Beyond Numbers: Business Leadership for CFOs Part 2

Speaker A: Welcome back Everybody, for part two on business leadership for CFOs, let's jump back in. Like, what if the CEO, uh, they're concerned that the CFO is underperforming, right? Like, what would help you assess whether, you know, you've really, you've over promoted what should be a controller or whether you need coaching? Like, how would you assess?

Speaker B: So, so can I flip the question upside down? Because I think it's a great question. What I want to do is, is flip it and say, for the CFOs who are actually listening today, what are the specific things that you can do to prep yourself for that new higher role? Because the CEO is going to look at you and say, gee, are you ready for that higher role? Right? So, so what can you do? What's, what's in your. And, and it's a, it's not hard. It's just that you've got to say, okay, I'm going to do it. Here's some ideas. I think one of the things I would start doing is I would start focusing externally now. Um, you know, um, are you strengthening your, your industry network? Are you, um, um, are you putting you in a position of uh, being say, uh, the leader of a not for profit? And, and, and the reason why I say this is because when you're the CEO, you will not have the time to do that. But perhaps if you're able to do some volunteer leadership of, of a not for profit, whether it's chair of the board or whether it's a, you know, some other role, uh, they'll give you the idea of flexing those kind of muscles and taking a look at the issues from, from that particular perspective. Um, what can you do right now to do more, um, capital markets and fundraising than you do right now? Like what specifically is the CEO doing in that area that perhaps you could stand in, uh, and perhaps take leadership on? Um, can you be, uh, do more PR or more spokesperson role? Okay, this is, you know, there's some things that are highly critical where the CEO must do it, or there's others that you might be able to do it. Can you step in, for example, um, and, or get some more upskilling? You know, there's some very, very, very heavy, uh, upskilling you can do. You know, the Harvard Advanced Management Program, the um, Ivy Executive Program, multi months away from your job. Not everyone can afford to do that kind of thing, but that might be something, uh, that you can do externally. Um, um, coaching is something that's a lot more, um, um, practical in the sense that it doesn't take you away from a lot of time. Um, the second sort of category is really to build internal capabilities. Um, so for example, uh, what can you do to upskill your ability to be ah, an effective uh, presenter, an effective public speaker? What are you doing, uh, to um, um, uh, build your bench underneath you, the, you know, the whole succession planning, making yourself not necessary in your particular role so that you've got a couple of people underneath you that might be somebody who could replace you because that, that can, that, that'll help as well. And by the way, that'll free up some of your time to do some of this other uh, prep work. Um, is there any way that you could ask for uh, or take wider responsibilities within the organization itself? Sometimes asking the CEO if you can take responsibility for something that they maybe are getting bored with or would like to sort of uh, uh, pass off to you. Maybe it's to take some operational responsibilities, um, maybe with respect to a business line or maybe operations or HR technology or whatever it happens to be where you can uh, be more involved. Maybe it's a question of saying okay, what can I do to build stronger board, one to one board relationships. As a cfo, you're already um, presenting the board. You're probably already having a number of conversations, but what does it take to build even stronger conversations? Um, uh, I think that if you're able to do some of these things, you can start to you know, build the experience base, the demonstrated experience base that makes it easier for a CEO to say, well this person is, is actually uh, somebody who I'd be supportive. And it's also because the board, who's going to choose who's the CEO or um, to say, yes, we've seen this person already doing the job or part of the job and therefore we think uh, we think he's capable of it.

Speaker A: You mentioned training, all these fancy uh, courses. Coaching. Um, all the research shows that for the C suite, as we said, it's a lonely job up there and you can't just be, you know, in your echo chamber. The performance is always, always optimized when there are external supports like coaching. Um, so I want to talk about if the CFO is responsible for the budgets and they're setting budgets for uh, highfalutin coaches and training, do they have to sort of manage that conflict of perceived, uh, conflict of interest there or a similar might be, you know, when you work with a client and they're paid on company dollar, is the dynamic different than if it's. They pay for it themselves, maybe it's better, best, better outcomes for them one way or the other.

