How the Best Finance Leaders Operate, Plan, and Forecast, with Christina Ross

00:00:04 --> 00:00:06 Welcome back to the Diary of a CFO podcast, the
00:00:06 --> 00:00:09 podcast where finance leaders share the lessons,
00:00:09 --> 00:00:11 challenges, and wins that shape their careers
00:00:11 --> 00:00:14 as well as their organizations. I'm your host,
00:00:14 --> 00:00:16 Wassia Kamon, and today I'm so delighted to
00:00:16 --> 00:00:19 have with me Christina Ross. She's a serial CFO
00:00:19 --> 00:00:23 turned founder and CEO of Cube, a no -code FB
00:00:23 --> 00:00:25 and a platform for modern finance teams. Christina
00:00:25 --> 00:00:29 is a two decade finance veteran from startup
00:00:29 --> 00:00:32 to public companies and a former finance transformation
00:00:32 --> 00:00:35 leader at Deloitte Consulting, managing large
00:00:35 --> 00:00:37 scale technology projects for the office of the
00:00:37 --> 00:00:40 CFO. After growing frustrated with the manual
00:00:40 --> 00:00:43 nature of FB &A, we've all been there, and after
00:00:43 --> 00:00:45 an implementation of a leading solution gone
00:00:45 --> 00:00:48 wrong, Christina set out to build the next generation
00:00:48 --> 00:00:52 of FB &A technology, and she founded Cube in
00:00:52 --> 00:00:56 2018. Welcome to the show, Christina. Thank you.
00:00:56 --> 00:00:59 I'm so excited to be here. Thank you. I'm very
00:00:59 --> 00:01:02 impressed because, one, we've been so frustrated
00:01:02 --> 00:01:05 with how manual FP &E is, but you did something
00:01:05 --> 00:01:08 about it. So very curious to hear about your
00:01:08 --> 00:01:11 career journey, what drew you into finance in
00:01:11 --> 00:01:13 the first place, and did you have a picture yourself
00:01:13 --> 00:01:18 as a CFO or a CEO? Thank you and great question.
00:01:18 --> 00:01:21 I definitely started out my finance career not
00:01:21 --> 00:01:23 thinking I wanted to be in finance I knew that
00:01:23 --> 00:01:26 I wanted to be in the world of business So when
00:01:26 --> 00:01:29 I went to school, I was a business major. I was
00:01:29 --> 00:01:31 in I studied operations management, which is
00:01:31 --> 00:01:35 like a mix between industrial engineering and
00:01:35 --> 00:01:38 the real world, and think about process, supply
00:01:38 --> 00:01:40 chain, all of those things. I love seeing how
00:01:40 --> 00:01:43 things work, and this is really nerding out.
00:01:43 --> 00:01:45 I was a member of the American Production Inventory
00:01:45 --> 00:01:48 Control Society, so that gives you a sense of
00:01:48 --> 00:01:50 how much I loved manufacturing in that entire
00:01:50 --> 00:01:53 space. Really, I wanted to understand the world
00:01:53 --> 00:01:55 of business and to understand business, you have
00:01:55 --> 00:01:58 to understand the numbers. And the reality was
00:01:58 --> 00:02:01 not everyone speaks the numbers. And that's still
00:02:01 --> 00:02:03 a challenge for finance leaders today is how
00:02:03 --> 00:02:06 do we translate this language that we speak to
00:02:06 --> 00:02:09 others who don't speak it. So I felt that if
00:02:09 --> 00:02:11 I ever wanted to be in business, work for a business,
00:02:11 --> 00:02:13 run my own business one day, I had to become
00:02:13 --> 00:02:16 an expert in the numbers. And more importantly,
00:02:16 --> 00:02:18 I had to learn how to speak this. very specific
00:02:18 --> 00:02:21 language. So that's how I got into finance to
00:02:21 --> 00:02:24 begin with. And I started out in the early 2000s,
00:02:24 --> 00:02:26 back when GE was considered, you know, the Google
00:02:26 --> 00:02:30 or Amazon or Apple of its time. Yes, those those
00:02:30 --> 00:02:32 were that was a long time ago now, but I joined
00:02:32 --> 00:02:35 working in their finance team and moved around
00:02:35 --> 00:02:37 the world in different types of finance roles.
00:02:37 --> 00:02:39 So I got to see it from a number of different
00:02:39 --> 00:02:41 angles, see where it was different in different
00:02:41 --> 00:02:43 industries and different types of businesses
00:02:43 --> 00:02:45 and where it was similar. And it was a really,
00:02:45 --> 00:02:47 really awesome work for someone in their early
00:02:47 --> 00:02:49 20s. You get to travel the world to work a million
00:02:49 --> 00:02:52 hours a week, which in those days just, you know,
00:02:52 --> 00:02:55 was something that helped me to learn a lot faster.
00:02:55 --> 00:02:57 And then I moved over to Deloitte consulting
00:02:57 --> 00:03:00 and did finance transformation work. And that's
00:03:00 --> 00:03:03 a very fancy way of saying we, we supported these
00:03:03 --> 00:03:06 large scale system implementations, which if
00:03:06 --> 00:03:08 you've ever been through these, especially at
00:03:08 --> 00:03:10 enterprise companies, you know, it's not just
00:03:10 --> 00:03:13 about the software. It's really about. Just like
00:03:13 --> 00:03:15 everything in this world, it's all about the
00:03:15 --> 00:03:18 people. And so it's about training. It's about
00:03:18 --> 00:03:21 mapping out how people use software. What are
00:03:21 --> 00:03:23 the jobs to be done? How do you trace this across
00:03:23 --> 00:03:26 different teams and geographies and regions and
00:03:26 --> 00:03:28 help do these large scale rollouts and deployments?
00:03:29 --> 00:03:30 So I did that with Deloitte for about three and
00:03:30 --> 00:03:33 a half years. And then I was ready to run my
00:03:33 --> 00:03:36 own finance team. And I got lucky quite a few
00:03:36 --> 00:03:39 times. I joined some amazing companies, two out
00:03:39 --> 00:03:41 of three of which went public. And I joined them
00:03:41 --> 00:03:44 in the very early days. So the first one was
00:03:44 --> 00:03:47 this little 50 person company that I joined called
00:03:47 --> 00:03:49 Rent the Runway. And of course, it's now a public
00:03:49 --> 00:03:51 company and it's been around for quite a few
00:03:51 --> 00:03:54 years. For all of the listeners wondering, yes,
00:03:54 --> 00:03:56 I did get free clothes to wear and borrow was
00:03:56 --> 00:03:59 definitely one of the perks of the job. But I
00:03:59 --> 00:04:01 learned the world of early stage finance at the
00:04:01 --> 00:04:04 time. So I went from very large scale enterprise
00:04:04 --> 00:04:07 to as early as it comes and understanding how
00:04:07 --> 00:04:10 to fundraise and You know, I tell a lot of stories
00:04:10 --> 00:04:12 from these days around how it wasn't my job to
00:04:12 --> 00:04:14 just roll up the numbers. I had to buy the soap
00:04:14 --> 00:04:17 as well for the bathroom. After Rent the Runway,
00:04:17 --> 00:04:19 I went to this company called Criteo. Also again,
00:04:19 --> 00:04:22 a publicly traded company. I was there for about
00:04:22 --> 00:04:25 two years where I met my husband, which is exactly
00:04:25 --> 00:04:27 why I left the company. Definitely don't want
00:04:27 --> 00:04:30 to work around your spouse for too long. And
00:04:30 --> 00:04:32 then joined another company called iView. We
00:04:32 --> 00:04:35 got to see another 10x growth journey. And then
00:04:35 --> 00:04:37 It was there, and this is probably the more interesting
00:04:37 --> 00:04:42 part of the story, where I became frustrated
00:04:42 --> 00:04:44 with what I think so much of the market and so
00:04:44 --> 00:04:46 much of the finance world is still challenged
00:04:46 --> 00:04:49 by today. And that is the following. We live
00:04:49 --> 00:04:53 in a world of really bad options, or at least
00:04:53 --> 00:04:55 we did when it comes to financial planning and
00:04:55 --> 00:04:58 analysis. And those two bad options really are,
00:04:58 --> 00:04:59 you could stick with your spreadsheets forever.
