John Leach, former CEO of Target, has a great description of what makes a CEO:
“There are four areas: Sales & Marketing, Finance, HR, and the Product.
A CEO needs to be an expert in one of those four, and know enough about the other three to not have the wool pulled over their eyes.”
It’s a great way of looking at it. Conventional management thinking may have evolved since then, but the principle holds true. You can’t afford to not know the fundamentals.
I feel this gets lost on social entrepreneurs. There’s an expectation that the CEO’s role is to understand the social impact and how the business contributes to it, as well as provide a vision for the future. Money is an afterthought.
This view is quite prevalent, but never amongst successful entrepreneurs.
I believe high-level financials are everyone’s business. A management team can’t afford not to know how the organisation’s finances are tracking.
If your team doesn’t know how much margin you make per sale, or what your breakeven points are, how are they supposed to make good decisions?
This is not to say that you need a team full of accountants, far from it. You need everyone to know the most important numbers, the indicators that tell you whether things are going well, or are going badly. It also means speaking the same language when it comes to finance. That’s one good thing about the canvas, it’s still new terminology, but terminology that everyone thoroughly understands.
So, consider this to be a new part of your role in social enterprise; to fully grasp the important numbers, and to ensure that your team knows how the finances are tracking.
It’s not easy or fun, but it’s certainly rewarding.