Speaker B: So this is an interesting question. I remember when I was, uh, I was a, I was a senior VP of American Public Company and the, uh, person who signed my expense reports was my boss, the CEO. And, and uh, it was, it was a very interesting thing. He said to me, randall, I'm the only person in this entire company that signs his own expense reports. And, and I know that most organizations, uh, will actually have the CFO sign the CEO's expense reports, but in, in, in, in this one, uh, that wasn't the case. Uh, so, so it was a very interesting thing. And, and I, you know, subsequently had this conversation. It's, it, it was basically, you know, listen, if you're, if I sign for too much, the board's going to be on my case. And this is not something I want the board to be on my case. At the CFO level, the question of saying, okay, how do you get to the next level and how do you tune yourself up for it is very much a conversation that you have with your boss, the CEO. Uh, the issue is not a conflict of interest. The issue is where does the CEO see the need for your professional development? Right. And, and, and what is the budget that's attached to that? So, so the CEO is probably already spending a chunk of money on executive retreats. You know, Rania, you and I have, have led a whole bunch of them and they've been fantastic in terms of upskilling, not just uh, achieving like a strategic plan or whatever, the, the other kinds of things, but there is training that takes place there. Um, so, so they're already spending money on that. They may also spend some money for, to send the CFO to various conferences and membership, uh, organizations where there's some point professional development on say, technical topics or something else. Um, and we also know that it's part of the, you know, it's a reasonable thing at the executive level that they get a coach to make sure that they're truly, um, um, performing at the highest level possible. And it's not a question of conflict of interest at all. It's really a question of saying, okay, um, this is one of the most, uh, expensive people that we have in our organization. We want to make sure that we're getting every single thing out of them. And if a coach can help make that happen, okay. Most, uh, CEOs are interested in understanding how and why, and it's really up, it's really up to the, uh, it's really up to the uh, the CFO to make the case saying, you know something, by the way, coaching is not that expensive. Okay, uh, but, but it's up to the CFO to say the CEO. This is what uh, I hope coaching will accomplish for me. And this is why I'll also say we've been in the situation where uh, a client will say, you know, uh, I know for me to get the next level, I should, I should get coaching, but I don't want the company to pay for it. I'm just gonna write a check myself. And the reason why is because, um, that way I know the coach is 100%. 100%, 100% just working for me. And everything that happens there is just between the two of us. And so we've had that kind of situation as well. By the way, if the company pays, it's still just between the coach and the client. It doesn't go anywhere else. Uh, uh, but still, um, there's no conflict of interest here as long as the coach is able to make the case as to why, um, and what the outcomes are.

Speaker A: Okay, Ruth, Um. In the tech sector, rapid scaling often involves taking on significant debt, which can lead to boom, bust, layoff cycles, especially in the transition between low and high interest rate environments. How can CFOs play a role in breaking or mitigating these cycles? I'm not a cfo, but often we're closely with them and this is a really tough challenge we face.

Speaker B: Well, I guess part of the question is taking on significant debt. Uh, the question is what's the capital? What's the capital stack? What's the structure that's being put in place? Right. And if you're not able to get uh, equity or convertible debt or some of these other ones and you have to rely just on debt, um, you know, clearly there's a problem. Um, I think one of the things that the CFO can do is it can, can uh, they can manage the cash and the treasury function and the capital requirements. I don't want to say function, if you will, a uh, little bit more proactively than perhaps anyone else in the organization. So for example, if there's a, uh, um, X number of months, Runway, and in six months, you know, you got to go and get some more money. Obviously, uh, the question of uh, when do you want to tighten the screws is going to be a lot. Uh, the earlier the better. Right. Uh, however, if it chokes off growth, that's a problem too. So the question of it, when, when do you go to markets looking for new money? What's the structure of that money? Is it possible, for example, some of the debt, to get that converted into equity, maybe by attaching a warrant or, or changing. Being a little bit more, um, creative with respect to what you offer? Uh, once you're a public company, it changes once again. But certainly with private companies scaling, uh, the question of capital structure and the kind of planning that you can do and what the market will, uh, what the market will, uh, um, bear is, is, is the number, number one thing, I think that there's a boom, bust, layoff cycle. You know, there's no kind of sensitivity analysis with respect to the debt. You know, if, if it's all variable debt, if it's all, uh, floating paper, I mean that's, that's a very expensive paper, okay? And that's a huge amount of risk. Um, I should say that if, uh. Ruth, you or if there's anyone else who's interested, uh, one of our white papers speaks specifically to the question of how do you address the issue of cash flow management, particularly when there might be a, ah, recession and everything. And we're happy to send that to you or to anyone else, just let us know one way or the other. And that's a much deeper exploration on this particular, much particular way. Um. Oh, actually, let me just make to one other thing. Um, I think, um, I think, you know, Ruth, you said that you're not the cfo, but, uh, but, but you, you, you work in this kind of environment. Um, I think that the cfo, what the CFO says, uh, with respect to what's happening is exceptionally important because if the CFO sort of gets on the horn with everybody and says, and sends uh, an email to everybody, uh, we are, we are one month away from closing up shop and we'll probably be doing layoffs. Uh, you'll have the best people leaving immediately and you'll be left with the ones who frankly are of lower value. Right. On the other hand, if you say that all is rosy, this uh, also is not exactly helpful because when all of a sudden, um, uh, the grim reaper comes, uh, you know, everyone's going to be very surprised and how come we didn't hear about it earlier? We could have done something, we're part of the team, etc. Etc. And, and the whole question when, when you, whether it's a capital crunch or a debt rate crunch, you know, what the um, um, what the CFO says and how they do it. And it's, it's a, the CFO is a critical part of the communications uh, loop and in a certain sense, in the same way that everyone hangs on what the CEO says when it comes to when times are tight, everyone also hangs on whatever the CFO says every, every last word. So uh, interesting. And thank you for the question. Ruth.

