By leveraging the planning and performance management cycles as well as analytical capabilities, CFOs can minimize strategic ambiguity and establish strategic clarity for the organization and its stakeholders.
In battle, strategic ambiguity can sometimes lead to disastrous results. At Gettysburg, for example, on the first day of the epic Civil War battle, General Robert E. Lee ordered General Richard Ewell to take Cemetery Hill “if practicable,” when, some historians say, he really meant to find some way to take the hill. But Ewell famously hesitated, allowing the Union Army to fortify its position on the high ground of the battlefield. The rest, as they say, is history.
In business, strategic ambiguity can also have disastrous effects – and cause major stress for CFOs. In fact, according to Deloitte’s quarterly CFO SignalsTM survey, roughly 30 percent (and as high as 40 percent) of CFOs at large North American companies have named “framing and/or adapting strategy” a top three company-level challenge over the past four quarters. Moreover, 35 percent of them on average named strategic ambiguity as one of their top three career stresses over the same time period.
In this issue of CFO Insights, we explore how CFOs can leverage data and the planning and performance management cycles to address multiple aspects of strategic risk and in the process create opportunities for themselves to serve as business strategists and catalysts.
CFO Insights: Turning strategic ambiguity into strategic clarity
The Strategy Execution Framework
One of the root causes of strategic ambiguity, not surprisingly, is the volatility in the business environment. Economic upheaval and change continue to drive many companies to revisit and revise their core strategies. At the same time, however, many CFOs tell us their own companies’ ability, or inability, to formulate and execute their business strategies only adds to the problem.
These factors challenge CFOs’ abilities for decisive direction-setting and decision-making and can stifle the broader organization’s ability to effectively execute the strategy. Addressing the problem requires considering a four-step approach as outlined in Deloitte Consulting LLP’s Strategy Execution Framework:
Spearheading strategic clarity
At each step of the Strategy Execution Framework, there can be opportunities for CFOs to take the lead in cutting through the fog of ambiguity to help achieve strategic clarity. Moreover, guided by the following four questions, CFOs can move out of their steward and operator roles as outlined in the Four Faces of the CFO into the strategic and catalyst roles they desire.
What is the core vision of the organization?
Do employees and investors understand and agree with the strategic direction?
What is the preferred way to implement the strategic direction into concrete action?
Does the strategy demand a different skill set across the organization? Or is there a gap between the desired and available skills and capabilities?
Strategy’s silver lining
The CFO plays a critical role in bringing strategic clarity to multiple constituents as a result of his particular position as an unbiased participant in the strategy development, communication, and execution process. By leveraging the planning and performance management cycles as well as analytical capabilities, CFOs can minimize strategic ambiguity and establish strategic clarity for the organization and its stakeholders. To finance chiefs, spearheading that process is not often “if practicable,” but increasingly necessary.