00:05:00 --> 00:05:02 And there's lots to be frustrated about. They
00:05:02 --> 00:05:05 don't scale. They're not databases. They have
00:05:05 --> 00:05:08 limited collaboration functionality, especially
00:05:08 --> 00:05:11 with Excel, which most finance professionals
00:05:11 --> 00:05:13 find superior to Google Sheets except for the
00:05:13 --> 00:05:15 collaboration functionality. There's so much
00:05:15 --> 00:05:17 to love there, but so much that doesn't work.
00:05:18 --> 00:05:20 It doesn't scale. And then on the other hand,
00:05:20 --> 00:05:22 you have, I would call it traditional legacy
00:05:22 --> 00:05:25 platforms or point solutions that sit in the
00:05:25 --> 00:05:28 second category, which is really like very scalable
00:05:28 --> 00:05:32 technology, but very difficult to use, very difficult
00:05:32 --> 00:05:35 to learn and to adopt and to implement. And really
00:05:35 --> 00:05:37 you're replacing your spreadsheet. So on the
00:05:37 --> 00:05:39 one hand, you have what you know and what you
00:05:39 --> 00:05:42 understand and what you've effectively built
00:05:42 --> 00:05:44 a language on top of Excel and spreadsheets are
00:05:44 --> 00:05:46 the lingua franca of finance. But then on the
00:05:46 --> 00:05:49 other hand, you finally get the power and scalability,
00:05:49 --> 00:05:51 but you have to relearn effectively how to do
00:05:51 --> 00:05:55 FP &A. So harking back to those days. in doing
00:05:55 --> 00:05:57 finance transformation. It's not just about the
00:05:57 --> 00:06:01 software. You have to change how you run your
00:06:01 --> 00:06:03 operations, what people are using the software,
00:06:04 --> 00:06:07 how they use it, et cetera. So these tale of
00:06:07 --> 00:06:10 two bad options basically left me in a very difficult
00:06:10 --> 00:06:13 situation where I finally decided to go for option
00:06:13 --> 00:06:16 number two. I was a technical person. I implemented
00:06:16 --> 00:06:18 a leading solution. They told me it'd be six
00:06:18 --> 00:06:21 weeks. Six months later, I was still mid implementation.
00:06:22 --> 00:06:24 and realizing that I couldn't get my numbers
00:06:24 --> 00:06:27 out. And my team didn't want to use the platform
00:06:27 --> 00:06:29 and they wanted to go back to Excel. And they
00:06:29 --> 00:06:31 built a backup model in Excel, which again defeats
00:06:31 --> 00:06:34 the purpose. And my board and my leadership team
00:06:34 --> 00:06:36 told me, quote, I'm not logging into that thing,
00:06:37 --> 00:06:39 but you can spread, send me a spreadsheet. And
00:06:39 --> 00:06:42 I realized very quickly that spreadsheets aren't
00:06:42 --> 00:06:45 going anywhere. And so why fight it? And instead
00:06:45 --> 00:06:47 developed the first fully spreadsheet native
00:06:47 --> 00:06:50 FPNA platform. And what that means is we built
00:06:50 --> 00:06:54 an entire backend that connects seamlessly to
00:06:54 --> 00:06:58 everywhere you work. Because it's really, FP
00:06:58 --> 00:07:01 &A is not just about financial planning and analysis.
00:07:01 --> 00:07:04 It's about harnessing the collective intelligence
00:07:04 --> 00:07:07 of the organization. So that means, can you capture
00:07:07 --> 00:07:09 it? It lives in people's heads. It doesn't live
00:07:09 --> 00:07:11 in a source system. That's the crazy thing about
00:07:11 --> 00:07:14 planning. It really does become your system of
00:07:14 --> 00:07:16 record. So you have to capture that information
00:07:16 --> 00:07:18 and you also have to share it back with people.
00:07:18 --> 00:07:20 And so the best way to do it is where people
00:07:20 --> 00:07:23 work. And so Cube has this really integrated,
00:07:24 --> 00:07:27 powerful data engine, calculation engine, but
00:07:27 --> 00:07:29 it connects to all the different areas where
00:07:29 --> 00:07:32 you work. So that's Excel, that's Google Sheets.
00:07:32 --> 00:07:35 That's Slack, that's Teams, and then coming soon,
00:07:35 --> 00:07:38 of course, is PowerPoint and slides. So all the
00:07:38 --> 00:07:40 ways people work. So that's a little bit about
00:07:40 --> 00:07:42 me, how I got my start and why I'm so passionate
00:07:42 --> 00:07:45 about FPNA and why I'm so passionate about finance
00:07:45 --> 00:07:47 and about how making it a better, how we'd love
00:07:47 --> 00:07:49 to make it a better place, not just for finance
00:07:49 --> 00:07:52 professionals, but for all of their organizations.
00:07:52 --> 00:07:56 That is so empowering and inspiring too, because
00:07:56 --> 00:07:59 you saw something was broken, actually did not
00:07:59 --> 00:08:03 exist. and you turn into something to where it
00:08:03 --> 00:08:06 is today. So what would you say helped you in
00:08:06 --> 00:08:09 that transition, right? Because there's something
00:08:09 --> 00:08:11 to see something and you wanna change it, but
00:08:11 --> 00:08:13 actually doing something about is quite different.
00:08:14 --> 00:08:16 So what would you say are some of the things
00:08:16 --> 00:08:18 that helped you, especially coming from, I think
00:08:18 --> 00:08:21 you were CFO and then you went into being a founder.
00:08:22 --> 00:08:23 Well, I think the best thing I'm gonna talk a
00:08:23 --> 00:08:26 lot about people in this session is my village
00:08:26 --> 00:08:29 of... Folks who I know who are in finance to
00:08:29 --> 00:08:32 validate the idea because it's one thing to have
00:08:32 --> 00:08:34 an idea It's another thing to start taking action
00:08:34 --> 00:08:37 on it So I'm sure for listeners out there who
00:08:37 --> 00:08:40 have a really great idea who are inspired by
00:08:40 --> 00:08:42 something and want to start a company I'll tell
00:08:42 --> 00:08:44 you I spoke to endless number of people who said
00:08:44 --> 00:08:47 I have this idea and I really want to do something
00:08:47 --> 00:08:50 about it and Only so many people my network who
00:08:50 --> 00:08:52 actually went and started a company and the reason
00:08:52 --> 00:08:54 I share this is because it's it's really not
00:08:54 --> 00:08:57 that hard to take the next leap, but it does
00:08:57 --> 00:09:00 take a lot of blind faith and a huge amount of
00:09:00 --> 00:09:03 risk. So I'll tell you, my first step was realizing
00:09:03 --> 00:09:05 that this was something that I wanted in my life.
