Cut costs and grow the top line: 3 questions that help you do both

So CFOs’ 2014 marching orders at most companies are clear: Maintain a cost-conscious culture while enabling top-line growth.

That’s the finding of recent research by the Hackett Group.

That probably doesn’t sound too different from last year’s action plan. Looks like the pressure is still high for CFOs to walk that tightrope in a still-shaky economy.

And while you’re certainly not going it alone, there’s definitely a lot on your shoulders.

The key to success? “Powerful agility.”

That was the theme of a recent MIT Sloan CFO Summit held in Newton, MA. Experts in the field got together to talk about the unique challenges facing financial leaders at the moment.

We think one CFO summed it up best: You want your company to have a stable foundation (your processes, systems and metrics), but not be so stable that you can’t react quickly to changing market conditions or new ideas.

3 filters for any idea

The panelists at the summit urged your peers to be flexible enough to handle the challenges you face now, no matter what your industry or company size.

Hopefully you’re in the position where people throughout your organization have ideas to cut costs and increase revenue. And you definitely want to foster a corporate culture that encourages employees to bring all those ideas – even the crazy ones – to you.

But then it’s often up to you to determine whether to act on them.

The panelists at the MIT Sloan CFO Summit suggest you put decisions through these three filters:

1. Financial: First and foremost, does it make dollars-and-cents sense? That’s probably the easiest filter for you to put things through, given your background. And of course your finance staffers can help you run the numbers to help make that call. Note: If an idea dies in this first step, be sure to follow up with the person who suggested it to help them understand why it wasn’t financially feasible. Showing them real numbers will not only help make the case but can get them thinking in those terms for their next idea.
2. Strategic: Does it forward our long-term goals? Where does it put us compared to the competition? Of course your company has a plan for where it wants to get not only this year but maybe five years from now. If that idea doesn’t further progress towards those goals (or worse, could ultimately undermine them), it may be worth passing on.
3. Realism: Can we execute? It may be a good idea, but it’s possible your company just isn’t set up to make it happen, whether that’s due to IT capabilities or current staffing levels. If you’re not set up to make it happen, people need to understand that it could cost your company a lot more than it stands to save you (or make you).

Info: The MIT Sloan CFO Summit is held each November; for info on this year’s summit, click.