The role of the CFO is evolving to one that provides strategic business partnership and drives performance across the organisation. Therefore, knowing how to build a business strategy has never been a more important skill for senior finance professionals.
At the recent CFO Roundtable Discussion on Business Strategy, Robert Half talked to Sheila Lines, CFO at Cabcharge, to identify her best practices for how to build a business strategy that will drive the organisation to future success. Whilst business development is not a skill set or process that can be learnt overnight, here are six secrets that might be worth considering:
1. Strategy is not a ‘one size fits all’
“Business development” is a buzzword that is relentlessly overused by business books and well-meaning CEOs. Unfortunately, the ability to define and execute an effective strategy can determine whether your company diminishes or grows. “When we say ‘business strategy’, it means different things to different people. There isn’t a ‘one size fits all’ definition” says Lines. However, Lines says that what’s important is that there is a common understanding of what the term ‘strategy’ means within the business. The people in that specific organisation, whether they’re the Board, shareholders, or the individuals working within the business, also need to agree upfront what the key elements and components of the strategy should be.
2. Business strategies must be forward-facing
For Lines, a key component of setting successful business development strategies is looking forward and not back. “Strategy drawn purely from historical data from within the company is going to be flawed,” asserts Lines. “Whilst the concept of strategy differs from company to company, there are some key commonalities. You must understand what your competitive advantage is. You should also try to look forward into the future. You should examine external markets and trends, and you should try to predict what the world is going to be like. And then, you should visualise the company thriving and growing in that world with all those changing factors”.
“The next step is to examine how the company can deliver value to customers in that future state environment”, says Lines. “You need to ask ‘What value proposition are we offering people? Why are people acquiring goods or services from my company in that future world instead of from someone else? Will they even want these goods or services?’”.
3. Goals must be measurable and achievable
When planning how to build a business strategy, you need to start at your endpoint. Visualise professional and financial objectives for your business and then plot out actions that will help you achieve those goals. These goals need to be “credible, achievable, measurable and realistic” says Lines. “The strategy needs to be within the capabilities and skills, or the future capabilities and skills, of the organisation”. Once the goals have been set, specific targets need to be put in place to ensure success can be measured. Adding specific deadlines to your objectives will also make it more likely that you reach your goals.
4. Co-creation with all key stakeholders is critical
“All stakeholders need to buy into the strategy,” says Lines. “In my opinion, sometimes the leadership team can benefit from external facilitation, to bring the outside world in and challenge some of the assumptions. Otherwise, the internal group can continue to live within their own assumptions and knowledge, which may be deeply embedded within the culture”.
5. Empower the company to live the business strategy
“People want to work in a company that has a clearly defined vision and strategy that they are driving toward,” says Lines. However, one of the key challenges in implementing a business strategy is getting engagement from staff. “Firstly, all staff need to agree that it’s a credible belief and a sufficiently ambitious strategy. Secondly, it needs to translate into actions and operational plans”. For Lines, staff should feel empowered to challenge the business strategy. “A lot of people get very wedded to strategies, and they don’t always work”.
6. Know when to change course
Business development is pointless if you can’t measure outcomes or establish clear KPIs. Therefore, it’s important to compile a list of success indicators for every aspect of your business and ensure you achieve these along the way. As a result, you may decide to change your course of action.
The best strategies are those that make room for transformation, evolution and growth. So, don’t be afraid to make adjustments along the way. You should aim to revisit your strategy yearly and ensure it incorporates new directions as well as business ebbs and flows. Lines says, “It’s ok to rethink a business strategy”. However, if the business strategy does change, Lines warns that “there has to be a discipline to it.” If a strategy needs to be altered, it can be done so, but only with a clear and unified approach from the leadership team.
Remember, creating a successful business strategy, whatever its components, must be approached with discipline and pragmatism. Face forward, not back and empower your employees to live the strategy and deliver against realistic goals.
As CFOs and finance teams become true business partners, they can leverage their access to Big Data. Analytical skills will also play a key role in setting realistic strategic targets and driving your business forward to achieve its goals.