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Editor's page.

Innovation is a key engine of growth, but it frequently sputters if the financial fuel is too lean or the "newness" of the products is oversold and they are really glorified line extensions. In our cover story, two consultants from Archstone Consulting argue that CFOs have as much responsibility for the success or failure of innovation as any senior executives.


Moreover, they maintain that "the fact-based discipline required to resource and manage innovation over complex organizations ... is precisely what effective finance executives excel at and should be relied upon to bring to the innovation process."

Expectations are high in some quarters that Auditing Standard No. 5 (AS5) will do much to trim what are perceived as excessive audit charges related to Sarbanes-Oxley Section 404 compliance. But no one is really sure, and the experience may be different for very large companies than for the non-accelerated filers that have yet to file reports, notes writer Stephen Barlas.

The CFO's relationship with the board--and particularly the audit committee--has changed significantly with the advent of Sarbanes-Oxley, but just what should it be? Executive Editor Ellen M. Heffes interviewed a number of board experts, and one dominant theme is communication: the finance chief needs to spend more time and effort keeping the audit committee and other board members up to date on financial issues. Other characteristics topping a "wish list" of CFO skills include integrity, honesty, knowledge of the business and industry--and guts.

Restructuring is an experience many CFOs and other senior finance executives will experience first-hand. Robert Tormey of Tatum LLC offers a series of suggestions and procedures that the CFO should think about when a restructuring looms or is actually underway. As he writes, creditors tend to remember executives who were helpful in a crisis, and many CFOs have found a restructuring to be a real asset on a resume.

Succession issues aren't always well handled, even at large companies with training programs and batteries of potential candidates. Ron Carucci, co-author of a recent book on emerging leaders, spoke with me about a broad range of succession issues, especially as they touch on finance departments. He believes there is a significant generational gap already at work, and that future finance leaders will be more intuitive and less driven by quantitative concerns.

It's often heard that the worlds of academia and business don't always communicate welll with each other. According to the Robert Half International Financial Leadership Council, the two worlds must forge effective partnerships to help new accounting and finance practitioners prepare for the future by expanding internship programs, improving access to data for academic research and encouraging qualified professionals to teach at the university level.

It was announced in early September that a former finance chief at Renault SA had joined parent Nissan Motor Co. as CFO. What was most noteworthy was the news that Nissan had operated without a CFO since 2003; CEO Carlos Ghosn had also headed the finance function. A drop in profitability and stock price appear to have been the impetus for the new appointment.

It's true that Ghosn is one of the world's most celebrated CEOs, but for a global auto giant to operate for four years without a CFO strikes me as a little mind-boggling. While the Detroit automakers have been struggling, their experienced CFOs appear to have been only positive influences on their organizations in an era of cost controls and rationalized spending.
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Author:Marshall, Jeffrey
Publication:Financial Executive
Date:Oct 1, 2007
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