overall performance and growth of the company. Responsibilities may include overseeing purchasing processes, facilities management, and department policies and procedures.
To fully leverage their cross-functional expertise, CFOs must actively engage with other departments and build strong relationships. CFOs should schedule regular meetings with department heads and key employees to establish open lines of communication and build rapport.
Attending events hosted by other departments also provides opportunities for networking and understanding their goals and challenges.
Taking the time to learn about other departments’ goals, challenges, and priorities is also crucial for effective collaboration. CFOs can initiate knowledge-sharing sessions and create opportunities for employees to work on projects across departments. This fosters a culture of collaboration and encourages the exchange of ideas.
In some instances, CFOs have designed formal team development programs that simulate real-life business cases. These programs encourage cross-functional collaboration and provide opportunities for employees to apply their skills and knowledge in a practical setting. By working together on challenging projects, teams can develop stronger relationships and improve overall performance.
