Long-Time Wharton EMBA Professor Discusses the “Forward-Looking CFO”

Wharton executive MBA students have benefited from Prof. John R. Percival’s wealth of finance knowledge for more than 35 years. The recipient of numerous teaching awards, he most recently received Wharton’s EMBA Core Teaching Award for Financial Analysis. In addition to teaching executive MBA students, he also has served as the lead faculty on several Wharton Executive Education programs including Integrating Finance and Strategy for Value Creation and The CFO: Becoming a Strategic Partner. In a recent Knowledge@Wharton article on the “Forward-Looking CFO,” he discussed linking financial rigor with leadership. An excerpt of the article follows.

We at Wharton started working more closely with CFOs about seven or eight years ago. In our senior-level executive education programs, we had been hearing from the participants that there was an important issue being discussed at corporate headquarters or business unit headquarters. It related to growth of the unit. Sometimes it was too much growth and how to manage that, but most often it was trying to find growth – profitable growth, value-creating growth. There were groups of senior executives, C-suite people, sitting around a strategy table talking about the future of the business.

What we were hearing was that the contributions that were coming from the finance people were a bit disappointing. It seemed that the finance people didn’t feel totally comfortable talking about strategy. Sometimes the analysis they had done was not particularly useful and compelling to their non-finance colleagues who didn’t have the same financial expertise. Sometimes it wasn’t so much the analysis; it was the way that they were communicating the results of the analysis. That didn’t seem to be particularly collaborative and helpful to their colleagues. …

It looked to us that there was a need for skills in finance people in performing this more forward-looking aspect of finance. …We emphasize in our [executive education] programs that we’re not trying to turn CFOs into generalists. But they do need to understand enough about the strategy of the business to bring their very important financial perspective to these conversations. …

We found … both from our surveys and from anecdotal information, that a lot of it is lack of comfort with this looking-forward aspect of being a CFO. It often wasn’t the way the person was trained. They were trained in accounting, which is an important part of the finance function. They have CPAs. But it’s a bit different from thinking strategically and understanding things about competitive advantage and customers and products. So there’s a lack of comfort in those areas now. It’s important in our programs to get them out of their comfort zone and into this more forward-looking aspect of being a CFO.

Click here to read the full Knowledge@Wharton article.