The following is a contributed piece from Thomas Fox, president and CFO of Malwarebytes. Opinions expressed are author's own.
It sounds paradoxical, but today’s planning and forecasting processes must balance adaptability with a steady, long-term strategy that investors, employees and stakeholders can appreciate. As an organization's strategic finance leader, it's on the CFO to articulate consistent, coherent and dynamic success metrics across teams and divisions.
Developing close partnerships across the C-suite and functional teams is a first step in creating an environment that prioritizes strong fiscal discipline. By communicating the contours of risk and return, CFOs can codify decision-making frameworks that support budgets without needing constant financial oversight.
Fiscal discipline may sound intimidating, but it boils down to the basic concept of demonstrating and modeling behaviors that support a healthy balance between cash inflow and outflow.
One practice I encourage is asking employees to spend the company’s money as if it were their own: to avoid overextending; to take measured risks; to avoid profligacy. Empowering employees to make investment decisions is important, but they must also feel accountable for their budgets and asked to explain variances and describe corrective action. Over time, this approach to investment can create useful cultural norms when supported with the right processes.
Even a modest nod to fiscal discipline early on can pay dividends down the road. It will preserve more resources for expenses that can truly drive the business forward, and both employees and shareholders alike can see the company is serious about value creation.
While it can be very tempting (and fun!), taking and aggressively deploying large cash infusions is risky. When I joined Malwarebytes as CFO in 2018, one of my goals was applying the principles of fiscal discipline to spur responsible business growth. Over my career, I have relied on a few best practices to do so.
- Position finance as the “decision-making engine” of the business
Organizations may not consider finance central to the decision-making process; some may even consider it an obstacle. CFOs must work with their teams to build the trust that earns them a seat at the table, both at the executive level and within business or functional units.
Finance leaders must demonstrate, in both word and deed, that they are there to help and consult, particularly with resource allocation. This entails working shoulder to shoulder with business owners to better understand what will make them successful while providing thoughtful recommendations and insights.
At Malwarebytes, the finance team members often sit among the functional units they support to increase informal collaboration and earn their partners’ confidence.
- Make IT instrumental to the business
Today, financial success increasingly relies on software and data. The right IT tools can generate timely insights that can result in significant savings, so it’s important to consider the return on investment of your tools from different perspectives. Can a tool reduce your need to hire additional outside resources? Can it increase your team’s efficiency?
IT can be an incredible resource and strategic partner in creating the right data for decision-making. At Malwarebytes, the IT and finance teams have worked hand in hand to implement a data store that aggregates and curates accurate, reliable data for planning and performance management. This data store is now the internal authority for nearly all the company’s non-financial business data—a major win for the business.
- Focus on business planning capabilities
Finance must develop strong business planning processes that let it partner effectively with sales, product and marketing. Clear plans and business goals can better rationalize the capital-raising process and let teams identify the right value creation levers in their departments. This facilitates stronger financial and operational discipline across teams, which benefits the organization in the long-term.
At both Angi and Malwarebytes, I rebuilt the finance and accounting teams, and focused on finding leaders who could build trusted relationships across other operating units, rooted in a deep understanding of the business. Out of that understanding arises insights that can help our business partners plan more effectively, which, in turn, supports finance in being the steward of the balance sheet.
- Establish an operating cadence for performance management
Remember: process and predictability go hand in hand, and adopting an operating cadence led by the CFO’s office will help position your business for more sustainable, responsible growth.
Additionally, developing a consistent resource allocation process provides an opportunity to adjust when necessary. This is especially critical for software models in which operating leverage makes up a big part of the investor story.
By creating the right “moments” with ritual and artifacts, companies can establish a business cadence that will spur growth, drive efficiency and promote cross-functional alignment.
For example, at both Angi and Malwarebytes, I set up what I call the “Monthly Operations Review”, which brings together all our senior leaders every 30 days to review financial performance and the latest forecast, discuss leading KPIs, review roadmaps, and make changes to our key investments.
Paired with vigorous annual and multi-year planning processes, a regular cadence for performance management can help companies create spaces that encourage healthy debate among team members and identify opportunities on a timely basis while limiting endless side meetings.
The famous English poet John Milton said, “Luck is the residue of design.” I believe that’s true. By developing robust processes that encourage preparation, guide decision-making and establish a rhythm to the operations, finance can become an indispensable part of the engine that drives growth, efficiency and innovation.