Speaking Like a CFO, Part I
Today's guest post is from Robert A. Rudzki, President of Greybeard Advisors LLC, who has (co-) authored a number of acclaimed business books, including Beat the Odds: Avoid Corporate Death and Build a Resilient Enterprise, On-Demand Supply Management, and the supply management best seller Straight to the Bottom Line.
In my experience, those procurement and SCM (Supply Chain Management) departments who invest the time and effort to develop and master the skill and perspective of "speaking like a CFO" are the departments heading to the top of the profession. On the other hand, those departments who don't - or won't - master this skill seem to be perpetually stuck on the tactical hamster wheel.
I've touched on this subject during numerous conference presentations, but it's important enough that I will risk repeating myself in order to reinforce a few key themes:
- You need to adopt and speak the language of the executive suite (the "financial language" of the CFO) in order to be effective in your communications with senior management.
- Develop a vision with BOLD objectives that tie directly to senior management's interests and objectives (EPS, ROIC, cash flow, risk management, etc.).
- Lay out your transformation plan and detailed roadmap (note: this starts with a comprehensive "current state assessment", compares the current state to best practices, and then uses the gap analysis as input to a well-constructed transformation roadmap).
- View technology as an enabler of your transformation plan and stretch objectives, not an end to itself.
- Build your business case (what you expect to deliver, in exchange for resources and budget).
- Be willing to make a commitment (of new $ results) in order to gain top management's commitment and support.
- Finally, lead and make it happen.
You can find out more about this subject by downloading the following free white-papers on the Greybeard Advisors website:
- A Leader's Guide to Supply Management Transformation
- Driving Outstanding ROIC & EPS: A White Paper for Executives
Thanks, Bob!
Great summary.
Few tips I would add are:
- reaching strong agreement on definitions of savings, ways of approving and reporting them (building on points 2 & 6) before you have that crucial talk
- while knowing typical financial terms & abbreviations is a must, refrain from using purchasing buzzwords; basic but professional language on market drivers and what you can do to tackle them is the best. CFOs are usually very pragmatic people.