00:09:06 --> 00:09:08 So it's not just about the idea. So many of us
00:09:08 --> 00:09:10 have so many brilliant ideas that we want to
00:09:10 --> 00:09:13 take action on. For me, it was really a personal
00:09:13 --> 00:09:17 decision of am I willing to take the risks that
00:09:17 --> 00:09:19 go along with starting a company, which really
00:09:19 --> 00:09:21 means taking your income down to zero. So if
00:09:21 --> 00:09:23 you're working in finance today and you're and
00:09:23 --> 00:09:26 you're employed, like that means that you're
00:09:26 --> 00:09:28 going to go intentionally to zero. And maybe
00:09:28 --> 00:09:30 if you're not employed, now is a great time to
00:09:30 --> 00:09:33 start thinking about what's next in the future
00:09:33 --> 00:09:35 of finance. So I would say that that was maybe
00:09:35 --> 00:09:37 unexpectedly the biggest decision that I had
00:09:37 --> 00:09:42 to make. And then I started to create small milestones
00:09:42 --> 00:09:45 for myself. So I always referenced the book or
00:09:45 --> 00:09:47 I didn't read the book. I watched the movie Moneyball.
00:09:48 --> 00:09:52 which is if the goal is to win the World Series,
00:09:52 --> 00:09:54 you really want to just focus on getting on base.
00:09:55 --> 00:09:58 You want to do one small thing at a time. And
00:09:58 --> 00:10:00 for me in the early days, it was figuring out
00:10:00 --> 00:10:02 who I was selling to. When I was building this
00:10:02 --> 00:10:04 FP &A platform, I thought it was going to be
00:10:04 --> 00:10:07 exclusively for small businesses. And I started
00:10:07 --> 00:10:09 talking to small business leaders who I knew,
00:10:10 --> 00:10:12 folks in my network. And I started to understand
00:10:12 --> 00:10:14 they didn't look at finance the exact same way
00:10:14 --> 00:10:16 that you would in a larger company and larger.
00:10:16 --> 00:10:19 I just mean mid market. It could be 50, 100,
00:10:19 --> 00:10:23 250, 500 employees. But if you're a mom and pop
00:10:23 --> 00:10:25 shop, I mean, I remember very distinctly, one
00:10:25 --> 00:10:27 of the answers someone on my network gave me
00:10:27 --> 00:10:29 was like, I was like, how do you think about
00:10:29 --> 00:10:31 cash flow? And he's like, what do you mean? And
00:10:31 --> 00:10:33 I'm like, cash flow, like, how do you plan on
00:10:33 --> 00:10:36 what you're going to spend? And how do you think
00:10:36 --> 00:10:38 about receivables and payables? He's like, sorry,
00:10:38 --> 00:10:40 Christine, I'm confused. We have money, we spend
00:10:40 --> 00:10:42 it. We don't spend it. What do you mean? And
00:10:42 --> 00:10:44 certainly not all small businesses are like that,
00:10:44 --> 00:10:47 but it was a little bit less of a FP &A focus
00:10:47 --> 00:10:50 that helped me figure out who my customer was.
00:10:50 --> 00:10:53 And I built a product for that market. That is
00:10:53 --> 00:10:58 awesome because now your platform pretty much
00:10:58 --> 00:11:01 can work in different sides of companies. So
00:11:01 --> 00:11:03 what would you say for your own experience working
00:11:03 --> 00:11:06 in a small business versus larger companies,
00:11:07 --> 00:11:09 especially when you're trying to go in that stage
00:11:09 --> 00:11:11 where you're trying to go public? What is something
00:11:11 --> 00:11:14 people often miss in that period when it comes
00:11:14 --> 00:11:18 to the importance of FDNA? I mean, even understanding
00:11:18 --> 00:11:23 that it is probably the most important, critical
00:11:23 --> 00:11:25 and strategic function within an organization.
00:11:26 --> 00:11:28 And I think anyone who's been through early stage
00:11:28 --> 00:11:32 finance organization has seen this. There's usually
00:11:32 --> 00:11:36 a. track where companies hire finance. So it
00:11:36 --> 00:11:38 starts with the most basic and the most important,
00:11:38 --> 00:11:40 which is like, we need someone to pay our taxes.
00:11:41 --> 00:11:43 Like they may be doing bookkeeping through a
00:11:43 --> 00:11:45 register, but at the end of the day, you got
00:11:45 --> 00:11:47 to pay your taxes. So they hire a CPA or they
00:11:47 --> 00:11:49 hire a bookkeeper. That's step one. As businesses
00:11:49 --> 00:11:52 get a little bit larger, they hire a full -time
00:11:52 --> 00:11:54 accountant. They'll get QuickBooks or Xero and
00:11:54 --> 00:11:57 they start to build again. That's finance is
00:11:57 --> 00:11:59 like, we just need to keep track. of the comings
00:11:59 --> 00:12:02 and goings of expenses. Then as business starts
00:12:02 --> 00:12:05 to get a little bit larger, and maybe the founder
00:12:05 --> 00:12:08 or the CEO can no longer manage it with just
00:12:08 --> 00:12:11 the accountant or small bookkeeping team, that's
00:12:11 --> 00:12:13 when FP &A usually starts to become really relevant.
00:12:14 --> 00:12:16 And we tend to see that generally around the
00:12:16 --> 00:12:19 time a company hits somewhere between 50 and
00:12:19 --> 00:12:22 100 FTEs. So, usually 100 is around the marker
00:12:22 --> 00:12:25 where FP &A starts becoming more and more relevant.
00:12:25 --> 00:12:29 And usually by 200 employees, most companies
00:12:29 --> 00:12:32 have a head of FP &A. Maybe that head of FP &A
00:12:32 --> 00:12:35 is titled VP of Finance. Maybe it's their CFO.
00:12:35 --> 00:12:39 But there is a leader whose job is wholly focused
00:12:39 --> 00:12:43 on managing not just what happened in the past,
00:12:43 --> 00:12:46 but what will happen in the future. Okay, and
00:12:46 --> 00:12:49 then in that in that moment when the company
00:12:49 --> 00:12:52 is growing What would you say are some things
00:12:52 --> 00:12:55 that as finance leaders? we should pay attention
00:12:55 --> 00:12:57 to right because the things that matters when
00:12:57 --> 00:13:00 you a Smaller company are different from when
00:13:00 --> 00:13:03 you meet size versus a growing company and you've
00:13:03 --> 00:13:05 worked in all three So I'm very curious to hear
00:13:05 --> 00:13:07 what have you learned in those different stages?
00:13:08 --> 00:13:12 I go back to the famous song mo money mo problems.
00:13:12 --> 00:13:14 It's just as things become bigger, the scale
00:13:14 --> 00:13:18 becomes more complex. So in the early stage days,
00:13:18 --> 00:13:21 it's more like it's more of setting up a foundation
00:13:21 --> 00:13:26 culturally in an organization of why Managing
00:13:26 --> 00:13:27 to the numbers, I'm going to sound, it sounds
00:13:27 --> 00:13:29 very rudimentary, but I've seen it a million
00:13:29 --> 00:13:32 times. Why managing to the numbers is critical.
