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CFOs can then bring a financial discipline to support and Challenger. As a challenger, the CFO and finance
extend the above strategy process by addressing questions organization act as stewards of future value in the strategy
such as: process by critically examining the risks to, and expected
1. Are the financial goals of the company viable? returns on, different strategy alternatives. Being a
2. What products and markets deliver the greatest promise challenger is sometimes equated with being a “Dr. No,” as
for revenue or margin growth? the CFO and finance organization seek to minimize risk or
3. How should the company organize and structure ensure adequate returns to future capital allocations and
financing of key investments to generate competitive investments (see Lessons from the Lab: It Takes More than
advantage? “Dr. No” to Create Value). Being an effective challenger
4. What structures (for example, business models; legal may require the CFO and finance organization to have
and tax entities; onshore, offshore, or outsourcing FP&A capabilities similar to those required of a responder,
talent models) and processes (automation, build vs. buy, as well as access to requisite information from the
networking, and so on) enable competitive advantage business units on key strategy assumptions and models.
and deliver superior market valuation and returns? Importantly, the CFO requires the permission of the CEO to
5. What financial and management reporting enables challenge business-unit leaders and their strategies. When
management to effectively execute and deliver the given that permission, the CFO as challenger is especially
strategy? critical to the review of major strategy investment
decisions.
The strategy process frames answers to the above
questions and executes on them to deliver returns to Architect. In the architect orientation, the CFO, finance
shareholders. The challenge for CFOs is to choose effective department, and business leaders jointly work through
ways to engage in the process in the context of their shaping strategy choices and apply finance strategies
company’s business, leadership, and directors. The four to complement and maximize the value of particular
key orientations below outline how CFOs can choose to strategies. Architects go beyond the challenger orientation
engage the strategy process. to enable the financing of innovative initiatives through
varied finance strategies and finance arrangements with
Four orientations suppliers, customers, or delivery channels. Architects thus
There are four distinct ways CFOs can orient themselves— work to find “a path to yes” on key business investments.
responder, challenger, architect, or transformer: To effectively deliver the architect orientation, the CFO,
finance organization, and businesses might need to
Responder. As a responder, the CFO and the finance establish mutual trust and work together at the outset of
organization support the company’s strategy development setting the strategy. In addition, the CFO often needs a
by helping key business leaders quantitatively analyze strong finance team inside the businesses to proactively
the financial implications of different strategy choices. partner with business leaders throughout the strategy
This type of CFO orientation is especially evident in process.
highly decentralized businesses where the CEO chooses
to drive accountability for strategy and performance to Transformer. As a transformer, the CFO becomes a
business-unit leaders. Occasionally, this orientation is also lead partner to the CEO in shaping and executing future
prevalent when the CEO chooses to limit the role of the strategy. The CFO is key to execution of “real operational
CFO or finance in the strategy process to quantitative and and financial options” for shifting the product market
analytic support. To be an effective responder, the CFO mix, delivering value, and creating distinctive capabilities.
and finance organization should consider having a central For example, consider a multidivision company with
financial planning and analysis (FP&A) capability that common accounting and financial systems where the
delivers the relevant analyses and data to the businesses, original synergies driving the existing product market mix
whose leaders have primary responsibility for generating no longer exist. By upgrading the systems, but doing so
strategy alternatives. in a way that allows the efficient spinout of a division in
the future, the CFO operationally creates the capacity for
shifting a core strategy choice—the product market mix.
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Or by changing the mix of debt to equity, the CFO may finance-operations roles. Initially, this generally requires
free up cash to invest in future growth, creating financial three things: knowing the businesses, generating valuable
options for the future. Through carefully structured strategy ideas and opportunities, and having a finance
financing and lease models, the company could change organization that delivers the basic finance and accounting
how customers are able to buy or use its products, thus processes consistently without errors.
shifting the business model to more-profitable formats.
In short, CFOs as transformers proactively engage in One way to generate valuable strategy opportunities
addressing the core questions in a strategy process, is to ask critical questions about the dominant growth
and they develop and execute options through finance constraints, uncertainties, and risks, and scale assumptions
in a way that allows the company to shift its strategy confronting the company (see The CFO as Pragmatic
effectively. Strategist: Lessons from the Lab). A strong finance team is
also key to earning a seat at the table, for three reasons.
