Accenture kicked off the CFO of the Future virtual summit series, Leadership for Resilience and Growth, in May 2020. Senior finance and supply chain executives came together to engage in a spirited virtual discussion with Accenture executives and Harvard University faculty.
The theme of the first session was how leaders and their teams rise to the challenge of high-stakes situations, which is particularly timely and important for chief financial officers (CFOs) amidst the COVID-19 pandemic. One of the major trends in finance over the past decade has been the expanding role of the CFO, which in turn has led to the rise of the CFO as an enterprise architect. Many CFOs ultimately become chief executive officers (CEOs), and they need to know how to manage people as well as numbers and data.
The COVID-19 pandemic has tested the managerial abilities of CFOs. Dr. Nancy Koehn, professor and historian at Harvard Business School and the author of Forged in Crisis: The Making of Five Courageous Leaders, provided insights into how effective leaders guide their teams and their organizations through crisis situations. Dr. Koehn’s book profiles Abraham Lincoln along with other leaders such as the abolitionist Frederick Douglass, the Antarctic explorer Ernest Shackleton, and the environmental pioneer Rachel Carson.
Dr. Koehn’s discussion of leadership seemed to me to be highly relevant to CFOs dealing with the pandemic and other crises. Among her key points:
- Resilience is a muscle. Organizational strength and the ability to recover from a crisis can be built up over time. Challenges can make organizations stronger, and the test posed by a crisis and the actions needed for successful recovery creates additional strength. In the current COVID-19 pandemic context, companies have been able to establish effective remote working arrangements for everything from closing the books to business scenario modeling in a relatively short period of time, ultimately developing additional resilience for the next challenge that emerges.
- Leaders are made, not born. Leaders emerge in crisis situations because they have the courage to take the needed first steps. They receive and respond to criticism, they adjust and recalibrate, and then they move forward again. True leaders improve their abilities in crisis situations. They learn quickly from their mistakes and readily adapt to changing circumstances. In a word, leaders are agile.
- Good information is in short supply. We emphasize the importance of data and analytics in making decisions. In a crisis, however, leaders will never have all the information they need. Dr. Koehn quoted Colin Powell, former US Secretary of State, as saying that you are lucky to have 70 percent of the information you need and that sometimes you must get by with just 50 percent. Therefore, leaders must have a bias for action with the best available information as opposed to being paralyzed by a desire for the perfect inputs.
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We have found that CEOs have relied heavily upon CFOs to help get their organizations through crises. Now CFOs are reimagining Finance to create value, to actively guide their organizations through this volatile environment, and to build the foundation for future growth.
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- Crises are managed from point to point. In a wide-ranging and complex crisis such as the COVID-19 pandemic, it is not always possible to predict future developments. The pattern of facts is changing all the time; therefore, the tactical approach should be to solve one problem at a time, then move on to the next. While keeping long-term goals in context is helpful, it is more important to “win the battle” ahead, rather than trying to simply solve for the longer-term war.
- Communication is essential. Workers, customers, suppliers and other stakeholders are bombarded with media reports, social media messages, rumors and other information – not all of it reliable or fully fact-based. It falls to leadership to communicate often and in detail to dispel uncertainties and keep the organization moving forward. Dr. Koehn recommended a combination of “brutal honesty and credible hope.” In other words, state the facts as they are known and then describe the resources available and the commitment to prevail over the problem. People respond better to a realistic portrayal of the situation than to evasiveness or sugar-coating.
- Leaders need to take care of themselves. One often overlooked aspect of leading in a crisis is the need for leaders to take care of their own physical and mental health by getting as much sleep as possible, eating nutritious food, and taking occasional breaks to rewind and recharge (preferably unplugged from any electronic devices). This behavior is especially important when working from home, since leaders need to project confidence to their families as well as to the people with whom they work.
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We have found that CEOs have relied heavily upon CFOs to help get their organizations through crises. Now CFOs are reimagining Finance to create value, to actively guide their organizations through this volatile environment, and to build the foundation for future growth. The CFO is working with the CEO to use data to forecast and model the best path forward. As the Virtual Summit reminded us, however, the success of the CFO ultimately depends not only upon technical and financial expertise but upon leadership traits such as courage, empathy, agility, self-caring, and the ability to communicate effectively.