00:13:32 --> 00:13:34 I'm talking early stage at this point. So sub
00:13:34 --> 00:13:38 a hundred FTEs, oftentimes remember these organizations
00:13:38 --> 00:13:41 have come up over time, maybe haven't been as
00:13:41 --> 00:13:43 focused on the financials. They've been focused
00:13:43 --> 00:13:47 on building. a business through sheer will, through
00:13:47 --> 00:13:50 great sales and marketing, through customer focus,
00:13:50 --> 00:13:52 et cetera. So trying to stab a culture and a
00:13:52 --> 00:13:55 foundation that finance is important and here's
00:13:55 --> 00:13:58 why. And oftentimes the role of the finance professional
00:13:58 --> 00:14:01 is to help teach and communicate to the rest
00:14:01 --> 00:14:03 of the organization why it's such a critical
00:14:03 --> 00:14:05 function and why they need to pay attention to
00:14:05 --> 00:14:08 it and how it ultimately serves them. So that
00:14:08 --> 00:14:11 I found in the very early stages is critical.
00:14:11 --> 00:14:13 As you start to become a larger company, it's
00:14:13 --> 00:14:16 about setting up all your people process operations
00:14:16 --> 00:14:18 again. You need more than just a bookkeeper.
00:14:18 --> 00:14:21 You need a strategic finance person, whether
00:14:21 --> 00:14:26 it's manager, VP, C -level person focused on
00:14:26 --> 00:14:29 the future and planning. And that's really critical.
00:14:30 --> 00:14:32 Finally, as companies start to get bigger, you
00:14:32 --> 00:14:35 start to see planning cycles move from once a
00:14:35 --> 00:14:37 year, twice a year to being constant. I don't
00:14:37 --> 00:14:40 mean just forecasting. Typically in most organizations,
00:14:40 --> 00:14:43 we all have our Excel models or our models somewhere
00:14:43 --> 00:14:46 that we're just updating real life changes as
00:14:46 --> 00:14:48 they happen. That is a version of forecasting,
00:14:49 --> 00:14:52 but I'm more referring to formalizing forecasting
00:14:52 --> 00:14:55 throughout an organization. So it goes from having
00:14:55 --> 00:14:58 a once or twice a year budget to having that
00:14:58 --> 00:15:01 plus having then a quarterly forecast, then having
00:15:01 --> 00:15:04 a monthly forecast, then having a real time forecast.
00:15:05 --> 00:15:07 That's what we usually start to see as you become
00:15:07 --> 00:15:10 larger and larger in terms of organizations.
00:15:10 --> 00:15:13 It's just that planning maturity. And in terms
00:15:13 --> 00:15:16 of planning maturity, I like how you said first,
00:15:16 --> 00:15:18 you start with, you know, learning the basics
00:15:18 --> 00:15:21 of the numbers and then you turn into strategic
00:15:21 --> 00:15:23 finance. What would be your best definition of
00:15:23 --> 00:15:25 what strategic finance is? Because when you come
00:15:25 --> 00:15:29 through college and finance, you know, you know,
00:15:29 --> 00:15:31 accounting is just accounting or finance is just
00:15:31 --> 00:15:33 this number, but you're not thinking strategically
00:15:33 --> 00:15:36 necessarily. So how do you grow into that and
00:15:36 --> 00:15:39 get into really what strategic finance is about?
00:15:39 --> 00:15:44 The way that we define strategic finance is powering
00:15:44 --> 00:15:46 strategic business decisions with financial clarity.
00:15:47 --> 00:15:49 It's kind of a buzzword now, strategic finance,
00:15:49 --> 00:15:51 and you see a lot of even job definitions changing.
00:15:52 --> 00:15:55 I think rightly so from FP &A or finance manager
00:15:55 --> 00:15:58 to strategic finance business partner. And I
00:15:58 --> 00:16:00 think it really reflects the world understanding
00:16:00 --> 00:16:04 the role of the finance professional. We have
00:16:04 --> 00:16:07 a framework at Cube that we use to think about
00:16:07 --> 00:16:09 how to become more strategic and what is strategic
00:16:09 --> 00:16:12 finance. You can get it on our website and we
00:16:12 --> 00:16:14 call it the strategic finance hierarchy of needs.
00:16:15 --> 00:16:18 So if you're familiar with Maslow's hierarchy
00:16:18 --> 00:16:21 of needs, the idea is before you can achieve
00:16:21 --> 00:16:24 self -realization, self -actualization, you first
00:16:24 --> 00:16:26 need to have food and water. and you need to
00:16:26 --> 00:16:30 have a home and all of those things. The equivalent
00:16:30 --> 00:16:32 in finance is at the top of the pyramid or at
00:16:32 --> 00:16:36 the top of the mountain is being strategic. So
00:16:36 --> 00:16:38 driving alignment, decision making, et cetera.
00:16:39 --> 00:16:41 But before you get there, I'm going to send shivers
00:16:41 --> 00:16:44 down everyone's spine. The data has to be right.
00:16:44 --> 00:16:47 There's four layers to the pyramid. And the bottom
00:16:47 --> 00:16:51 layer is data management or data fidelity or
00:16:51 --> 00:16:54 data integrity. And that is making data usable
00:16:54 --> 00:16:58 and trustworthy. so that we can then make strategic
00:16:58 --> 00:17:00 decisions. So first you need your data clean.
00:17:00 --> 00:17:03 And most folks when they come to cube are struggling
00:17:03 --> 00:17:06 with this as anyone would. It is not just a finance
00:17:06 --> 00:17:08 challenge, but I'll also describe what makes
00:17:08 --> 00:17:11 this challenging for finance professionals. More
00:17:11 --> 00:17:13 so than I would argue anyone else in the business.
00:17:13 --> 00:17:16 Finance is the most downstream function in an
00:17:16 --> 00:17:18 organization. And what I mean by that is if you
00:17:18 --> 00:17:21 think at the top, top of the org. If you think
00:17:21 --> 00:17:23 about a data structure, everything that happens
00:17:23 --> 00:17:25 in the business gets captured somewhere. There's
00:17:25 --> 00:17:28 a data capture in your CRM. There's data captured
00:17:28 --> 00:17:31 in your ERP. There's data captured in your HRIS
00:17:31 --> 00:17:33 platform. All that information then needs to
00:17:33 --> 00:17:39 be transformed and centralized in a way and translated
00:17:39 --> 00:17:41 so that finance can report at the end of the
00:17:41 --> 00:17:44 month, quarter period, et cetera. And finance
00:17:44 --> 00:17:48 is the last stop before that data hits executives
00:17:48 --> 00:17:51 and leadership. or goes external and goes to
00:17:51 --> 00:17:53 Wall Street or to a board of directors. Last
00:17:53 --> 00:17:56 Touch means finance is dealing with every single
00:17:56 --> 00:18:00 mistake, issue, data imperfection that happens
00:18:00 --> 00:18:03 in the organization. And by the way, we're the
00:18:03 --> 00:18:05 ones who sign off our name with that we go to
00:18:05 --> 00:18:08 jail if it's wrong, like see if it's wrong. It
00:18:08 --> 00:18:12 is a big deal. And so again, think of broad lower
00:18:12 --> 00:18:15 layer of the pyramid is data management. The
00:18:15 --> 00:18:18 next layer is reporting and analysis. So now
00:18:18 --> 00:18:21 you've got the data right. Yes, I can finally
00:18:21 --> 00:18:24 do something with it. And that's translating
00:18:24 --> 00:18:27 numbers into actionable insights. So now I can
00:18:27 --> 00:18:29 say I have my numbers reporting is not just about
00:18:29 --> 00:18:33 putting it into a report reporting is about figuring
00:18:33 --> 00:18:36 out what that story is behind the numbers. Reporting
00:18:36 --> 00:18:39 is oftentimes about getting your data now into
00:18:39 --> 00:18:42 a format where you could then perform more analysis.
00:18:42 --> 00:18:44 So now we're getting more and more into the parts
00:18:44 --> 00:18:47 of the job that I know I love and I know CFOs
00:18:47 --> 00:18:49 and finance professionals I speak with actually
00:18:49 --> 00:18:52 enjoy doing. Very few folks love the data management
00:18:52 --> 00:18:54 piece. So now we're on the second layer. Great.
00:18:54 --> 00:18:57 Now I have the reports that I need. I've analyzed
00:18:57 --> 00:19:00 the data. What's next? Reporting is typically
00:19:00 --> 00:19:02 in the past. Next comes planning and modeling.
00:19:03 --> 00:19:04 That's looking at the future. That's the next
00:19:04 --> 00:19:07 layer. That's about keeping plans current and
00:19:07 --> 00:19:09 connected to reality. One of my favorite sayings
00:19:09 --> 00:19:12 or one of my famous sayings is if we were great
00:19:12 --> 00:19:14 forecasters in finance, we wouldn't be doing
00:19:14 --> 00:19:16 this job. We'd be in Vegas betting on horses
00:19:16 --> 00:19:20 or basketball teams or something. It's not about
00:19:20 --> 00:19:23 perfect prediction. What it is about is understanding
00:19:23 --> 00:19:26 the drivers of your business. And when the world
00:19:26 --> 00:19:29 turns and the unexpected happens, that we're
00:19:29 --> 00:19:32 prepared to make changes in real time. That's
00:19:32 --> 00:19:35 really the power of planning. So again, the frequency
00:19:35 --> 00:19:37 of planning, the quality of your inputs, the
00:19:37 --> 00:19:41 quality of your model really matters. Now you
00:19:41 --> 00:19:43 have these three layers, think of them like Lego
00:19:43 --> 00:19:45 blocks or think of them like layers of the pyramid.
00:19:46 --> 00:19:49 Now you can finally ladder up and drive alignment
00:19:49 --> 00:19:51 and decision making. So that's how we think about
00:19:51 --> 00:19:53 what is strategic finance and how to get there.
00:19:53 --> 00:19:55 And I'm sure most of the listeners would be like,
00:19:55 --> 00:19:57 wait a minute, I do that and I don't have all
00:19:57 --> 00:19:59 these things perfect. That's okay. But typically
00:19:59 --> 00:20:01 if you're going to sit in front of an executive,
00:20:01 --> 00:20:04 and they're going to ask you, hey, even what
00:20:04 --> 00:20:06 happened last month, you're going to use all
00:20:06 --> 00:20:08 those layers. Number one, you got to have clean
00:20:08 --> 00:20:11 data. Number two, you have to pull a report together
00:20:11 --> 00:20:13 to look at the information and analyze it. Number
00:20:13 --> 00:20:16 three, you have to have a plan of which you're
00:20:16 --> 00:20:18 comparing against. So you can say, hey, we grew
00:20:18 --> 00:20:20 20 % last month. That could be the most amazing
00:20:20 --> 00:20:22 thing in the world, or that could be absolutely
00:20:22 --> 00:20:24 terrible, depending on what your plan said you
00:20:24 --> 00:20:26 were supposed to do. So there's the planning
00:20:26 --> 00:20:29 component. And then the why and the so what becomes
00:20:29 --> 00:20:32 the strategic finance. So as we think about how
00:20:32 --> 00:20:34 to be more strategic thinking about checking
00:20:34 --> 00:20:37 a box on each of each of those really important
00:20:37 --> 00:20:41 layers Oh, I I love I love that pyramid. I love
00:20:41 --> 00:20:43 how you explained it and I definitely want to
00:20:43 --> 00:20:46 spend time at the bottom, right? Um, because
00:20:46 --> 00:20:51 when you said I was like, oh I feel this To get
00:20:51 --> 00:20:53 the data clean like you said because the data
00:20:53 --> 00:20:58 lives in so many different So if you're using
00:20:58 --> 00:21:00 Salesforce, you know that you have regular field
00:21:00 --> 00:21:03 and 10 custom fields. And then you go into
00:21:03 --> 00:21:07 your HR and you have. regular fields and 10
00:21:07 --> 00:21:10 fields and we call them differently. So that's
00:21:10 --> 00:21:13 where I think business partnering comes into
00:21:13 --> 00:21:16 place and you have to work well with your accounting
00:21:16 --> 00:21:18 team. You have to work with different partners.
00:21:19 --> 00:21:22 So what do you advise people to do at that stage
00:21:22 --> 00:21:25 when you come in and you realize, ouch, I have
00:21:25 --> 00:21:29 a data integrity problem or I have difficult
00:21:29 --> 00:21:32 relations with other departments because I need
00:21:32 --> 00:21:35 their data by X date in order to do my report,
00:21:35 --> 00:21:38 but they have their own struggles. Like how do
00:21:38 --> 00:21:41 you navigate that kind of stuff? I mean, I could,
00:21:41 --> 00:21:43 we can do a whole session on just this one. So
00:21:43 --> 00:21:46 maybe next time we could, we do an hour on it
00:21:46 --> 00:21:48 or a half an hour. There's a few different, if
00:21:48 --> 00:21:50 you think of it in a framework, which I love
00:21:50 --> 00:21:54 my frameworks, there's people processing technology.
00:21:54 --> 00:21:56 So going back to the. to the consulting days,
00:21:56 --> 00:21:58 I can talk about each one of those. But let's
00:21:58 --> 00:22:02 also break down how to get to good data management.
00:22:02 --> 00:22:05 And we think of it like combining, cleaning and
00:22:05 --> 00:22:08 controlling the data. The most important piece
00:22:08 --> 00:22:11 is having good data governance as a foundational
00:22:11 --> 00:22:13 layer. So this is probably like, maybe it's a
00:22:13 --> 00:22:15 little the honorable, but you need to have good
00:22:15 --> 00:22:18 data governance before you can. know that your
00:22:18 --> 00:22:20 data is going to be right. And you brought up
00:22:20 --> 00:22:22 a really important part, which is how do I work
00:22:22 --> 00:22:24 with my accounting team or how do I work with
00:22:24 --> 00:22:27 my sales team to have the data? At the end of
00:22:27 --> 00:22:29 the day, this goes back to a really important
00:22:29 --> 00:22:32 part about data integrity, which is the point
00:22:32 --> 00:22:35 of capture. We cannot. So number one, we need
00:22:35 --> 00:22:38 to set the right sort of governance around making
00:22:38 --> 00:22:41 sure I'll use the classic examples to salespeople
00:22:41 --> 00:22:44 accurately put information in Salesforce. There's
00:22:44 --> 00:22:47 a lot of work to be done around that. And at
00:22:47 --> 00:22:49 the end of the day, it will not be perfect ever.
00:22:49 --> 00:22:51 I've never seen an organization be like, oh my
00:22:51 --> 00:22:54 gosh, our salespeople are the best. They do everything
00:22:54 --> 00:22:56 as they're supposed to and they put the data
00:22:56 --> 00:22:59 into Salesforce. So we have to think of it in
00:22:59 --> 00:23:02 two ways. Number one, what is the sort of overall
00:23:02 --> 00:23:05 data governance and expectations that we're setting
00:23:05 --> 00:23:08 to make sure that data is clean? and captured
00:23:08 --> 00:23:10 properly, that will include a control process.
00:23:11 --> 00:23:13 So as finance professionals, this is part of
00:23:13 --> 00:23:15 our jurisdiction is to say, OK, if data is going
00:23:15 --> 00:23:17 to get cleanly into Salesforce at the end of
00:23:17 --> 00:23:20 the month, what controls are we are we giving
00:23:20 --> 00:23:22 back to finance or whoever maybe is rev ops or
00:23:22 --> 00:23:25 who their sales leader is? Maybe it's part of
00:23:25 --> 00:23:27 their commission plan to make sure that that
00:23:27 --> 00:23:29 data is captured appropriately. That's part one.
00:23:29 --> 00:23:31 Part two is assuming it's going to be wrong.
00:23:31 --> 00:23:33 So that's where the data cleansing process comes
00:23:33 --> 00:23:36 in. And going back to like a very common example,
00:23:36 --> 00:23:39 I think we've seen over time the trying to match
00:23:39 --> 00:23:43 up vendors or things like there's walmart .com,
00:23:43 --> 00:23:45 there's walmart, there's wal -mart, there's data
00:23:45 --> 00:23:47 that's spelled different ways. Yes, you're rolling
00:23:47 --> 00:23:50 your eyes. We've all been there. We spent way
00:23:50 --> 00:23:52 too many hours, then we get a new file and it
00:23:52 --> 00:23:53 looks a little bit different and you have to
00:23:53 --> 00:23:56 match these things. So we talked about people
00:23:56 --> 00:23:58 in this, we talked a little bit about processing
00:23:58 --> 00:24:00 controls, and then we talk about technology.
00:24:01 --> 00:24:03 As much as I'd love to make this a full pitch
00:24:03 --> 00:24:05 for cube. And of course, this is one of the things
00:24:05 --> 00:24:07 that we do best. There are a number of different
00:24:07 --> 00:24:10 types of technology to help you cleanse your
00:24:10 --> 00:24:12 data, whether it's through, you know, at a most
00:24:12 --> 00:24:15 basic level, doing it in Excel and capturing
00:24:15 --> 00:24:17 all these different spellings and creating mapping
00:24:17 --> 00:24:20 tables all the way through buying technology
00:24:20 --> 00:24:23 to cleanse these. This, by the way, is where
00:24:23 --> 00:24:25 I think AI is going to become very interesting.
00:24:25 --> 00:24:27 And we're starting to see the beginnings of this
00:24:27 --> 00:24:30 because. taking a step, a little bit of a side
00:24:30 --> 00:24:35 to this. Automation is extremely precise and
00:24:35 --> 00:24:37 works very well, but you have to program it.
00:24:38 --> 00:24:40 So automation is you saying Walmart is the same
00:24:40 --> 00:24:44 as Wal -Mart, which is the same as walmart .com.
00:24:44 --> 00:24:47 Intelligence starts to find these patterns over
00:24:47 --> 00:24:50 time and is saying Walmart. without you having
00:24:50 --> 00:24:52 to program it is saying these three things are
00:24:52 --> 00:24:55 the same. So that's where artificial intelligence
00:24:55 --> 00:24:57 and these LLMs are going to get a lot smarter
00:24:57 --> 00:25:00 over time around matching different data sets
00:25:00 --> 00:25:03 and handing them to you saying, do you agree
00:25:03 --> 00:25:05 that these are a match? That's where our job
00:25:05 --> 00:25:07 is going to get a lot more fun over time. And
00:25:07 --> 00:25:10 we're going to start to see more and more of
00:25:10 --> 00:25:13 the early layers of the pyramid become automated
00:25:13 --> 00:25:15 and start to see us be able to spend more time
00:25:15 --> 00:25:19 on the upper layers of the pyramid. The dream.
00:25:19 --> 00:25:23 Yes, the dream Now going to the second layer
00:25:23 --> 00:25:29 in terms of reporting So what I realized is sometimes
00:25:29 --> 00:25:32 especially when you fresh in finance Your reporting
00:25:32 --> 00:25:36 is often based on what you understand what makes
00:25:36 --> 00:25:40 sense to you when Reporting is for really your
00:25:40 --> 00:25:44 customers, whether internal or external. So what
00:25:44 --> 00:25:47 would you say, especially for the next generation
00:25:47 --> 00:25:49 of leaders, how can you accelerate learning?
00:25:49 --> 00:25:52 What kind of reporting works for who and how
00:25:52 --> 00:25:56 can you really be a better storyteller? How can
00:25:56 --> 00:25:59 you really make your reporting come alive and
00:25:59 --> 00:26:06 be useful? I love these questions. the foundation
00:26:06 --> 00:26:08 of good strategic finance business partnering.
00:26:09 --> 00:26:11 And we've done this a number of different ways,
00:26:12 --> 00:26:14 but I think the first best, I'll just go in like
00:26:14 --> 00:26:17 very specific examples. The first one is when
00:26:17 --> 00:26:19 you're meeting with your executives, department
00:26:19 --> 00:26:22 leads, et cetera, I always recommend that that
00:26:22 --> 00:26:25 you come with something because if you sit down
00:26:25 --> 00:26:26 generally with a marketing leader, you're going
00:26:26 --> 00:26:28 to get a sense of they're going to tell you what
00:26:28 --> 00:26:30 they like to measure. So they'll come in with
00:26:30 --> 00:26:32 the same perspective that you're coming in with.
00:26:32 --> 00:26:34 Like, here's what I think you should measure.
00:26:34 --> 00:26:35 And they're going to say, here's what I think
00:26:35 --> 00:26:38 I should measure. Set up a listening tour, come
00:26:38 --> 00:26:41 to the table prepared with something. However,
00:26:42 --> 00:26:44 have a look at what they like to measure and
00:26:44 --> 00:26:46 how they're measuring their business. But it
00:26:46 --> 00:26:48 also goes up a step further, which is like, what
00:26:48 --> 00:26:51 are your goals as a marketing organization? And
00:26:51 --> 00:26:54 almost what is your mission as a marketing organization?
00:26:54 --> 00:26:57 So I like to start all the way at the top. And
00:26:57 --> 00:27:00 we have something we use internally at Cube for
00:27:00 --> 00:27:02 all of our departments is we have Every single
00:27:02 --> 00:27:05 month we review the same sort of document and
00:27:05 --> 00:27:07 it starts for each department that's presenting
00:27:07 --> 00:27:09 the department mission. Because these things
00:27:09 --> 00:27:11 believe it or not do change over time. Maybe
00:27:11 --> 00:27:13 a marketing team is really focused on getting
00:27:13 --> 00:27:15 leads and bringing new business in the door.
00:27:15 --> 00:27:18 Maybe a marketing team is more focused on brand.
00:27:18 --> 00:27:21 Maybe a marketing team is focused on... launching
00:27:21 --> 00:27:24 campaigns, each one of those things will determine
00:27:24 --> 00:27:27 what type of goals they have. So that might change
00:27:27 --> 00:27:29 what KPIs they're looking at, depending on what
00:27:29 --> 00:27:32 their mission is for that particular team. So
00:27:32 --> 00:27:34 number one, start out with the mission of the
00:27:34 --> 00:27:37 organization. Once that department leader has
00:27:37 --> 00:27:39 told you, here's what I'm focused on, you already
00:27:39 --> 00:27:41 have your list that you've come with and you
00:27:41 --> 00:27:43 can start to merge those lists together to figure
00:27:43 --> 00:27:46 out what's most important. This is the part where
00:27:46 --> 00:27:49 most organizations run into challenges. There's
00:27:49 --> 00:27:53 a very big difference between KPIs and reporting.
00:27:53 --> 00:27:58 Oh, Lord. Any. Yes. Yeah, let's walk right here.
