Just quoted in CFO Magazine.
In our Proformative question of the week, Wayne Spivak, president and CFO at SBAConsulting.com, writes:
How important is industry knowledge to the CFO? My thesis is that all businesses are about 90% the same. They all have cash-flow issues, budgeting, products and/or services, ownership (of some type), taxes, and compliance issues.
Yes, depending on the industry, sector or sub-sector there are differences (about 5%-8%), but CFOs as smart, energetic individuals can solve those issues by either a) learning them or b) using subject matter experts (which they will need regardless, since one can’t be a CFO and a SME on all subjects).
The last 2%-5% is company culture.
So, how important is industry knowledge to the CFO?
Answering the question, one consultant says while many skills are transferable across industries, the 90% level Wayne refers to above is likely lower.
“There are many new-age industries emerging — high tech, data-driven service companies, a move to subscription revenue models, etc., that have nuances that not everyone has encountered in their careers,” says the consultant. “So in some cases I can see that the 90% level of commonality could be as low as 50% to 60%.”
Indeed, other respondents seem to think that industry knowledge is an imperative.
One European finance executive writes: “You don’t have to have it to begin with and you can certainly make improvements to a company’s bottom-line from a purely financial perspective; however, if you want to provide strategic business support to the CEO you better show you understand the industry.”
Agreeing, another finance executive says, “You cannot make the best decisions on numbers alone.”
But is industry knowledge really the expertise that the CFO needs to be a strategic partner to the CEO? A CFO responding to the post questions the premise:
“There is a propensity to conflate industry and business model,” he writes. [In my opinion], what is important is to understand the business model. Industry knowledge is much more constraining for the company and business models are easier to change or refine.”
He then provides an example: “In the SaaS world … where subscription models/contracts vary widely, [a CFO’s] revenue recognition knowledge from a different company may be useless to the new company.”
To see the responses to the question in depth or to add your own perspective to the conversation, go to the discussion on the Proformative website (registration required).
To find the CFO Magazine Article: