Which Way Should I Go?

There is a segment in Lewis Carroll’s (actual name Charles Dodgson) Alice in Wonderland in which Alice is confronted by the Caterpillar sitting on a mushroom smoking a hookah.  Alice inquires as to which road she should take to which the Caterpillar asks, “Where do you want to go?”  Alice responds that she doesn’t know and the Caterpillar replies, “then it doesn’t make any difference.”

In a previous article I briefly described the roles and functions of the Chief Financial Officer (CFO) as falling into five key categories – Planning, Operations, Financial Information, Risk Management and Financing. This article digs deeper into the role of the CFO as it relates to the Planning function, specifically Strategic Planning.

Wikipedia defines “strategic planning” as the organizations process for defining the organization’s direction and the decision making process for pursuing that strategy. While the ultimate responsibility for the crafting of a strategy for the company rests with the Chief Executive Officer (CEO), the CFO should be an active participant. As the member of the executive team most knowledgeable about the financial aspects of the business operation and the one most involved in assessing risk, it just makes good sense to include the CFO.  As a fairly conservative member of the management team, the CFO often is the voice of reason, which explains the reputation that CFOs have as the “No” people.

When I meet with a potential client, I often use the analogy. “You can get from the East coast to the West coast, but you really need three things – where you want to go, where you are now and it’s really handy to have a map.” That essentially describes the strategic planning process – define the strategic goal (where you want to go?), document the current capabilities of the company, (where are you now?), and develop a plan to reach the goal (the map). Each of these steps will be explored in more depth.

Define the strategic goal: I once read that one must identify a future milestone or accomplishment to move toward, that you can’t move away from where you are.  The CEO leads the management team through the process of identifying the future milestone or accomplishment the company will strive to achieve. There are a host of factors that will come into play during the defining of strategic direction – regulatory and competitive environment, operating capabilities of the company and other factors.


Document the current capabilities:  Many companies conduct a SWOT analysis as part of the strategic planning process – strengths, weaknesses, opportunities and threats.  Once the Strengths of the company have been identified, it is common to describe how the Strengths will enable the company to capitalize on the Opportunities, then how the Strengths will compensate for the Weaknesses of the company and finally to discuss the Threats the company anticipates and how they propose mitigation by application of the Strengths.  The SWOT findings are incorporated into the overall strategic plan.

Develop a plan to reach the goal:   The plan connects where you are to where you want to go.  The plan outlines specific changes that the company needs to make in order to achieve the desired goal(s).  Changes are generally incremental in nature and targeted on those specific functions that will likely result in achieving the desired results.  The plan will also identify the positions or persons that will be responsible for accomplishing various aspects of the plan.

This article discusses the strategic planning process.  The process consists of three steps – define the strategic goal, document the current capabilities and develop a plan to reach the goal.  Each of these steps have been briefly described.

Concepts gleaned from The CFO Guidebook by Steven M. Bragg.

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