00:27:58 --> 00:28:01 Yeah, let's let's let's let's put it. Let's start
00:28:01 --> 00:28:04 with this one. Anything more than five is a report.
00:28:04 --> 00:28:07 Any more than five metrics is a report. You can
00:28:07 --> 00:28:09 have three. I like one because then you know
00:28:09 --> 00:28:12 if you're really on track. But you you have to
00:28:12 --> 00:28:14 go through this uncomfortable forcing exercise
00:28:14 --> 00:28:17 of stack ranking. If I'm only going to pick three
00:28:17 --> 00:28:19 of these or five of these to review every single
00:28:19 --> 00:28:21 month with you, every single quarter, what are
00:28:21 --> 00:28:24 they? And then you can keep the rest, you know,
00:28:24 --> 00:28:26 maybe it's in another tab, another report somewhere.
00:28:26 --> 00:28:28 But the second you get more into more than three
00:28:28 --> 00:28:32 to five metrics, it's a report. So I always like
00:28:32 --> 00:28:34 to figure out what are the most high level ones
00:28:34 --> 00:28:36 that sort of capture all that data behind it.
00:28:36 --> 00:28:39 That's the second piece. And then you have your
00:28:39 --> 00:28:42 reporting. And typically, then you're able to
00:28:42 --> 00:28:44 do, then you're able to have real strategic conversations
00:28:44 --> 00:28:46 where you're looking at those metrics and you
00:28:46 --> 00:28:48 can double click on them if they're working or
00:28:48 --> 00:28:50 not working. So then that goes back to what was
00:28:50 --> 00:28:53 the plan and what was the actuals. Very simple
00:28:53 --> 00:28:54 red, yellow, greens. Are we on track? Are we
00:28:54 --> 00:28:58 not? If red scares you, use Harvey Balls. Throw
00:28:58 --> 00:29:00 back to Harvey Balls, those are great. But if
00:29:00 --> 00:29:02 you're on track or not on track, then you can
00:29:02 --> 00:29:05 use it to double click into your. your broader
00:29:05 --> 00:29:07 set of reporting and analysis. But going back
00:29:07 --> 00:29:12 again, it really is a team building motion and
00:29:12 --> 00:29:16 you can use this as an opportunity to let that
00:29:16 --> 00:29:18 other executive know that I'm on your side. I'm
00:29:18 --> 00:29:20 here to listen to you to understand what are
00:29:20 --> 00:29:23 the metrics that are most important to you? What
00:29:23 --> 00:29:25 are you being driven by? How are you being ranked
00:29:25 --> 00:29:28 and scored? You can also figure out through this
00:29:28 --> 00:29:32 if there is a mismatch in terms of their incentives
00:29:32 --> 00:29:35 and alignment. and what the organization is looking
00:29:35 --> 00:29:38 for. So again, let's use that marketing example,
00:29:38 --> 00:29:40 a classic one, as I've seen lots of marketers,
00:29:41 --> 00:29:44 maybe they're measured or comped on leads. And
00:29:44 --> 00:29:46 then an organization is like, what do I do with
00:29:46 --> 00:29:49 these leads? They're not converting into real
00:29:49 --> 00:29:54 revenue. The sales team or the customer team
00:29:54 --> 00:29:55 is not able to convert those leads into something
00:29:55 --> 00:29:58 that drives revenue. So then maybe there's an
00:29:58 --> 00:30:00 opportunity then to partner with leadership to
00:30:00 --> 00:30:02 figure out. is marketing being incentivized in
00:30:02 --> 00:30:05 the right way to drive the right sort of benefits
00:30:05 --> 00:30:07 for the organization? That's where this starts
00:30:07 --> 00:30:10 to get really interesting. So this is more on
00:30:10 --> 00:30:12 the revenue side, right? And I'm glad that now
00:30:12 --> 00:30:17 you have your own company. So you have, I should
00:30:17 --> 00:30:19 say, a better understanding on the other side
00:30:19 --> 00:30:23 when it comes to fundraising debt and cash, right?
00:30:23 --> 00:30:25 Because sometimes when you get into traditional
00:30:25 --> 00:30:29 FP &A, you are often just focused on the P &L,
00:30:29 --> 00:30:32 on the EBITDA. and you don't necessarily think
00:30:32 --> 00:30:36 about the balance sheet. Okay, what does it mean?
00:30:36 --> 00:30:39 You have debt covenant. You can only borrow so
00:30:39 --> 00:30:40 much. Can you speak a little bit about - These
00:30:40 --> 00:30:43 are the hardest questions. I love these, sorry.
00:30:44 --> 00:30:47 Thank you. But can you speak a little bit about
00:30:47 --> 00:30:51 how do you transition to stretch your thinking
00:30:51 --> 00:30:54 beyond just the P &L? Because really every decision
00:30:54 --> 00:30:57 a business make is a capital allocation. Like
00:30:57 --> 00:30:59 i'm spending cash on this while i'm spending
00:30:59 --> 00:31:02 cash on that and I can now have to stay within
00:31:02 --> 00:31:06 the guardrails of my covenants Yes, yes. Yes.
00:31:06 --> 00:31:09 Okay i'll take a i'll take a big step back or
00:31:09 --> 00:31:12 a big a big You know 30 000 foot view of this
00:31:12 --> 00:31:16 but before we can even get into P &Ls versus
00:31:16 --> 00:31:19 balance sheet. It goes back to what we talked
00:31:19 --> 00:31:20 about with marketing. It's like, what are the
00:31:20 --> 00:31:23 goals of the organization? And I think as a finance
00:31:23 --> 00:31:25 person, I've fallen into the trap in the past
00:31:25 --> 00:31:28 where my CEO showed up at my desk and was like,
00:31:28 --> 00:31:31 hey, we need a plan. And I'm like, okay, what,
00:31:31 --> 00:31:34 what kind of plan? Yeah, we need a plan for next
00:31:34 --> 00:31:35 year. So can you put one together and I'll take
00:31:35 --> 00:31:39 a look at it. And I'm like, yeah, I mean, I can
00:31:39 --> 00:31:41 put a plan together. What do you want to do with
00:31:41 --> 00:31:45 the company? So step one is and and believe it
00:31:45 --> 00:31:48 or not, a lot of organizations, sometimes finance
00:31:48 --> 00:31:51 has to drive those strategic planning sessions
00:31:51 --> 00:31:53 and sometimes the best finance leaders and the
00:31:53 --> 00:31:55 ones who really become the chief operating officers
00:31:55 --> 00:31:58 of an organization are driving those strategic
00:31:58 --> 00:32:01 planning sessions. And the way I love to do this
00:32:01 --> 00:32:04 is to is to make everything a cycle or make everything
00:32:04 --> 00:32:07 scheduled, because my my catchphrase for the
00:32:07 --> 00:32:09 year, my one of my New Year's resolutions was
00:32:09 --> 00:32:12 what gets scheduled gets done. And so you can
00:32:12 --> 00:32:17 think about, yes, you can think about a planning
00:32:17 --> 00:32:20 calendar. So in the beginning, maybe three months
00:32:20 --> 00:32:22 prior to the beginning of the fiscal year, you're
00:32:22 --> 00:32:24 going with your executive team over what are
00:32:24 --> 00:32:27 the strategic goals of the organization. You
00:32:27 --> 00:32:29 use those and those KPIs you've already put together
00:32:29 --> 00:32:32 to say for each department or team, what are
00:32:32 --> 00:32:35 my top three KPIs? You use that to build a plan.