Speaker A: Yes, great question. Ruth here wrote here. Ah, uh, of course, that makes sense. Thank you. And yes, we'll send you the white paper and anyone else here wants it, happy to share it as well. Okay. To uh, everyone on the call, I'm gonna ask Randall a question and we're all going to see your friendl's eyes light up.

Speaker B: Shoot.

Speaker A: Randall, you've always been a leader and pioneer in marketing and you often see the opportunities, intersectionality of all aspects of business and brand and everybody's roles as it relates to marketing. Um, what is the intersection that you see like between marketing and the cfo? Like should there be collaboration there?

Speaker B: Listen, I said it earlier. Uh, money is the oxygen of business and marketing is, is, is obviously what generates cash beyond financing. Right. Um, here's the, here's the interesting thing that I think most uh, um, um, here's the interesting thing that, that many CFOs understand and some of them actually don't. And it's an interesting bridge. If you're going to do a budgeting exercise and you're going to say well this is the percentage of costs on, on uh, uh, GNH and general and administration overhead etc. And this is the percentage that we're going to spend on, on this and this is a percentage on this and this percentage on that and gee, we'll have more by the way. This is a percentage on marketing and this is the percentage on the sales and ah, and everything. If we're going to spend, if sales go up that means we have more money to spend on, on marketing. Right. Which kind of makes sense because there's more cash, therefore more cash can be sent into this particular line item. Marketing. Right. But what happens when everything's cyclical to a certain extent? Uh, sales are down? Uh, well if sales are down, we have less money. Which means, thank you, marketing. Some CFOs will say time to uh, time to tighten the, tighten the belt here we have less to spend on marketing. You can spend less on marketing, which I think is very counter intuitive because when sales are down a little bit, that's when you've got to lean into marketing to increase sales. Right. And, and, and very often there's A little bit of a uh, of a uh, dispute with respect to how much is available for marketing and sales oriented activities. And um, I think the CFO is right to say we have less money, therefore you can spend less money. And, and the cmo, the Chief Marketing Officer is right by saying the only way we're going to increase uh, sales is if we spend more money on marketing. And, and these are very different perspectives and I think the best ones will say that and say, okay, now let's just roll up our sleeves and figure out what's actually really happening. Because very often the concept of product market fit, the idea of you spend so much money on marketing and then because it's such fit, you know, you'll get a greater return than the investment that you're making. Okay, but what happens if the marketplace changes? Sometimes marketers can become lazy and they don't realize that product market fit isn't exactly a good fit anymore. And therefore the marketing investment they're making, that's why sales have gone down because the fit has changed, the markets change, the environment's change, the, the customers changed. Right. Um, new competitors are in the market and things have got to be changed. Just putting more money digging, uh, faster will not get you out of the whole. So, so an investing more won't, won't either. So, so the CFO by saying, hey listen, you got less money. Sometimes that gets the CMO thinking, uh, maybe I got to look at all these other factors. And then once the, those other factors are addressed or turned around or pivoted or whatever it happens to be, then it becomes a lot easier for the, the CMO to go to the CFO and say we've made these changes. We do now actually need more money to, to, to make this happen. Here's the data that supports it. Which case the CFO has got to say, okay, we're gonna, we're gonna move some of these budget numbers around and we're gonna find money because that makes sense. I've got a case for it now. Right? And this is, this is great collaboration where, where it makes an awful lot of sense. Right? Um, the best, uh, best CFOs are ones that are also uh, CTO, CIOs, CMOs, chief people, officers, chief operate like everything because they've got their fingers in all this. The worst ones are when they think they know it all. And, and, and, and because they've got the fingers and it's the collaboration that makes an executive team actually work really well. Right. And uh, um, yes, I Know a lot, an awful lot about marketing but, but thankfully I think I know some about the pressures of the CFO and certainly the CEO having been in that role too. So it's an interesting uh, it's an interesting uh, question.

