An Ode to Finance & Strategy / Strategic Finance

As a former consultant, I sometimes receive questions on post consulting roles, especially business operations/strategy and operations roles in tech. Occasionally, someone asks about Finance roles in tech. I share my views with the caveat that while I will describe the role/function, I have not done it myself. My view is “outside in”, an external partner expressing what I have observed and admired about F&S teams I’ve been fortunate to work with.

So, here is my “Ode” to Finance partners. Not poetic, but hopefully helpful. I will cover:

1. What Finance & Strategy does
2. Good to Great Finance & Strategy

1/ What Finance & Strategy does

Definitions

The F&S team provides insights and recommendations to drive rigorous decision making and superior financial performance. Job titles include: “Finance”, “Finance & Strategy”, “Financial Planning & Analysis”, “Finance Business Partner”, and “Strategic Finance”.

Types of Work

One way to understand what F&S does is to look at specific examples (non exhaustive) of the work, which I classify in two buckets:

1. Business Partnership
2. P&L Management

Bucket 1: Business Partnership

• Customer and industry insights: Analyze customer segments and industry landscape (profitability, acquisition costs, lifetime value, retention, product adoption), recommend opportunities.
• Pricing strategy: New product pricing, product bundle pricing, cost analysis, deal discount guidelines.
• Strategic deals: Structure complex deal terms, especially for “first of its kind” deals/complex negotiations.

Bucket 2: P&L Management

• Investments and resource allocation: Analyze expected return of internal projects/potential acquisitions. Allocate resources (capital, headcount).
• Financial planning and reporting: Lead planning process, develop financial models. Monitor and report key business metrics (monthly/quarterly business reviews) to stakeholders.
• Process improvements and automation: Improve existing reporting processes, like reducing steps and manual work.

F&S work is diverse and highly cross functional, requiring collaboration with product, go-to-market, partnerships, accounting, data science, corporate development etc.

Designstripe

2/ Good to Great Finance & Strategy

I’ve worked with stellar F&S teams who stood out with these top characteristics:

1. Curiosity to dive deep into the details: This refers to a curiosity for understanding the business in detail, and how data fits in the context of the business. One can’t advise on business levers and provide actionable insights without understanding how the levers work.
2. Ability to soar high: This refers to seeing the big picture, filtering through the noise to pull up actionable insights. I place this after deeply understanding the details, because it’s easy to appear to “soar high”, but then have a poor grasp of the details and be unable to execute.
3. Maturity: I summarize this as “being the adult in the room”, which means tampering excessiveness and exuberance with prudent and sound judgement. It means prioritization and saying no (even to good ideas). It means thinking long term, vs short term shiny “ships”.

Balancing (1) and (2) is hard, like walking on a tightrope.

Note: I left out quantitative skills, financial modelling with large complex data sets, which I assume are the baseline no matter the level of the role.

What makes F&S challenging

The best F&S teams face challenges unique to the role. I list some below, and this list is non exhaustive.

1. Saying no: Inherent in the F&S role is being empowered and supported to say “are you sure?”, “No” (with reasoning) to decisions, investments. That is the guardrail for financial performance. However, it is hard to hear “no”, and it’s easier for teams to index for “happiness” as an OKR rather than financial performance [1]. So, it’s a tough balance for F&S teams.
2. Accountability throughout the org: P&L management is successful to the extent it is a company priority. If not the entire organization considers P&L, it is easy ignore costs (e.g. let’s just waive XYZ fees just because).
3. Data quality: Finance is capable of wrangling large and complex data sets for financial models, but poorly set up data pipelines and mediocre data quality make the F&S job more challenging.

The underlying theme is empowerment. The F&S team is successful if empowered organizationally to say no and hold teams accountable, and equipped with the right tools and data.

What F&S can do, but ideally is not spending 100% of time on

• Accounting and reporting: F&S intersects with Accounting on budgets, financial reporting. My guess is that this should be <20–30% of the time, given accounting skillsets are more specialized.
• Business reviews and planning: Quarterly business reviews and planning is important. But it is a waste if a talented F&S team is spending most of their time here, versus business partnership.
• Basic modelling: Personal opinion — don’t waste your F&S team’s time to build simple (defined as 1/2 page) models.

Overall, this post is my “outsider-insider” view of the F&S function. I am thankful to have worked with great F&S teams (especially those who scrappily build the function from scratch), to drive rigorous decisions and improved financial performance.

[1] I do NOT recommend “Happiness as an OKR” but am sympathetic to why teams fall into it. For example, it is easier for finance, reg/product legal, compliance, risk, to just say “Yes” to product/business and optimize on happiness. However, the company is far worse off if that happens.