Choosing to be an effective strategist First, by getting the basics right, the team presents the
For CFOs, choosing to be an effective strategist demands finance organization as credible. Second, a strong finance
earning a seat at the strategy table, having an effective team frees up the CFO to attend to strategic matters
finance team, and selecting the strategy orientation that (see Crossing the Chasm from Operator to Strategist).
is appropriate to the context of the company and level Third, it can provide the quantitative analysis and support
of permission granted by the CEO. This is obviously not capabilities vital to shaping strategy.
simple, and effective CFO strategists continually need to
reorient themselves to changing organization situations The choice of strategist orientation depends extensively
and contexts. on the context of the company and the level of permission
from the CEO. The table in Figure 1 summarizes common
While increasingly recruited to be strategy partners to their requirements for CEO permission and finance and
CEOs, many CFOs in our CFO Transition Lab sessions note organization capabilities, as well as typical contexts for the
they have to earn a seat at the strategy table—especially different types of orientations.
those internally promoted from controller, accounting, and
Permission Generally, low permission from Strong permission from CEO Acceptance by business-unit Strong permission from CEO and/
CEO for CFO to engage in for CFO to challenge leaders in strategy process or the board to shape strategy
strategy
Typical context Highly decentralized businesses Decentralized or nonper- Finance is already viewed as Finance is a business partner
or where other executives forming businesses seeking a contributing partner to the or where finance is not a key
are primarily responsible for capital from the corporate businesses constraint to the growth of the
strategy for future investments overall business
Required finance Strong centralized FP&A Strong FP&A and access to Strong finance capabilities to Strong CFO capacity to influence
capability capabilities relevant data to evaluate partner with the businesses on the business to fundamentally
value and risk in business strategic planning, complement- change its strategy
strategies and plans ed by strong FP&A expertise
Required organizational Strong strategy capabilities in Strong strategy capabilities Strong partner to finance in the Capacity to absorb any necessary
capability the business in the business businesses changes to strategy and change
processes, systems, and structure
accordingly
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No single approach Primary contacts
There is no one single approach to being an effective Michael Armstrong Sanford A. Cockrell III
strategist CFO. The four CFO orientations described Director Partner
herein should help CFOs, CEOs, boards, and business-unit Deloitte Consulting LLP U.S. and Global Leader, CFO Program
leaders better establish mutual expectations on how the mikearmstrong@deloitte.com Deloitte LLP
CFO will engage in the strategy process and address key scockrell@deloitte.com
strategy questions within the company. Moreover, these Frank Borgsmiller
orientations are not static, and the appropriate orientation Principal H. Steven Ehrenhalt
will vary with the changing context and performance of Deloitte LLP Principal
the organization. fborgsmiller@deloitte.com Leader, Global Finance Transformation
Practice
Endnotes
David Carney Deloitte Consulting LLP
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Deloitte LLP’s Four Faces Framework: http://www.deloitte.com/view/en_US/us/
Services/additional-services/chief-financial-officer/four-faces-cfo/index.htm Principal hehrenhalt@deloitte.com
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Playing to Win: How Strategy Really Works, A.G. Lafley and Roger L. Martin, Leader, U.S. Strategy & Operations Finance
Harvard Business Review Press, 2013.
Service Line Ajit Kambil
Deloitte Consulting LLP Global Research Director, CFO Program
Deloitte CFO Insights are developed with the guidance of
dcarney@deloitte.com Deloitte LLP
Dr. Ajit Kambil, Global Research Director, CFO Program,
akambil@deloitte.com
Deloitte LLP; and Lori Calabro, Senior Manager, CFO
Bob Comeau
Education & Events, Deloitte LLP. This article was prepared
Principal Samuel Silvers
by Dr. Ajit Kambil, with contributions from: Michael
Deloitte Consulting LLP Principal
Armstrong; Frank Borgsmiller; Pat Brown, Editor, Deloitte
rcomeau@deloitte.com Deloitte Consulting LLP
Modules in CFO Journal and Risk & Compliance Journal;
ssilvers@deloitte.com
H. Steven Ehrenhalt; Shannon Fitzpatrick Testa, Senior
Manager, CFO Advisory Office, Deloitte Services LP;
Philippe Podhorecki, Manager, CFO Program, Deloitte For more information about Deloitte’s CFO Program, visit our website at:
LLP; Samuel Silvers; and Maureen Tully, Director, National www.deloitte.com/us/thecfoprogram.
Marketing, CFO Program, Deloitte Services LP.
About Deloitte
As used in this document, “Deloitte” means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a
detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest
clients under the rules and regulations of public accounting.
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