The lessons CFOs can take from "Titanic"

09/25/2023 06:56:21 +0000

Over the recent long weekend I showed my girls James Cameron's movie, Titanic. For almost 8 and 9 year old girls, this was a big ask of mum, simply due of the movie length itself but also because of the questions it raises.
"I don't understand, it's an unsinkable ship that... sinks?!"
"Why couldn't they turn around quicker?"
"Was it his fault?"

The one they kept coming back to was "Was it his fault?" because as the ship sinks, the movie switches frequently between the Captain, Edward Smith, the ship's architect, Thomas Andrews, the 2 lookouts in the crow's-nest and Joseph Ismay, the Managing Director of the White Star Line. It was becoming confusing who actually was at fault.

I think there's a lot of synergy between the Captain of Titanic and Chief Financial Officers. Very simply put, a ship Captain's primary job is to navigate the vessel safely from one port to the next. That's it. Move the boat from one destination to another and keep everyone and everything on board safe. But as depicted in the movie, that's not actually enough. There are stakeholders to please, brands to elevate, deadlines to meet and egos to manage.

Hence, decisions can be made such as:

  • to not weigh down the vessel or negatively impact the aesthetics of the ship with the adequate number of lifeboats

  • use excessive speed to get to the destination faster and create a 'grand spectacle'

  • not prioritising the communication of risks with respect to the icebergs (instead focusing on transmitting messages to passengers on board)

  • not providing the right tools of the trade - i.e., binoculars for the lookouts

Can you see where I'm going here? At its core, the role of a Chief Financial Officer is to be the custodian and steward of an organisation's financials to ensure it can be sustainable and achieve its objectives. Using the going concern assumption, can the company discharge its debts as and when they fall due?

To stop there, however, would be greatly understating the realities of what it means to be a CFO.

The tension between compliance and commercial

There is a constant tension between the need to be both compliant and commercial for a CFO. This tension extends from the very highest of levels: some days involve talking to the regulators in one meeting immediately followed by a conversation with the CEO or Chief Distribution Officer to talk about how to maximise revenue from a new sales contract. To the very real 'BAU' vs 'strategic' activity, providing numbers vs insights, must do and 'should dos'.

I was discussing this tension with a client recently. We are working on his executive brand and how his peers perceive him and his performance. We discussed at length his perceived priority (compliance) as compared to the priority of his key stakeholders (commercial). Immediately the penny dropped for him as he realised the disconnect.

It's a little bit like the iceberg itself. The perception of my client by his stakeholders is informed by what they see above the waterline. More specifically, what they choose to see through the lens of what they care about. If my client's priority is compliance then his iceberg will be made up of compliance activities. His brand will be compliance. Which won't be valued. In fact, it won't be visible through the eyes of someone whose focus is commercial.

The Identity Iceberg: Visibility gets you a seat at the table

It's really not fair. To think that everything you have worked for, studied and excelled in isn't visible or valued by those who judge and measure your performance is really horrible. But this is where you need to play the long game. Visibility gets you a seat at the table to speak up and educate those around you why you can and must be compliant and commercial. That those 2 concepts aren't mutually exclusive and you'll get better, more sustainable outcomes if you think about them both concurrently. The key is, you need to know how to think of them concurrently.

The Titanic sank because there weren't the right controls in place to manage the compliance (safety) elements of sailing the vessel while also meeting the commercial expectations.

Create your controls

Typically, compliance covers what we know as 'BAU' or 'business as usual' and commercial covers our strategic activity. The easiest way to manage both BAU and the strategic aspects of being a CFO is to create a system that allows you to get early warning signs when BAU or compliance goes awry so you can spend most of your day being commercial. You need to create controls you can rely on to ensure BAU is on track. Examples of these might be:

  • Weekly review of the numbers

  • Checking in twice a week with your Financial Controller

  • Calling your A/P manager on a monthly basis to see how things are going with supplier payments. Proactively validate with the business.

  • Mid-month performance review

In fact, to gain as much efficiency as possible, you'll ensure these are the same key controls that feature into your internal controls framework and you'll have a readily available and easy to understand dashboard.

Communicate commercially

While visibility gets you a seat at the table, presence gets you heard. Executive presence is a skill: it takes time, effort and practice because it's actually a mindset. So when the above controls are operating effectively for you, it is easier to have executive presence because you can focus your energy and effort on communicating with impact and influence....through the eyes of your stakeholders.

Take this section from Amy Cuddy's (of TED 'power pose' fame) book "Presence: Bring your Boldest Self to your Biggest Challenges":
"Listening is crucial to presence... Real listening can't happen unless we have a sincere desire to understand what we're hearing. And that's not an easy thing to manage, because it requires us to suspend judgment - even when we're feeling frustrated or scared or impatient or bored and even when we feel threatened or anxious about what we're about to hear..."

Think of a time when you're having a commercial conversation with one of your peers...and when at the back of your mind you're worrying about whether the numbers will come out of the system right this month. Does that thinking impact your ability to have maximum presence? I'd say so... In contrast, imagine your level of executive presence when you are confident that your team has the compliance activities sorted and you can be 'all in' on the commercial conversation?

The Titanic movie culminated, of course, with the scene where the Captain makes his way back to the cockpit alone. He closes the door deliberately and shuts himself in to watch the water flood around him. We know 'a Captain must go down with his ship' and we're faced with this reality as we his watch him secure his fate. Despite having watched this movie at least a dozen times before, as I watched with my girls, I couldn't help but wonder at the pressure and responsibility he must have felt. That the world was on his shoulders and the destiny of the thousands of passengers and crew members on the ship were in his hands and that he had let them down.

I know this is a fear of CFOs and I know this is the pressure they feel at times. This is the impact of the tension between commercial and compliance.

How do you make monitoring compliance effective and effortless?
How can you be visible?
How do you become a CFO of influence?

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Author: Alena Bennett

Alena works with leaders and their teams to connect technical and leadership skills so they can deliver to deadline without killing their people.
She is a mentor, trainer, facilitator and coach. Contact her today on [email protected]
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We acknowledge the Darkinjung people, the traditional custodians of the land on which we live and work and pay our respects to the Elders both past, present & emerging.