Speaker A: So uh, Randall, um, I appreciate your, your thoughts and your answer, but when I came up with this question, what I specifically had in mind was when we see like trends in like marketing of what companies are featuring, whether it's that seg, the governance, uh, equity, you know, society stuff, you know, whether esg, whether we see, you know, look how fun a team we are, look how social we are, look at the events we put on or look, look or we have the cutesy behind the scenes stuff in the office showing the human side of the high powered team. These are all different trends we see. But what I frankly where I see a gap and uh, is we don't see social media posts where it says we have 98% employee retention. That's, that's great for the, I think it looks great. You know, where we Invest x number $100,000 in employee training and we work with clients who do these things, who, numbers and it's something to be very proud of. So maybe I'm just seeing it from my own lens of business growth and employee engagement. But like how many pictures of what a cool party we hosted can I see when I want to know, like are you responsible and professional and treating your employees well? That's what's important.

Speaker B: I, I, I couldn't agree more and thank you for bringing that up. Um, but it, it also, and, and it also sort of tweaks something else for a public company or a very, very large private company. Okay. They do say posts about a lot of those things because they've got the infrastructure to do that kind of communication and they do talk about um, you know, insurance companies for example, they're rated in terms of, of their uh, solvency and their, their ability to, you know, do their, you know, make their numbers etc and, and be safe if you will, in insurance companies. And they've got the right ratios and so, so they do that except for, it's just not really exciting. Right. Uh, public companies, thank you very much, they have to file and they send press releases out sometimes. This is not like a social media, Facebook kind of, uh, kind of thing or on LinkedIn. Um, we see it a little bit more for, for sure. Right. But for the cfo who's, whose core responsibility is, is the fiscal management and planning, uh, for the, for the organization and Making sure that the rest of the management team can also manage based on trusted numbers and everything. Uh, this is something that is very core. All those other things, many CFOs will say, well this is kind of, that's that person's job or this person's job and that's this person's job. And so the question of, okay, where does the cfo, uh, and why doesn't or why shouldn't the CFO also take a strong amount of interest in it? I see the best ones do. And I also say those who are interested in moving into a CEO role, uh, perhaps doing more of that is the kind of thing that will actually be helpful improving to others around you, the board, maybe the existing CEO, that you're actually a viable candidate for that role.

Speaker A: With the time we have left, Randall, I want to talk to you about um, this signal to noise ratio. What advice would you have for CFOs in terms of like understanding that signal to noise ratio and knowing what's important and staying focused?

Speaker B: Yeah. Okay, so I, I think it goes to uh, the basics. You got to be able to do your job, right, but your job has probably changed quite a bit since uh, over the last number of years that you've held it. So what are you doing to make sure that you're on top of all the latest and greatest, not just the technical, you know, ah, ifrs, ah, fill in the blank, etc. Uh, but also with respect to your, your roles as, as a leader, as a model. Excuse me, as, as somebody who might actually be a, ah, successor, ah, for the most senior role. And by the way, if not that, certainly for uh, uh, for other roles and other organizations or um, so I, I, I, I think that you know, make sure that you're taking care of the knitting, right? And then say what do I need to grow? And, and then frankly make a plan to get there. This is not rocket science. If ah, for example, you're not a, uh, um, great, uh, with respect to uh, people, get some coaching. If for example you're, you're not great at uh, um, oh, I don't know, speaking. Okay, get ah, some help there. If for example you want to work on changing the culture of your organization, gee, that's something that you work on too. G. If it's a question of developing more external network, uh, and everything, add that onto your list, right? Have a conversation, build the relationships at the board. All those kinds of things are not beyond most competent CFOs role, uh, and capability. Right. Uh, so that would be my um, number one, um, responsibility. Here's another one. When was the last time, um, uh, an executive retreat or leadership retreat was organized? Right. Well, could it be that you should organize it? Right. And g, um, you can help set the agenda. Right. Um, and, and take off something from this. The CEO. Same thing with respect to all hands meetings. Right. Uh, town halls. Uh, would the CEO be open to you being the primary person who actually speaks and ANSwers the questions, etc. These are all possibilities. You may be surprised that some CEOs don't enjoy doing that kind of thing. And when that's the case, putting uh, up your hand and saying, hey, here's something we might be able to do. I'm happy to run point on it or be the, the primary speaker or whatever it happens to be. Right. But, but to step up so that people can see you doing your job. Um, I'm looking at the time. Rania, can. I've got a couple points that I really wanted.

Speaker A: Absolutely. Randall, send us off with your final thoughts.

