In thirty years of board rooms — public boards, private boards, committees I chaired and committees I should have pushed harder in — one pattern shows up almost every time.
Someone on the board asks a question about operations. The operations team answers with an operational number. Finance does not know how to connect it to the P&L. And nobody in the room says so out loud.
Two languages — financial and operational — are rarely spoken by the same person in the same room. That gap is where capital gets misallocated.
Freight cost keeps climbing because nobody has connected the carrier contract decision to the margin. Inventory keeps growing because procurement and finance are measuring different things. Capital gets allocated to the wrong projects because the board heard a utilisation number but could not read it against return on invested capital.
This is not a data problem. The data almost always exists. It is a translation problem.
What the gap actually looks like in practice
I have walked into engagements where the CFO and the VP of Operations were both good at their jobs, both working hard, and genuinely not understanding each other. The CFO was asking about working capital. The VP was answering about throughput. Neither was wrong. They were just measuring different things with different units and nobody had ever built the bridge between them.
The most common version of this I see: a board that receives a monthly operations report and a monthly financial report, and nobody on either team has ever joined the two into a single view. The operations team tracks what they can track. Finance reports what the general ledger shows. The gap between those two documents is where the real story lives.
In one engagement, joining those two data sets surfaced over $200 million in annual loss pathways — duplicate suppliers, unbundled freight, cross-division contracts nobody could see in full. The data existed in both systems. It had just never been read together.
Why this gap persists
Part of it is structural. Finance organizations are built around the general ledger. Operations organizations are built around the system that runs the operation — the ERP, the dispatch platform, the maintenance log. Those systems do not naturally talk to each other, and the people who run them are not trained to make them.
Part of it is incentive. A CFO is measured on the accuracy of the financial statements. A VP of Operations is measured on throughput, utilisation, and cost per unit. Neither is measured on whether those two pictures produce a coherent story for the board.
And part of it, honestly, is that the person who can speak both languages fluently is rare. Most CFOs came up through finance. Most operators came up through operations. The ones who crossed over and learned both are the ones who can close the gap.
What closing the gap is actually worth
The $200 million figure I mentioned was not the result of a complex analytical model. It came from joining three data sets — procurement spend, freight invoices, and inventory receipts — into a single view and asking the question that neither the finance team nor the operations team had thought to ask: where is the same dollar appearing more than once?
The rail car engagement was simpler still. Six months of transaction data. Car location against load schedule. Two systems, both working correctly, never connected. $10 million per year in recoverable utilisation — visible before a single car moved.
In both cases the answer was already in the data. It had been there for years. What was missing was someone who could read financial data and operational data at the same time and ask the right question across both.
What boards should be asking
If you sit on a board, the question worth asking is not whether your CFO is competent and your VP of Operations is competent. They almost certainly are. The question is whether anyone in the room can read both reports together and tell you where the gap is.
If the answer is no, the gap is costing you money. How much depends on the size and complexity of the operation. In my experience, the number is almost always larger than anyone expects — because the gap has been there for years, compounding quietly, and nobody had a reason to look at it until someone asked.
The right next step is not a reorganization or a new system. It is one data export and a fresh set of eyes that can read financial and operational language at the same time. That is what we do.
Arthur Madden is a CPA CMA MBA ICD.D with thirty years in CFO, CEO, and board advisory roles across four continents. He is the founding partner of AJM Solutions Inc., based in Calgary. www.ajmsolutions.ca | amadden@ajmsolutions.ca
Related: Why your board pack is answering the wrong question — the downstream effect of the translation gap on how decisions get made.