Bears Business Brief: Why every CEO should know the numbers

Clif Smart

By: Clif Smart

The chief executive officer of any large entity has many roles. As president of the second-largest university in Missouri, my roles include casting a vision for the institution, advocating for and promoting the university to government leaders and other constituencies, fundraising, and interacting with current and prospective students and their families. To serve effectively in these roles, nothing is more important than knowing the numbers of my organization.

Why is knowing the numbers so important to any CEO? Let me suggest three reasons: 1) being conversant in the company’s numbers inspires confidence in leadership; 2) data helps the leader engage in informed planning; and 3) the leader can unite his/her constituency around a shared vision.

First, being fully conversant in data relevant to your organization inspires confidence. In corporate America, the numbers typically revolve around cash flow, profit, stock price, and earnings per share. In the not-for-profit world, the emphasis is usually on good stewardship of funds and programs overseen by the organization. For example, when Missouri State’s governing board meets, much of the agenda involves numbers. They want to know how we will meet the challenges of reduced state funding and how we compare with our peer institutions across the nation. When I meet with prospective students and their families, they want to know what we are doing to keep tuition low — I’m always happy to tell them our tuition has increased at less than the rate of inflation over the last eight years. When I am advocating for additional funding from the state, lawmakers want evidence that we are being good stewards of existing state funds. I need to lead those discussions with clarity and understanding — not simply defer to the chief financial officer who prepared and analyzed the data. If a CEO knows the financials and can lead those discussions, it shows that he/she has the ability to make decisions in these areas and creates confidence among constituencies about the institution’s financial management.

Second, the leader must know the relevant numbers to engage in informed planning for the organization. Decisions such as whether to diversify into a new product line or geographic region depend on understanding the underlying data, financial trends and projections, and the assumptions that underlie the information. Similarly, in my world I have to make decisions about what our optimal enrollment number should be; whether we should start, continue, or end certain programs; and what capital projects we should take on and when. The ability to discuss the specific details of these important subjects with constituents helps me better advocate for more money from the state, solicit donations from alumni, and recruit students to the university.

Finally, knowing the numbers helps the CEO unite the constituency around a shared vision. At Missouri State, we recently spent two years researching and preparing our new five-year strategic plan. As I talked with various groups of students, faculty, staff, business people, and government leaders, it was important for me to convey accurately our current numbers and metrics, and ensure our new plan is based on sound analysis and understanding of the current situation and expected future trends.

Clifton “Clif” M. Smart III has served as the 11th president of Missouri State University since June 27, 2011. Smart is known throughout campus and the state of Missouri for his collaborative leadership and strong relationships with students, faculty and staff. Before his presidency, Smart served as the Missouri State University’s general counsel.

This article appeared in the March 25, 2017 edition of The News-Leader and can be accessed online here.