English 
Vietnamese Gone are the days when Chief Financial Officers (CFO) were confined to the realms of balance sheets and financial reports. Today's operational CFOs are rolling up their sleeves and diving deep into the nuts and bolts of business operations.
But wait, isn't that the job of the Chief Operating Officer (COO)?
In this blog, we will explore the fascinating evolution of the CFO role and how it is increasingly overlapping with traditional COO responsibilities. We will unpack the key differences and similarities between operational CFOs and COOs and examine why some companies are opting for this new breed of financial leader.
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Table of Contents
What Is an Operational CFO?
An operational CFO, also known as a Chief Financial Officer with an operational focus, is a financial executive who goes beyond traditional financial management roles to actively participate in and influence the company's operations and strategic decision-making.
An operational CFO aims to bridge the gap between finance and operations, ensuring that financial strategies align with and support the company's operational goals. This role is particularly valuable in companies undergoing growth, transformation, or facing complex operational challenges.
Key aspects of an operational CFO's role include:
- Financial oversight: Managing financial planning, reporting, and analysis.
- Strategic planning: Actively participating in setting and executing company strategy.
- Performance improvement: Identifying areas for operational efficiency and cost reduction.
- Data-driven decision making: Using financial and operational data to guide business decisions.
- Cross-functional collaboration: Working closely with other departments like operations, sales, and marketing.
- Technology integration: Leveraging financial technology to improve processes and gain insights.
- Risk management: Identifying and mitigating financial and operational risks.
- Business partnering: Acting as a trusted advisor to the CEO and other executives.
The need for operational CFOs emerged as businesses recognised the value of integrating financial expertise more deeply into operational decision-making. This shift began to gain traction in the late 1990s and early 2000s, becoming more pronounced in the following decades.
When it started to become prevalent:
- Late 1990s - Early 2000s: The dot-com boom and subsequent bust highlighted the need for financial leaders with operational acumen.
- 2002-2010: The Sarbanes-Oxley Act of 2002 expanded CFO responsibilities, pushing them towards more operational involvement.
- 2008-2012: The global financial crisis accelerated the trend as companies needed finance leaders who could drive operational efficiencies.
- 2010s onwards: Digital transformation across industries further cemented the need for CFOs with strong operational and technological understanding.
- 2020 and beyond: The COVID-19 pandemic underscored the importance of CFOs who can rapidly adapt financial strategies to operational challenges.
Operational CFO vs COO – Is there an overlap?
An operational CFO and a COO (Chief Operating Officer) have distinct roles, but there can be some overlap in their responsibilities. The key is to maintain a balance and clear delineation of duties.
Here's how this dynamic typically works:
1. Distinct primary focuses
COO: Primarily responsible for day-to-day operations, execution of business plans, and operational efficiency.
Operational CFO: Primarily responsible for financial strategy, reporting, and using financial insights to influence operational decisions.
2. Areas of potential overlap
- Performance improvement initiatives
- Resource allocation
- Strategic planning
- Technology implementation decisions
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3. Complementary roles
In well-structured organisations, the operational CFO and COO work collaboratively rather than competitively.
The CFO brings financial expertise to operational discussions, while the COO brings operational expertise to financial decisions.
4. Potential for conflict
If roles are not clearly defined, there can be tension or confusion about decision-making authority.
Some companies may choose to have either an operational CFO or a COO, but not both, depending on their specific needs and structure.
5. Communication and collaboration
Successful companies foster open communication between these roles. Regular meetings and joint projects can help align financial and operational strategies.
6. Reporting structure
Both typically report to the CEO, which helps maintain balance. In some cases, the CFO might report to the COO or vice versa, depending on the company's structure and needs.
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7. Size and complexity of the organisation
Larger, more complex organisations are more likely to have both roles, with clearer distinctions between them.
Smaller companies might combine these roles or lean more heavily on an operational CFO if they can't justify having both positions.
While there is potential for an operational CFO to step into areas traditionally managed by a COO, this is generally not the intent. The goal is to have financial leadership that understands and can influence operations, not to replace the operational leadership. Effective companies clearly define these roles to leverage the unique strengths of both positions while minimising conflict and redundancy.
Conclusions
The operational CFO doesn't replace the COO but rather complements this role, bringing financial acumen to operational decisions and operational insights to financial planning. This evolution reflects the growing complexity of modern business environments, where financial and operational considerations are increasingly intertwined.
For businesses considering this model, the key lies in clear communication, well-defined responsibilities, and a collaborative approach. The goal isn't to create competition between finance and operations, but to foster a more integrated, data-driven approach to business management.
As we look to the future, it's clear that the most successful organisations will be those that can effectively bridge the gap between finance and operations. Whether through operational CFOs, collaborative CFO-COO partnerships, or other innovative leadership structures, the integration of financial and operational expertise will be crucial for navigating the challenges and opportunities of tomorrow's business landscape.
In addition to participating in the operational aspects of an organisation, modern CFOs must stay up-to-date with the latest technological advancements, such as cloud computing.
Download our whitepaper to find out why smart CFOs are increasingly embracing the cloud.
