The Strategic Governance Divide: Why the CFO Has Two Jobs

Executive summary

Across the Fortune 500, strategy is still governed as if the world moved at the speed of the annual plan.

Analysis of 30 companies from the top 100 of the Fortune 500 across financial services, technology, retail, energy, healthcare, automotive and consumer goods shows a striking pattern: around 85% follow the same annual rhythm for strategic announcements — Q4 planning, a January–February "big reveal", and then ten months of commentary against that story.¹ No company in that sample had operationalised a genuinely continuous strategic‑intelligence system between these episodic rituals.¹

This paper argues that the resulting strategic governance divide — between how strategy is created and how it is governed — is now one of the largest unmanaged risks in large organisations, and that the executive who must bridge it is the Chief Financial Officer.³ ⁴

We make four core claims:

1. Strategy is conducted episodically; competition is continuous. The Fortune 500 evidence shows highly ritualised strategic communication patterns, but no equivalent discipline for continuously testing the logic of strategy between those set pieces.¹

2. The CFO is structurally the natural owner of strategy governance. The CEO and (where it exists) the Chief Strategy Officer (CSO) lead strategy creation. The CFO sits at the intersection of capital allocation, risk, performance, and investor communication — the levers through which strategy is governed.³ ⁴

3. The CFO's governance role must shift emphasis across the strategy journey. From question‑holder and assumption‑challenger in formulation, to visibility‑enabler and resource‑system steward in implementation, to protector of renewal capacity in regeneration.³ ¹⁰

4. To govern strategy credibly, the CFO must distinguish three different forms of "intelligence". Strategy intelligence (the machinery of governance), strategic intelligence (external sensing and scenarios), and organisation‑wide intelligence (the enterprise's learning and adaptation capacity). Confusing them creates blind spots.³ ¹⁰

The conclusion is blunt: if roughly three‑quarters of the largest companies have no dedicated CSO on the top team, the CFO's strategy governance role is not optional — by default, it is the only game in town.⁵

1. The annual ritual – and what's missing

1.1 How large companies actually communicate strategy

Public evidence from investor calendars, earnings transcripts, investor days and corporate plan updates reveals a near‑universal pattern.¹ ²

• Q4 planning. Inside the firm, October–November is when business units submit plans, the centre arbitrates, and capital and budgets are effectively locked down for the next year.¹

• Q1 strategic "reveal". For US‑listed companies, January–February Q4 earnings season becomes the main stage for strategy. Annual results, forward guidance and "strategic priorities for the year ahead" are all bundled together.¹

• The rest of the year as commentary. Subsequent quarterly results calls largely function as a commentary track against that January narrative: explaining variance, updating guidance, and reporting progress on already‑announced initiatives.¹

Different sectors decorate this pattern differently:

• Banks add spring investor days (often May–June) to reinforce the story once Q1 numbers are in.²

• Energy companies issue November–December Corporate Plan Updates with multi‑year capital allocation and volume guidance.²

• Retailers hold April strategy / investor days once the holiday season is visible in the numbers.¹

• Healthcare companies lean on December investor conferences and the January JP Morgan healthcare conference as major strategic stages.¹

The dates shift, but the underlying habit is the same: strategy has a season.¹

1.2 The continuous strategy gap

The negative finding is more important than the positive one: in this Fortune 500 sample, there was no evidence of a governed, continuous strategic‑intelligence system between these rituals.¹

Every company had:

• Quarterly earnings calls;

• Occasional investor days;

• Annual shareholder meetings;

• Ad‑hoc announcements for M&A, restructurings or CEO changes.¹

But between those set pieces, boards and CFOs mainly saw execution reports — P&L, balance sheet, KPIs — not a live view of whether the strategic logic itself was still valid.¹

In other words:

Strategy is conducted annually; competition, technology and risk are continuous.

That gap between continuous reality and episodic governance is what we call the strategic governance divide.

2. Defining the strategic governance divide

On one side of the divide sits strategy creation:

• The CEO and, where it exists, the CSO.

• Imagining futures, designing business models, choosing where to play.

• Setting technology, data and ecosystem direction.

• Telling a coherent story to investors, employees and partners.

This is imaginative work: outward‑facing, future‑oriented, narrative‑driven, and inherently political.³

On the other side sits strategy governance, which naturally falls into the CFO's remit:

• Governing how strategic choices are made, tested, funded and renewed.

• Ensuring assumptions are explicit, scenarios are explored, and capital is aligned with declared priorities.

• Providing the board with a clear view of risk, optionality and renewal capacity.⁴

A simple division of labour captures the logic:

• The CEO proposes and designs.

