Running your company and growing your company should go hand in hand.
Last week, I was talking to the CEO of a fast-growing retail operation. The company needs to hire a new CFO to help manage the business more efficiently and drive its continuing growth. He asked me for my advice. It took the form of the diagram. I suggested that this type of organizational map could help him align his business strategy with each of the functional departments. The circle itself circle represented his company.
The inner circle represents all of the process activities and infrastructure; the middle ring the management team and tactics; and the outer ring the leadership team and company strategy. Everything outside of the diagram represents the market for the company’s products. The line down the middle separates the company into distinct halves. On the left involves everything involved with running the company, and on the right growing it. Each function in the company can be assigned to either half, with some supporting both. Most companies hire people to do one or the other, rather than hiring people who can see the running and growing issues in tandem. As a result, they build an ever growing wall between the efforts, stunting a company’s growth potential, increasing inefficiency and making the process of implementing change more difficult than necessary.
The CEO was planning on hiring a CFO who could run the company more smoothly. I suggested he hire someone who could help grow it more smoothly. Most CFOs tend to naturally focus on the running the business side. Those that focus on growing the business recognize the importance of an efficient and sound infrastructure, but they view it as the foundation for a growing business, not as its primary purpose. The CEO then asked me how would the job description change as a result. First, I suggested that he not use a skills- and experience-laden job description, instead he should start the process by defining what he wanted accomplished as a series of performance objectives. Here’s what he came with after about 30 minutes:
- Establish a management reporting and information system to give line managers the insight they need to better manage their departments.
- Implement a budgeting and planning system that balances the needs for growth with exceptional customer service and operational efficiency.
- Set up a forward-looking diagnostic system that provides visibility into upcoming changes in market and business conditions
- Determine what it takes at the operating and merchandising level to grow market share and maintain margin premiums in the face of online discounters and big box stores.
- Build an accounting and financial team that sees beyond the preparation of accurate and timely financial statements.
At the end of the meeting, the CEO understood he needed a CFO who could not only break the walls that already existed, but prevent them from ever being created again. This is good advice for any business leader. It starts with a strategy that gives equal importance to both growing and running the company. But it most cases this is just lip service, unless each hiring decision is made from the same perspective. Every new hire must understand the bigger objective. When they don’t, the walls keep getting bigger and bigger never to come down.