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Occasionally you come across chief information and technology officers, or CITOs. Then there are the rare chief marketing and technology officers, or CMTOs. These mashups sound awkward, at least to me, which is why I hope there won’t be too many organizations formally designating anyone as the COFO — the chief operations and financial officer.
Last month the Wall Street Journal (reg required) covered the results of a study by the Universities of Alabama and Oklahoma that examined 16 years’ worth of data and 3,500 companies. The goal was to figure out whether having one person oversee both operations and finance is a good thing or a bad thing. Executive summary: It’s a good thing!
Here’s what stood out to me:
The researchers found that CFO-COOs strengthened a company’s financial reporting in a very specific way. Discretionary accruals, which are noncash accounting items that involve some estimation, were more predictive of future cash flows at a company with a unified CFO-COO than at one with separate chiefs, the study found. More accurate judgments and estimates lead to fewer adjustments and corrections to the books once the cash comes in, and financial reports are more reliable.
I would translate this as, being hands on with operations allows CFOs to see more, learn more and ultimately drive better decisions across both finance and operations. At many companies, this probably also makes it much easier for CEOs and boards of directors to feel confident about the person most likely to be the successor to the top job, even if it’s on an interim basis. (And as we’ve seen from Tim Cook and Apple, some former CFOs prove quite capable when they finally move up.)
As further evidence, the study noted that a dual COO-CFO role is not only happening in startups and small companies, as you might expect. Some of the more B2B-ish examples of larger firms included Occidental Petroleum and insurance company Aflac.
What’s less clear, at least for now, is how companies should best tie operations to customer experiences and overall performance. Today, a lot of the CX area seems to be the focus of those in marketing, and to some extent IT. As CFOs take on more operational responsibilities, are they merely ensuring that martech tools function properly and that customer service processes are efficient, or will they begin to help steer things like brand and reputation, which sometimes have very real consequences for a firm’s stock price?
The good thing about CFOs moving in this direction is that they have a measurement-oriented mindset that could bring greater quantification of things that, left in the hands of marketers, have sometimes seemed ephemeral. As more areas of content marketing become automated, meanwhile, we can expect CFO-COOs to be paying much closer attention to how stories are developed, distributed and used to drive revenue. Just don’t add an “M” to their title. There’s only so many letters one role should be asked to represent.
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Shane Schick is the Editor-in-Chief of B2B News Network. He is the former Editor-in-Chief of Marketing magazine and has also been Vice-President, Content & Community (Editor-in-Chief), at IT World Canada, a technology columnist with the Globe and Mail and was the founding editor of ITBusiness.ca. Shane has been recognized for journalistic excellence by the Canadian Advanced Technology Alliance and the Canadian Online Publishing Awards.
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