• The CFO tests, challenges, and governs.

• The board adjudicates.³

Where that structural separation is explicit, the tension is productive. CEOs can be bold; CFOs can be demanding; boards can see the trade‑offs.³ ⁴

Where it is not:

• CEOs are expected to both imagine bold futures and stress‑test every assumption — a recipe for either paralysis or unchallenged optimism.

• CFOs are told "strategy is the CEO's domain", and withdraw from governance beyond the numbers.

• Boards receive precise financial reporting on strategically incoherent portfolios.² ⁹

The result is familiar: multi‑billion‑dollar write‑downs and "strategic resets" that, in hindsight, were predictable if someone had systematically governed the strategic logic rather than only the financial outcomes.² ⁹

3. How the CFO's role must shift along the journey

The CFO's strategy‑governance role is not static. It changes emphasis as the organisation moves through three broad phases: formulation, implementation, and regeneration.³ ¹⁰

3.1 Formulation – question‑holder and assumption‑challenger

In formulation, the central question is: "What do we want this company to become?"

The CEO and strategy team are exploring futures, testing ideas with customers and markets, and designing options. The CFO's governance stance should be as question‑holder and assumption‑challenger, not shadow strategist:

Key questions:

• Are we exploring a wide enough range of futures, or have we anchored prematurely on one emotionally appealing narrative?

• Do we have genuine downside and stress scenarios, or just a base case with minor sensitivities?

• What are the small number of critical assumptions that make this strategy work — and how would we know early if they are wrong?

• Are we committing major capital after this reframing work is done, or allowing restructuring to start before the thinking is finished?

The primary governance risk in formulation is premature closure: committing to restructurings, acquisitions or divestments before the intellectual work is complete. When that happens, organisations "optimise" themselves into thinner versions of the same business, then find themselves back in crisis 18–24 months later.

The CFO's responsibility is to ensure the board sees evidence that reframing has been done with adequate rigour before large, irreversible commitments are made.³ ⁴

3.2 Implementation – visibility‑enabler and resource‑system steward

Once strategy moves into implementation — reallocating capital, pruning non‑core businesses, building new capabilities — the CFO's emphasis shifts.

Now the role is visibility‑enabler and resource‑system steward:

Governance questions here include:

• Is capital allocation actually aligned with what we said we would do?

• How much is being spent to sustain the current business, how much to strengthen it, and how much to disrupt and seed future growth?

• Where is the boundary where restructuring hands off to revitalisation — and is that boundary visible and honoured?

If reframing was weak, implementation exposes it. You see repeated cost‑out waves and portfolio pruning, but little genuine renewal. Margins improve temporarily, then the underlying competitive position erodes and another "transformation" is announced.² ¹⁰

As more of the resource base becomes computational — data platforms, AI models, automation, cloud infrastructure — the CFO must also govern resource agility:

• Can these assets be repurposed if the strategy changes?

• How hard is it to switch architectures, vendors or ecosystems?

• Are we building firm‑specific human–machine systems, or just buying the same tools as everyone else?¹⁰

In implementation, the CFO's job is to give the board clear sight of resource flows and optionality so that they can see whether the declared strategy is truly being resourced — and how locked‑in those choices are.³ ¹⁰

3.3 Regeneration – protector of renewal capacity

Regeneration is not a destination; it is an operating mode in which the organisation:

• Continuously senses and reframes;

• Periodically restructures from strength, not panic;

• Constantly revitalises core businesses;

• Deliberately builds the next wave of businesses and capabilities.¹⁰

The CFO's governance emphasis in regeneration is to act as protector of renewal capacity.

Questions in this mode:

• Do we have a visible "green shoots" portfolio — experiments, adjacencies, deliberate self‑disruptions — with protected funding and stage‑gate criteria?

• Is that portfolio expanding, stable, or quietly shrinking whenever earnings pressure rises?

• Are the assumptions behind major bets being tracked and revisited routinely, or only after something breaks?

• When we say we are "transforming" or "regenerating", do capital flows and incentive structures actually support that claim?

A simple test applies:

If most capital continues to flow into sustaining the core and "green shoots" are starved whenever things get tight, the company is not regenerating. It is doing episodic restructuring with better branding.

