CTO 30-Second Mindset Shift: When Finance Tightens, It’s the Operating Model Talking!

Read time: 2.5 minutes

How CTOs Work with Finance to Help Accelerate Change:

1. Use Tightening as an Indicator, Not a Road Block

When Finance tightens in a mid-cycle period, it is signalling uncertainty in how well the system operates.

CTOs should ask, “What is causing the undefined part of the problem?” Instead of asking “Who is blocking progress?”

2. Unstated Risk Boundaries / Limits Slow Transformation

Not stating/communicating your unstated assumptions and/or unstated probable outcomes causes Finance to manage the Downside’s of these situations defensively.

I recommend that you make any relevant or risk boundaries explicit early in the process, before controls become formalized.

3. CFO’s Operate on the Principle of Design. Ambiguous Outcomes = Constraint

This is not operating conservatively; this is CFOs. It is a case of the Chief Financial Officer’s responsibility to be accountable for their responsibilities.

CTOs must define acceptable risks and who owns them, and where these risks will escalate for resolution.

4. Reframe Tension Into Operating/Decision Model/Such

Developers should not be asking why Finance is being resistant... instead, they should be clarifying what the decision rights and/or risk limits are.

5. For Momentum To Exist, There Needs To Be Balance, Not Optimism

An effective transformation aligns:

• Strategic Flexibility

• Defined Risk Tolerance

• Clear Responsibility

Any missing component erodes velocity in advancing the transformation. CTOs must investigate which pillar is the weakest.

6. Strong CTOs Identify Risks Early Instead of Waiting to Negotiate

If you wait to identify risks until after the fact, it will create mistrust in the process. If you identify risk early in the process, you will create alignment throughout Finance, the Board, and the Leadership in order to gain additional resources/support for your initiative.

💡Key Takeaway: 

As finance becomes more cautious about spending, the CTO Office is inquiring about the future of the operating model. By responding to these inquiries with design rather than engaging in a debate with Finance, CTOs can create momentum from the friction with Finance.