A very powerful survey recently conducted by Accenture (as summarized in CFO Magazine) reveals how overly optimistic CEOs are compared to their CFOs with respect to profits, costs, investments, and growth:
“CEOs (35%) are more likely than CFOs (19%) to say that leadership has the right initiatives in place to achieve cost-reduction goals, presenting a sizable variance that shows a majority of executives who are not confident that they have identified the right initiatives.”
That is an incredible difference of opinion and optimism (or skepticism) between the CEO and CFO. Even though the survey was a global survey, it is equally relevant for small businesses and startups here in the San Francisco Bay Area and Silicon Valley.
“Further, they [CEOs and CFOs] also disagree on the purpose of cost-management activities. CFOs say that companies need to improve competitive advantage, while CEOs say they must prioritize simplification and increase flexibility in their organization to become more responsive to market changes.”
There are many other areas where the CEO and CFO are not together in their views. Here are some other interesting survey results with the survey results (percentages reflect agreement with survey statement):
“Resources are prioritized and allocated to activities that drive value for the organization”
CEO: 51%
CFO: 34%
“The company’s operating model is aligned to fuel strategic growth”
CEO: 31%
CFO: 17%
“Return on reinvested cost savings is assessed through formal reviews”
CEO: 70%
CFO: 49%
Source: CFO Magazine
Why are there such the startling differences in opinions between the CEO and CFO?
One possible reason is that the CFO often is more heavily involved with the actual data than the CEO in budgeting, strategy, and annual planning.
“This data orientation that CFOs bring to the table is not always fully valued by the CEO and other C-suite executives, who tend to be more visionary in nature. Industry analysts refer to the growing divide as a 'gravity of tension' that has been increasing in the C-suite, with potentially serious consequences.”
Clearly, this should be a cautionary warning to CEOs, business owners, and other management teams across industries and sizes.
“A focused management vision and direction is one of the key factors that helps companies grow. To drive profitable, sustainable growth, the entire C-suite must identify and agree on activities that drive value, remove non-value-adding costs, and reinvest those savings into initiatives that improve competitiveness. Those who fail to master this practice risk becoming obsolete. Since 2000, 52% of the companies in the Fortune 500 have gone bankrupt, been acquired, or ceased to exist.”