A recent report by Accenture found that nearly 25% of CFOs think that their current company (as they exist today) will die. Wow. If there ever was a wake-up call for companies of all sizes (large or small) to challenge themselves to improve continuously, this would be it. In particular, cost management as a key driver for improved margins, profits, and cash flow is crucial.
Forbes magazine recently interviewed one of the co-authors of this report who revealed that while CFOs generally recognize the importance of strategic cost management, only 6% plan to prioritize it.
Here are some other key points and observations from the interview:
“The ability to deliver sustained cost reductions not only increases flexibility but also provides the fuel to invest in growth strategies”
“CFOs can focus on growth but not at the expense of maintaining a disciplined approach to cost management. By embedding sustainable cost management processes rather than resorting to one-off cost-cutting programs, CFOs can ensure discipline is not lost and that growth strategies do not distract from ongoing operational discipline.”
Here in the San Francisco Bay Area (and Silicon Valley, in particular), the obsessive focus on growth at any cost usually comes at the expense of cost management. However, the best companies (even small businesses and startups) are able to manage both cost management and growth at the same time.
One CFO commented, “I no longer hire accountants for my finance team. I need a much more diverse set of skills, ranging from quantitative mathematicians to sociologists, to interpret and analyze the vast new sets of data becoming available.”
No longer are CFOs glorified accountants or bean-counters. They need to be multi-skilled across a wide range of business areas in addition to accounting and finance.
“The most important element is to live and breathe a relentless customer focus. All too often cost reductions lead to service reductions, opening the door to disruptors who can deliver great service at the same or lower cost.”