Leadership in and through the field of accounting marks the difference between companies that are solid and stable and companies that are unreliable and questionable. Companies whose fiscal foundation is questionable may well jeopardize a start-up’s IPO or acquisition prospects while those companies whose fiscal integrity is solid will command a high price in the market. When the two words leadership and accounting are put together, one might think that’s a dichotomy, but consider it. Who handles the day-to-day functions of revenue and cash management? The Controller. Who leads the way in raising funds, handling equity transactions, safeguarding company assets and dictating internal policies? The CFO. These functional aspects of accounting & finance personnel are critically important to the health and welfare of the organization and the face of the company to prospective investors. However, there is a lot more that a true accounting leader can provide.
In the words of Peter Drucker, “Management is doing things right; leadership is doing the right things”. A common error made by many start-ups is to skimp on the newly budding company’s accounting workforce (which is usually one or two people). Poor fiscal management in the early stages can have two potential results. The company struggles and eventually goes out of business by making poor financial decisions or being unable to gain traction from a void in securing adequate venture capital. Conversely, the company succeeds and then enters crisis mode spending multiple times the amount of money backfilling what they had failed to do correctly the first time.
A leader does the right things. An accounting leader helps guide the CEO and/or the Board to make fiscally sound strategic decisions. These decisions, once made, are like a pebble thrown in a clear pond: they will reverberate for months and years to come. It is therefore judicious to have a solid accountant on board at the outset of the company. Strategic decisions cannot be made without financial knowledge.
While the first aspect of leading through accounting is with wisdom and insight, usually peppered with many years of experience, the second is of service. Dwight Eisenhower stated, ”You do not lead by hitting people over the head - that's assault, not leadership.” Jim Collins and his landmark book Good to Great discovered the most surprising principle that marked astoundingly successful companies: The leaders of the companies were actually servants. Collins defines this leader as a Level 5 Executive – one who "builds enduring greatness through a paradoxical blend of personal humility and professional will". He uses words such as modest, willful, humble, gracious, mild-mannered, understanding and fearless to define this leader. Successful leaders treat others well with humility and grace and serve the ‘lowest’ person in the company. That is a rare element that virtually does not exist in most businesses today. It is this type of leadership through accounting that will build the next generation of successful companies in Silicon Valley and beyond.