The Finance Gem 💎 #85 - The C-Suite Chessboard and How Great CEOs Lead

^{Welcome to Issue #85 of The Finance Gem}

^{Today’s Finance Gems:}

1. The C-Suite is a Chessboard

2. The Best CEOs See Beyond the Numbers

3. Why Most CEOs Confuse Accounting with Finance

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1. The C-Suite is a Chessboard

The C-Suite is a Chessboard

They are envied, respected, and feared.

But behind the titles and the corner offices lies a truth few acknowledge:

The C-Suite is not a team—it’s a chessboard.

Each leader has their own moves, their own priorities, and their own strategy.

• The CEO pushes for growth.

• The CFO demands financial discipline.

• The COO focuses on operational efficiency.

• The CMO calls for bigger marketing budgets.

And when these agendas clash?

• Strategies clash.

• Priorities collide.

• Execution falters.

Here’s how the key players align on the corporate chessboard:

♔ CEO: The King

The visionary. The CEO sets the strategy and secures the company’s future.

• Represents the company to shareholders and the board.

• Builds relationships with stakeholders.

• Drives innovation and opens new opportunities.

Key move: Sets the direction but depends on the rest of the team to execute.

♕ CFO: The Queen

The financial powerhouse. Like the queen in chess, the CFO moves across the board, driving strategy and financial health.

• Manages budgets, capital structure, and financial planning.

• Ensures compliance with regulations.

• Oversees investor relations and reporting.

Key move: Balances opportunity and risk while securing financial stability.

♖ COO: The Rook

The operational backbone. The COO ensures daily operations run efficiently.

• Oversees production, quality control, and service delivery.

• Improves processes and policies for maximum efficiency.

• Ensures teams align with strategic goals.

Key move: Moves straight toward operational excellence.

♗ The Bishops

CMO:

The strategist. The CMO focuses on market opportunities and brand positioning.

• Develops marketing strategies to boost brand awareness.

• Monitors market trends and adjusts tactics.

• Builds customer loyalty and engagement.

Key move: Cuts through complexities to drive growth.

CHRO:

The cultivator of talent. The CHRO steers organizational culture and workforce strategy.

• Shapes talent acquisition, development, and retention.

• Aligns human resources with business objectives.

• Champions employee engagement and leadership development.

Key move: Navigates the complexities of human capital to empower the organization

♘ CIO: The Knight

The innovator. The CIO creates non-linear solutions, like the knight’s unique movement.

• Leads IT strategy and tech innovation.

• Oversees digital transformation and data security.

• Aligns technology with business goals.

Key move: Leaps over obstacles to build a competitive edge.

♙ CRO: The Pawn

The protector. Often overlooked, the CRO plays a critical role in safeguarding the company.

• Designs and implements risk management strategies.

• Monitors compliance with policies and regulations.

• Develops reports to inform leadership.

Key move: Defends against threats to ensure sustainability.

So why does all of this matter?

The C-Suite isn’t just a set of titles—it’s a system of interconnected roles.

Each leader brings unique expertise, but success depends on alignment:

• The CEO sets the vision.

• The CFO secures the finances.

• The COO ensures execution.

• The CMO drives growth.

• The CIO builds innovation.

• The CRO mitigates risk.

When these roles work together, the company thrives.

When they don’t? It’s checkmate.

2. The Best CEOs See Beyond the Numbers

All CEOs want better EBITDA.

Some CEOs focus on stronger Cash Flow.

But here’s the truth:

Few understand how capital allocation shapes both.

Every dollar you invest, pay down, or distribute creates ripple effects across your business—affecting today’s performance and tomorrow’s growth potential.

Let’s break it down:

1️⃣ Investing in Growth

• EBITDA Impact: Growth investments—like entering new markets or building new capabilities—often increase costs upfront, reducing EBITDA in the short term.

But over time, they drive revenue and operational efficiency, improving margins as economies of scale kick in.

• Cash Flow Impact: These investments require significant upfront cash outflows, impacting free cash flow now.

However, they set the stage for stronger, more sustainable cash inflows in the future.

2️⃣ Paying Down Debt

• EBITDA Impact: Debt payments don’t directly affect EBITDA since interest expenses are excluded.

But reducing debt improves financial stability and lowers future costs tied to interest, allowing you to retain more of your operating profits.

• Cash Flow Impact: Paying down debt requires a short-term cash outflow, but it reduces future interest obligations, freeing up cash flow for reinvestment.

It also improves your ability to access capital markets when needed.

3️⃣ Returning Capital to Shareholders

• EBITDA Impact: Dividend payouts or share buybacks have no direct impact on EBITDA because they occur after operating profits.

However, these actions can signal financial health and attract investors, indirectly supporting valuation growth.

• Cash Flow Impact: Returning capital requires cash outflows, reducing free cash flow available for reinvestment.

But if executed strategically, it can improve shareholder value and maintain investor confidence.

4️⃣ Building Cash Reserves

• EBITDA Impact: Retaining cash doesn’t influence EBITDA directly.

However, it provides a buffer that enables smoother operations during economic uncertainty, indirectly protecting profitability.

• Cash Flow Impact: Building cash reserves reduces short-term cash flow availability for other uses.

But it ensures liquidity, enhancing your ability to weather downturns or seize new opportunities.

5️⃣ Acquisitions

• EBITDA Impact: Acquisitions can boost EBITDA by adding new revenue streams and achieving cost synergies.

However, poor integration or overpayment can erode margins, negating the intended benefits.

• Cash Flow Impact: Acquisitions typically require significant upfront cash outflows or financing, impacting cash flow in the short term.

Successful acquisitions, though, generate future cash inflows and create long-term value.

The Bottom Line

Capital allocation isn’t just about dollars and cents.

It’s a strategic lever that balances growth, stability, and long-term financial performance.

The question is: Are you using it effectively?

I've coached hundreds of CEOs on these and many other topics and helped them scale their businesses by 20x. Join my CEO Financial Intelligence Program and accelerate your leadership. The next cohort starts January 29

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3. Why Most CEOs Confuse Accounting with Finance

Accounting is about tracking the past.

Finance is about building the future.

Most leaders get them mixed up because they simply don’t understand their different objectives, roles, and skills.

Meanwhile, the most successful CEOs don’t stop at understanding the accounting numbers—they use them to shape long-term finance strategies.

Here’s how they do it:

1. They focus on cash flow, not just profits.

Profit looks good on paper.

But cash flow keeps the lights on.

Savvy CEOs track operating cash flow, optimize working capital, and control liquidity to fuel growth.

2. They see capital allocation as a growth lever.

Every dollar can grow the business—or waste potential.

The best CEOs make disciplined choices based on ROI, IRR, and NPV to maximize returns and minimize risk.

3. They connect financial strategy with business goals.

Short-term thinking drives short-term results.

Top CEOs ask:

• How will this decision affect cash flow next year?

• How will it impact valuation in 5 years?

They don’t just plan for tomorrow—they build for the next decade.

4. They turn data into action.

A P&L statement won’t drive change on its own.

The best CEOs translate financial insights into simple, clear narratives that inspire teams and align stakeholders.

The Bottom Line:

Accounting keeps score.

Finance drives the game.

If you want to scale your business, you need more than a great CFO—you need financial intelligence of your own.

Want to become the CEO who leads with clarity and confidence? Join my CEO Financial Intelligence Program and learn how to:

• Master the financial metrics that matter

• Allocate capital for sustainable growth

• Control cash flow to drive long-term stability

• Lead with data-driven strategy

POLL TIME

As always, if you have specific suggestions or feedback, simply reply to this email.

Thanks so much for reading.

Oana

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