In regeneration, the CFO's task is to make sure the numbers and the narrative match, and to surface any divergence to the board.¹⁰

4. Three kinds of intelligence the CFO must govern

To take this governance role seriously, the CFO needs a more precise vocabulary for "intelligence". In practice, organisations rely on three distinct forms:

1. Strategy intelligence – the inward‑facing machinery of governance.

2. Strategic intelligence – the outward‑facing sensing of the external environment.

3. Organisation‑wide intelligence – the whole‑of‑enterprise learning and adaptation capacity.³ ¹⁰

Treating these as interchangeable is a major source of governance failure.

4.1 Strategy intelligence – the machinery of governance

Strategy intelligence is inward‑looking and process‑oriented. It is about the quality and discipline of the strategy process itself.³

This includes:

• Capital allocation by strategic intent (sustain / strengthen / disrupt).

• Portfolio management, prioritisation and exit logic.

• Scenario modelling and financial stress‑testing.

• Assumption tracking — documenting the beliefs in place when decisions were made.

• Decision‑gate design and enforcement (what must be true before we move from pilot to scale).

• Resource‑deployment mapping — who and what is tied up where.³

Strategy intelligence answers: "Is our strategy process functioning with appropriate rigour, and are our choices being governed?"

Most large organisations already have elements of this machinery: formal planning calendars, capital committees, risk reports, board packs. The problem is that they are usually:

• Tied to the annual ritual; and

• Focused on execution and budget variance, not on whether the underlying strategic logic remains sound.¹ ³

The CFO's task is to upgrade strategy intelligence from annual to continuous, and to extend it from money and milestones into assumptions and options.³ ⁴

4.2 Strategic intelligence – sensing the outside world

Strategic intelligence is outward‑looking and future‑oriented. It is the organisation's ability to sense, interpret and respond to what is changing in markets, technology, regulation, geopolitics and society.² ¹⁰

It involves:

• Horizon scanning and trend analysis.

• Competitive and ecosystem intelligence.

• Regulatory and policy monitoring.

• Scenario design and war‑gaming.

• Stakeholder and societal foresight.¹⁰

These capabilities typically sit in strategy teams, corporate development, risk, government affairs and specialist insight units. In many companies they are strong in pockets, but poorly connected to financial governance.¹⁰

The CFO's responsibility is not to own strategic intelligence, but to ensure that:

• It feeds into capital allocation, risk reporting and board materials.

• It is converted into explicit assumptions and scenarios.

• It is monitored over time, with clear triggers for re‑examining major commitments.¹⁰

Without this link, the organisation can be very well informed in theory but strategically blind in practice: insights sitting in slide decks, disconnected from the decisions that move billions.² ¹⁰

4.3 Organisation‑wide intelligence – the nervous system

Organisation‑wide intelligence is neither a function nor a tool; it is a property of the enterprise.

It is the collective capacity to:

• Integrate signals from different parts of the organisation into coherent action.

• Allow local units to respond to emerging conditions without losing strategic alignment.

• Learn from experience and embed that learning into standard practice.

• Change direction without losing coherence and purpose.³ ¹⁰

In the Fortune 500 evidence base, there are few examples of this being intentionally governed. Innovation portfolios exist, but are often opaque and fragile. Lessons are learned locally, but not systematically shared. Local sensing is strong, but does not roll up into an enterprise‑level view.¹ ¹⁰

For CFOs, the implication is that they must not only:

• Govern the machinery of strategy (strategy intelligence); and

• Ensure sensing reaches governance (strategic intelligence);

They must also sponsor the organisational‑learning systems — incentives, metrics, data architectures — that make the whole enterprise more intelligent over time.³ ¹⁰

5. CFOs, CSOs and the emerging governance patterns

How does all this play out in real C‑suite structures?

Recent surveys and role announcements point to three broad patterns.⁵ ⁸

1. No CSO; CFO + CEO carry strategy.

A large share of Fortune 500 companies still have no named Chief Strategy Officer in the top team; strategy is embedded in the CEO, CFO and business‑unit leaders.⁵ In these firms, the CFO is usually the only executive with both the analytical capability and the board mandate to challenge strategic assumptions. Unless the CFO consciously steps into that role, the "institutionalised dialectic" between creation and governance collapses.³ ⁵

2. CSO leads formulation; CFO governs capital and renewal.

Where a CSO exists, the question is not "who owns strategy?" but "who owns rigour and renewal?" In practice, the CSO leads formulation; the CFO still owns the capital allocation, risk and renewal discipline that make strategy credible. General Motors' recent appointment of a Deputy CFO & Vice President for Strategy, Corporate Development and Technology Partnerships — reporting to both the CEO (for strategy) and CFO (for capital and ventures) — makes this dual structure explicit.⁶ ⁷