Speaker B: So one of the questions I've certainly been asked is, you know, you know. Yes. How do you get the experiences you need to be successful? Okay. But once, uh, I'm in that role, gee, it's impending. What are some of the things that I can do that uh, that can sort of help me be more successful coming into the role? Because if you know that if you're able to set yourself up for success and if you're able to think about it beforehand, you might frankly might uh, make the difference between a successful launch, if you will, as your CEO and also frankly, if you're coming into any role. I think these are, these are great pieces of advice. So I think one of the things that's really important and one of the things that certainly was, it was uh, an eye opener for me the first time I was a CEO was that nobody told me anything. You know, when, when I wasn't the CEO, people would talk all the time. You know, we, I don't want to say we gossip, but we talked, right? We, what's going on with this, what do you think about that, etc. When you're CEO, people sometimes assume that you know everything and that everything comes out of, that's coming out of your mouth is always perfect. Which by the way, it certainly is not. Right. Which is why you've got to be so careful saying, saying things in that role, but making sure that you're almost uh, you know what's happening and what I call this is building redundant intelligent Pathways. Okay. Redundant intelligence pathways, you know. So for example, how do you find out what's happening beyond just what your direct reports the other C suite people are, are actually saying? You know, uh, yeah, of course you're going to have staff one on ones and you'll have the various meetings where you talk about the issues and whatever the goals are and everything like that. Um, but how about one on ones with the frontline? You know what if the, the idea of uh, skip manager meetings where, where uh, the direct reports of your direct reports will meet with you on a particular schedule. Um, uh, skip manager meetings are very common in many organizations. Right. But it should also be at, at your level. Um, how about a um, uh, hands on monthly meeting. Uh, how about the idea of, of using what I call early morning assistance which by the way is one of the ways I actually started my career. Um, I was brought on as the early morning assistant to the vice chair of KPMG and I showed up at his desk at 5:36 and we talked for around two or three hours typically on strategy and business leadership topics. And, and at 9:00 clock I did my job and he didn't is in 9:00pm that was the end of the day. Well forget about the long days, let's focus on the early morning. That was a six month assignment. That's where I learned to be a senior executive. Right. But what happened after that short version is I got placed somewhere in the organization. Well guess what? He'd been doing this for years and he had this network of former early morning assistants who consistently fed him intelligence and he was able to ask questions about what's going on in different parts of the business. And this is, this is a you know, multi billion dollar organization. It was a brilliant idea. But the question is how do you start? And this is a longer term uh, activity. Start building your set of intelligence assets if you will. Another thing is the question of building a cult. A ah, coaching culture rather than being a building a directive one. So if you're doing that you start to also get information that starts to come up. Um, it's, it's very easy to have a authoritative directive culture. Do this and everyone does it. Right. It's a lot harder to do one where you get people to think and take responsibility and you're there to support them and everything. But if you're able to do this now as a cfo, okay. When you're a CEO it becomes an awful lot easier because at least your area has kind of got that culture and it will Seep into other areas. Uh, it's a lot easier and as, as a CEO to have that kind of culture as opposed to one that's just purely directive. Um, building a culture of innovation, I think that's also really important is that way it's not relying just on you as the leader. And you know, how do you build that coaching culture or a culture of innovation? You know, part of it is alignment with the performance appraisal system. Rania, you had asked, you had said something earlier about what's the connection between HR and, and, and, and, and, and the finance, the CFO function.

Speaker A: Right.

Speaker B: And that's the kind of conversation in place, um, executive alignment and modeling. Um, whether this is ah, specifically retreats or how you act as, as the cfo, uh, investments in upskilling to move people up. Okay. Either in, in in particular courses or in uh, I actually have retreats or in coaching and everything, um, town halls, you know, management, um, retreats like all these kinds of things are what build that culture and also showcase you as a leader who can move into that role and also give you the ability to learn, if you will, how to use these management levers, these leadership levers for once you actually get there.

Speaker A: Any other thoughts? Randall?

Speaker B: Just, I, I, I think this is the greatest opportunity. You know, when somebody's thinking gee, how do I move to that next level of my career as a cfo? Um, you know, I think it's just a very exciting time. I spent nine years at kpmg, you know and, and uh, you know there's uh, there's an awful lot that's possible, um, once you sort of uh, start asking yourself.

Speaker A: Well said. Uh, I want to thank everyone who joined us here today. I want to thank Randall for all these insights. Thank you so much for the time and if anything we talked about resonates with you, you're happy. You're welcome to meet with Randall. Meet with me. I can share the link in the chat book a call with us. Hope will see what more of these monthly sessions. Ah, happy to put you on the email list. For those you can email us atinforandall craig.com and look forward to seeing you again and being in Touch on LinkedIn.