The Executive flinched in his chair. The numbers in his Long-Range Planning (LRP) portfolio were rigorously done, but he had promised a higher performance to the street. Looking squarely at his senior FP&A analyst, he said, “I need to see another $50 million in value from our portfolio. Please make it happen.”
Introducing the CFO Chart
Answering the dreaded question
Using this chart, our FP&A professional can respond to the executive, “Oh, you wanted to increase $50 million in value? No problem. That would require a further investment of $10 million as this CFO Chart shows.” Conversely, if the executive says, “Find me a way to remove $10 million from our budget,” the FP&A executive could say, “No problem. That would correspond to a $50 million value cut for us.”
If this is so good, why hasn’t this been used already?
In fact, it has. A Harvard Business Review case study, “How SmithKline Beecham makes better resource allocation decisions,” details how a CFO Chart was used to conduct the value-tradeoff conversation with the board. The story goes that when the board saw this chart, instead of cutting R&D, they increased their investment.