3. Dual‑hatted strategy roles.

An emerging pattern is the creation of combined roles (e.g., Chief Strategy and Transformation Officer, Chief Strategy and Growth Officer) that connect formulation with transformation execution. These roles work best when they are architected as a bridge between CEO and CFO: strategic narrative on one side, governance and capital deployment on the other.⁵ ⁹

All three patterns reinforce the central thesis: "In a world where many large companies have no dedicated CSO, the CFO's strategy‑governance role is not optional. It is structurally central to whether strategy is disciplined, credible and renewable.³ ⁵

Professional bodies and regulators are converging on this view. The Institute of Chartered Accountants in England and Wales, for example, describes the CFO as "leader, adjudicator, orchestrator and implementor of strategy", emphasising that "a CFO who does not take a lead on strategy is not really a CFO".³ Securities regulators, including ASIC, increasingly frame the CFO's responsibilities in terms that include not only numbers, but the governance systems that protect and enhance shareholder wealth.⁴

6. Implications and next steps for CFOs

For CFOs who recognise themselves in this analysis, three practical moves stand out.

6.1 Make the role explicit

First, name the strategic governance divide inside your organisation.

• Explicitly distinguish strategy creation from strategy governance in board and executive discussions.

• Position governance of assumptions, scenarios, capital alignment and renewal capacity as core to the CFO mandate, not an informal add‑on.³ ⁴

Clarity about roles is the first step to closing gaps.

6.2 Build continuous strategy intelligence

Second, upgrade the machinery:

• Move from annual, budget‑centric planning to a model that surfaces and tracks critical assumptions and options.

• Introduce a light‑weight, recurring strategic‑assumptions review (monthly or quarterly) that sits alongside, but separate from, standard performance reviews.

• Integrate strategic‑intelligence outputs into board materials, with explicit links to capital allocation and risk.³ ¹⁰

The aim is not to abolish the annual ritual — investors will still expect January guidance — but to ensure that strategy logic is continuously governed rather than only revisited once a year.¹ ²

6.3 Protect renewal capacity

Third, institutionalise regeneration:

• Establish a visible, governed "green‑shoots" portfolio with defined stage‑gates and protected funding thresholds.

• Track how that portfolio behaves under earnings pressure; make shrinkage or raids on renewal capital visible to the board.

• Ensure incentives and KPIs reward not only cost control and quarterly performance, but also learning, experimentation and strategic option value.¹⁰

Over time, this shifts the organisation from viewing "transformation" as a one‑off programme toward seeing regeneration as a normal operating condition.¹⁰

Conclusion

The evidence from large corporates is clear: strategy is still largely anchored to the rhythms of the annual plan and the investor‑relations calendar, while the environment demands continuous sensing, learning and adaptation.¹ ²

Bridging that mismatch is not a theoretical exercise. It is the essence of modern strategy governance, and it sits squarely on the CFO's desk.³ ⁴

By making the strategic governance divide explicit, shifting governance posture across formulation, implementation and regeneration, and distinguishing between strategy intelligence, strategic intelligence and organisation‑wide intelligence, CFOs can move from being guardians of the annual ritual to architects of continuous strategic integrity.³ ¹⁰

For boards, investors and regulators, that shift may be one of the most important developments in corporate governance over the next decade.² ⁸

Footnotes

1. Spencer Stuart (2025), "Fortune 500 C‑Suite Snapshot 2024: Profiles in Functional Leadership," Spencer Stuart Research & Insight.

2. Fortune (2024), "How CFO turnover may impact company strategy in 2025," Fortune, 26 December 2024.

3. Chartered Accountants Worldwide / ICAEW (2021), "The many strategic roles of the CFO," ICAEW / Chartered Accountants Worldwide.

4. Australian Securities and Investments Commission (ASIC) (2013), "The role of the CFO in corporate governance," speech to the Financial Executives Institute, 13 May 2013.

5. Deloitte (2024), "2024 Chief Strategy Officer (CSO) Survey," Deloitte Insights.

6. General Motors (2026), "Claudia Gast joins General Motors," GM Newsroom, 8 February 2026.

7. Detroit Free Press and related outlets (2026), "New GM exec Claudia Gast to report to CEO, CFO," 9 February 2026.

8. Russell Reynolds Associates (2026), "Global CEO Turnover Index," January 2026.

9. Fortune (2025), "Where does the CFO path lead? New data shows 34% became president/CEO in 2024," Fortune, 18 February 2025.

10. Grant Thornton Australia (2025), "Transitioning with purpose: the CFO's role in a shifting market," Grant Thornton insight blog, 10 July 2025.