The Evolving Role of the CFO in Shaping Company Strategy: Insights from Gary McGaghey
The responsibilities of the CFO have grown over time. These days, chief executive officers and boards want their chief financial officers to do more than just crunch numbers. They want to work side by side with them to shape the company’s overall strategy. Companies have varying expectations of their CFOs since the term “strategy” has varying meanings to various boards and CEOs.
Globally experienced group and divisional CFO Gary McGaghey has articulated four orientations of strategic CFOs to assist CFOs choose how they may best contribute to their company’s strategy. These perspectives provide light from many viewpoints on the strategist’s function and reveal the extent to which an organization may shift gears and put a new plan into action.
According to Gary McGaghey, these four perspectives sum up the primary methods in which CFOs may participate in the strategy process.
The responder directs the company’s strategy development, guiding the company’s senior business executives through the process of statistically examining the financial repercussions of multiple strategy choices.
The architect collaborates with the finance team and other company executives to implement well-considered financial plans.
Throughout the strategic planning process, the challenger plays the role of guardian of future value. They take a close look at the dangers of several alternative strategies and the returns the company should expect these strategies.
The transformer works closely with the CEO to develop and implement the business’ overall strategy. This CFO is instrumental in putting into action the operational and financial choices that will most effectively bring about value delivery, the development of unique capabilities, and the modification of the product market.
Moreover, Gary McGaghey argues that a CFO’s optimal orientation will vary based on the breadth and depth of the CFO’s engagement in the strategic planning process inside the organization.