Leadership

Priceless Performance Secret of the Elite C-suites

Priceless Performance Secret of the Elite C-suites

A high-performing senior management team is essential to the success and safety of any business. Enduring companies have learned to manage those leadership roles to optimize not only the current operation of the business but the future as well. Large public companies are excellent managers of the present and future. They are required to be. 

This article will explore how they view and utilize the Chief Operating Officer and Chief Financial Officer roles to the best effect. Smaller businesses and start-ups should use these methods to grow faster and strengthen their foundation for the long term. These concepts work for any company.

How are traditional roles defined?

The Chief Operating Officer and Chief Financial Officer are impactful members of your senior executive team. The size of your business and your market may determine how you view the traditional leadership roles of the COO and CFO. 

The COO is a traditional strategic role where tactical needs are solved, and new strategies are implemented, guided by the person’s broader experience. That view of the role is necessary. The CFO role is often viewed as the historical financial data provider for the business, ensuring that the business’s financial performance is reported correctly. It is an essential and required role. 

What do the expanded COO & CFO roles look like?

The combined roles provide the critical strategic thinking capability that your company needs. Let’s first examine the information that both the COO and CFO have.

The CFO has the big picture of the business financials and has the granular data from the departmental and supporting levels of the business. Strategic as well as tactical numbers. A comprehensive financial history.

The COO knows how the business performed to get to those numbers at all company operational levels. Also, tactical and strategic.

Large companies do this as normal practice.

The expanded relationship that I will discuss here is one that public companies and larger businesses already have and depend on to maintain high-performance and healthy companies. The expanded leadership team relationship takes the information that both roles have access to, described above. It creates a framework to forecast the future and execute it more effectively to the future. It establishes a FORWARD-LOOKING capability.

How do you create the ‘Forward-looking’ component for your business?

Perhaps an easier way to describe the value and process is to share a real example with you. At one of the companies I served as CEO, my COO, Jack, and my COO, John (Yes. Jack and John) had solid traditional role skills and knowledge. They had exceptional talent.

But as CEO, I needed a reliable way to forecast the potential future of our business. Performing in a turnaround business role, we could not afford to make many consequential mistakes. We needed to be able to predict the short and intermediate future to give ourselves the best opportunity to survive and thrive. Proper performance management was essential.

Here are the steps they took:

1. Jack and John worked together to marry the future execution (COO) of the business with an ability to view the future financials (CFO) of the company. Together they analyzed proposals data, sales data, project execution data, micro human resources utilization data, and all historically associated data components to get a precise numbers picture of how the business performed when at its best, worst, and in between.

2. They then worked closely with the lower operational leaders to understand what was operationally occurring when each segment performed well and when they didn’t. And for each case, what did the numbers demonstrate? What tactical execution attributes correlated with times when the financial performance was most efficient and profitable. This analysis gave them validation and clarity into the information they had gathered.

3. They used the information from points 1 and 2 to look back at the picture of what the business looked like when executing effectively. We were beginning to understand what we wanted the company to look like and how we wanted it to perform in the future. Critically important. While gathering the data from 1, 2, and 3, ideas were already forming with John and Jack about capturing and formatting forward-looking information from all appropriate places in the business to execute more efficiently and profitably GOING FORWARD. 

My CEO-level guidance to them described what elements I would need to manage risk for the entire company. We frequently talked about how to meet that objective. 

4. Then Jack and John began to design business tools, financial tools, and real-time data correlating methods. These tools created an ‘Early warning System’ into how our business could perform well in advance. As we created the first set of tools, our CEO, CFO, and COO team met to determine how we would use the information provided to manage business risk. These were early rehearsals, and we observed quickly that the more we used these tools, the more efficient we became. It was a continual growth process.

Should small and mid-size businesses create forward-looking models and expand COO & CFO roles?

Yes. The example above was a mid-sized business, and I’ve managed teams that put this discipline in place in small businesses.

Our management teams worked completely differently once this process was in place. We continually refined the tools. It was exciting to see the future of our business and how to execute it safely.

A significant extension of having created this discipline is that we used it at the divisional operating levels of the business. If a segment of our company had P/L, we put this process in place for them to manage risk for ‘their businesses’ better. All operational managers became P/L risk managers.

What kind of business performance improvements can you expect?

Every P/L division of our business performed more profitably within six months. Overall business profit grew by 20% in the first 18 months. The company experienced fewer negative surprises because we saw things coming at the earliest possible time. 

This discipline refined our timing for new hires. We were able to see staffing needs earlier than before. There were very few lost revenue opportunities due to not having the resources to earn that revenue.

What new productivity benefits will you experience?

Our management hiring philosophy changed. Our divisional and operational level leaders/ managers were becoming well qualified to manage risk at the next level. We had developed more strategic thinking capability in the company. So, we looked to promote first from within because we already knew how well some of our junior leaders could manage risk.

The input to managing the overall business came from a broader and more competent base of company leaders and employees. Business operations became more fun at every level. Managers began to challenge themselves to hit their targets with more precision. We all became better business forecasters, and my job became easier every year. We all slept better.

To conclude:

Creating an expanded CEO, COO, and CFO working relationship is the beginning of the process that transforms a business into a safer, more predictable company. The details of how you may implement this will vary according to your business, but it is easier than you might expect. And don’t worry. You do not need expensive software and high implementation costs commonly needed by large public companies to put this discipline in place.

I believe that a company that does not implement a forward-looking structure for its C-suite roles with appropriate tools will lose its ability to have visibility into its growth. That can expose a business to deadly surprises that could have been detected early and avoided. Your company will have a backbone that will stand the test of time, no matter what leaders you have in place over time. It will be a part of your infrastructure. This discipline worked very well for me.

So, get started! Build an all-star executive leadership team and keep the best and brightest inside your business. The long-term safety of your company demands it.

Let’s talk. If you want to discuss this in more detail with me, click below for a free session. https://calendly.com/dave-kerford/

Also, join our Bulletproof Business Community. This is a forum for wisdom and insights from our C-suite and business leader members who have formed or are forming Bulletproof Businesses. As a first step to joining our community, click below to sign up for our newsletter. https://davekerford.com/subscribe/ Enjoy!

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