The CSO and the CFO: Creative Tension in the C-Suite

Author: Daniel T. London and Eric M. Lowitt

For some years now, chief financial officers have been playing a larger role in the strategic management efforts of their organizations. As more companies bring on chief strategy officers, however, the potential for conflict between the CFO and the CSO over turf and responsibility is likely to grow. (The biggest area of possible tension is somewhat metaphysical, perhaps: Just where does short-term strategy execution end and medium-term strategy begin?) Fortunately, Accenture research reveals that both parties understand not only how important it is to work together but also that perfect harmony at the top is actually undesirable.

To find out more about how the CFO role is evolving, Accenture surveyed 30 financial officers of leading companies worldwide and followed up our survey with in-depth interviews. What the CFOs said about their experience in the area of strategy was consistent with prior studies. But what they said about their relationships with top strategy officers was revealing.

Accenture research confirmed the growing importance of CFOs in the strategy formulation and execution processes. Fifty percent of our survey respondents indicated that five years ago, they had been primarily "service providers" in their organizations; today, only 6% feel that way, while fully 44% consider themselves to be mainly "business partners." Almost 90 percent expect to be mainly business partners in another five years. In addition, 83% said they were engaged or highly engaged in strategy formulation, and 95% were engaged or highly engaged in its execution.

Through our interviews, Accenture also found that the survey results were not simply expressions of wishful thinking. Accenture talked to a variety of financial chiefs who are helping drive their companies' strategic vision. For example, Doug Winterrose, divisional CFO of a business that is part of Dutch publishing giant Wolters Kluwer, works closely with his company's top strategy executive and the business development group to make their strategic vision a reality. Kimberly-Clark CFO Mark Buthman works almost daily with CSO Robert Black on strategy and innovation. And the head of finance at a subsidiary of a European chemicals company is leading the effort, along with the heads of strategy and marketing, to define the unit's five-year strategy.

A key factor in the success of these efforts is the strength of the working relationship between the CFO and the CSO—something these executives are well aware of. More than three-quarters of CFO respondents, for example, agreed that their working relationship with the CSO is critical to their own ability to execute. And in a separate survey of CSOs, more than half of the respondents indicated that only the CEO is more important to their ability to execute than the CFO. These findings help explain why 86% of the CFOs interact at least once a week with their company's CSO, and 41% do so several times a week.

This close relationship is not without friction, of course. Despite—or perhaps because of—such close and frequent interaction, CFOs and CSOs may find themselves at odds over strategic direction and priorities. The greatest point of tension can come when horizon-one activities like budgeting (the CFO's domain) blur into horizon-two efforts like strategic planning (the CSO's bailiwick).