The new breed of CFOs.

• Author: Vilandre, Paul C.
• Position: Chief financial officers - Viewpoint

Not long ago, I had lunch with the chief financial officer of a promising biotechnology firm. To illustrate how his role as CFO was changing, he drew his job as a one-inch square on the back of a napkin. Next, he drew his personal management capabilities, which he represented as a two-inch square overlaying the first square. The message? His classic accounting responsibilities were taking up but one-fourth of his capabilities. We began talking about how other senior financial managers address the problem of outgrowing their jobs, particularly in Silicon Valley, where a model of a new CFO may be emerging.

The world of financial management is changing, especially in nonmanufacturing organizations where "top line" is replacing "bottom line" financial management, particularly as cost structures become increasingly layered and fixed over the medium term. Other trends of the '90s, such as outsourcing and activity-based costing (ABC), while offering improved cost predictability, also lock in the period cost layers, unless they are pried open with severe re-engineering efforts. Meanwhile, for many firms, improved information technology, often available on the desktop, has ushered in the era of custom pricing and P&Ls by customer, frequent RTFs (responses to forecasts) and just-in-time systems that respond to daily demand cycles.

Because of some of these changes, I see an increasing number of financial vice presidents also act as senior vice presidents of operations, or some equivalent title. This is a new organization paradigm that I have named |CFO.sup.2~ (the chief financial and operations officer).

At first, I thought the operational CFO and his or her organization had finally teamed up with the chief executive officer to effect the classic "Mr. Outside/Mr. Inside" model, particularly as the role of chief operating officer gets squeezed out in flat organization models.

Yet, this is not what I hear when I talk to CFOs, many of whom are just as externalized as the CEO and frequently work with customers as much as they do with the analyst community. The new business world order of the mid-1990s requires the CFO to manage what has been called the "virtual corporation." Such firms thrive on a profound customer orientation, encompass time-based competition to compete on a global scale and organize with high employee intensity and productivity to achieve fast responsiveness to market conditions of the moment.

SEIZE THE DAY

For the CFO and the finance...