00:32:36 --> 00:32:38 But then comes to your actual question, which
00:32:38 --> 00:32:40 is like, where does the balance sheet come into
00:32:40 --> 00:32:43 this? The reality is depending on whether you
00:32:43 --> 00:32:47 are a profitable organization looking to meet
00:32:47 --> 00:32:49 the capital constraints that you have. Well,
00:32:49 --> 00:32:51 all businesses have capital constraints in theory,
00:32:52 --> 00:32:53 whether you're looking to meet the financial
00:32:53 --> 00:32:57 constraints or if you're some venture backed
00:32:57 --> 00:32:59 listeners, it's a runway question of how much
00:32:59 --> 00:33:02 burn do you have that you want to allocate for
00:33:02 --> 00:33:04 a period of time. But you have two things that
00:33:04 --> 00:33:07 you have to look at. You have the business strategic
00:33:07 --> 00:33:09 goals. and then you have your financial goals.
00:33:10 --> 00:33:11 And typically, that's a conversation with the
00:33:11 --> 00:33:15 CEO. Again, you can make recommendations of how
00:33:15 --> 00:33:17 long do you want your cash burning organization?
00:33:17 --> 00:33:19 How long do you want the runway to stretch out
00:33:19 --> 00:33:22 for? Maybe it's indefinite or maybe it's we want
00:33:22 --> 00:33:25 it to last the next 36 months. If you are a profitable
00:33:25 --> 00:33:28 organization, you have a certain amount of cash
00:33:28 --> 00:33:31 flow that you can dip into, like what sort of
00:33:31 --> 00:33:33 reserves are we looking for? What's our what's
00:33:33 --> 00:33:36 our appetite for taking risk? How much debt do
00:33:36 --> 00:33:39 we want to use? those are constraints that you
00:33:39 --> 00:33:43 then use to plug into your plan to back up against
00:33:43 --> 00:33:46 the strategic and financial goals and blend them
00:33:46 --> 00:33:50 together to do a little bit of iterative work
00:33:50 --> 00:33:53 to make them match as closely as possible. This,
00:33:53 --> 00:33:54 by the way, is the part that breaks everyone
00:33:54 --> 00:33:56 in the budget cycle is like these two things
00:33:56 --> 00:33:59 do not match ever. And so that's when we go back
00:33:59 --> 00:34:03 to the people part of setting a schedule for
00:34:03 --> 00:34:06 building a financial planning process of Okay,
00:34:06 --> 00:34:09 great. We started three months before the end
00:34:09 --> 00:34:12 of the year. We have the strategic plan. We have
00:34:12 --> 00:34:15 our financial goals. Finance oftentimes puts
00:34:15 --> 00:34:18 together a first pass. It's usually top down,
00:34:18 --> 00:34:21 bottoms up, and a bottoms up of how to make these
00:34:21 --> 00:34:24 numbers work. Top down says it makes sense. Bottoms
00:34:24 --> 00:34:26 up says it's impossible. Now we start fighting
00:34:26 --> 00:34:29 the good fight, and we start meeting with each
00:34:29 --> 00:34:32 of the different leaders to say like, hey, I'm
00:34:32 --> 00:34:34 not going to be able to grant you all your headcount
00:34:34 --> 00:34:37 wishes next year because we've got a gap to make
00:34:37 --> 00:34:41 up. Go back. Let's get creative is my favorite
00:34:41 --> 00:34:43 term. Let's get creative with this amount of
00:34:43 --> 00:34:46 resources and tell me how you'd get this done.
00:34:46 --> 00:34:48 And then that's when finance can really start
00:34:48 --> 00:34:51 leaning into its leadership role. And instead
00:34:51 --> 00:34:53 of saying you can't have this or you can't have
00:34:53 --> 00:34:56 do this, or you can't do this, you can start
00:34:56 --> 00:34:59 really co -creating with your business partners
00:34:59 --> 00:35:03 on how to make something happen. Love it. And
00:35:03 --> 00:35:06 now back into your CFO days, because this, you
00:35:06 --> 00:35:08 can tell you were CFO for a long time, right?
00:35:08 --> 00:35:11 Because a lot of technology, people in technology
00:35:11 --> 00:35:13 didn't necessarily have the finance background
00:35:13 --> 00:35:16 you have. And I want to speak a little bit now
00:35:16 --> 00:35:19 with the uncertainty in the economy, in just
00:35:19 --> 00:35:22 the world right now. What are some things that
00:35:22 --> 00:35:24 we as finance leaders should really pay attention
00:35:24 --> 00:35:27 to? You spoke a little bit about reserves. You
00:35:27 --> 00:35:29 spoke a little bit about constraints. Like what
00:35:29 --> 00:35:31 are that? What are something we should just be
00:35:31 --> 00:35:34 mindful of, right? We think AI is disrupting
00:35:34 --> 00:35:37 this, supply chain being disrupted, industries
00:35:37 --> 00:35:40 flipped upside down. What would you say are some
00:35:40 --> 00:35:43 things that finance leaders, CFOs today should
00:35:43 --> 00:35:47 really pay attention to or get ready for? I will
00:35:47 --> 00:35:49 say it in one word, and that is speed. And the
00:35:49 --> 00:35:51 reason why speed is so important, it goes back
00:35:51 --> 00:35:54 to the example of we're not perfect forecasters.
00:35:54 --> 00:35:57 We can't predict the world. we would be buying
00:35:57 --> 00:36:00 stocks and in Vegas, et cetera, like no one can
00:36:00 --> 00:36:02 predict what's going to happen. But the ability
00:36:02 --> 00:36:05 to adapt to that change and to plan quickly and
00:36:05 --> 00:36:09 to make adjustments and to be prepared is by
00:36:09 --> 00:36:12 far the most important thing. So think of back
00:36:12 --> 00:36:19 to the early days of COVID or when the asset
00:36:19 --> 00:36:22 class of venture capital blew up post -2021,
00:36:22 --> 00:36:25 all these unexpected events and we've lived through
00:36:25 --> 00:36:27 so many black swan events through the last 10
00:36:27 --> 00:36:29 years, we know that the world is more volatile
00:36:29 --> 00:36:32 than ever. And it goes back to the old saying
00:36:32 --> 00:36:36 about evolution, which is it's not the, what
00:36:36 --> 00:36:40 is it? Not the smartest or strongest that survives.
00:36:40 --> 00:36:42 It's the one that's most adaptive to change.
00:36:42 --> 00:36:45 And so as finance professionals, we have to think
00:36:45 --> 00:36:48 of ourselves as the ultimate. in sort of driving
00:36:48 --> 00:36:50 the evolution of our organizations. And that
00:36:50 --> 00:36:53 means that when something inevitably happens,
00:36:53 --> 00:36:56 we have to be prepared for it. That's two things.
00:36:56 --> 00:36:58 Number one, we have to have a plan for that.
00:36:58 --> 00:37:01 It's no longer okay to have a plan A, or even
00:37:01 --> 00:37:04 a plan A and a plan B, we have to have a plan
00:37:04 --> 00:37:06 C and a plan D. And that's when having these
00:37:06 --> 00:37:08 really good planning cycles and thinking ahead
00:37:08 --> 00:37:12 allows us to, when the inevitable happens, something
00:37:12 --> 00:37:14 dips in a not good way, something accelerates
00:37:14 --> 00:37:17 in a great way, We know we have a plan for that
00:37:17 --> 00:37:20 and we know how to adapt to it. Having really
00:37:20 --> 00:37:23 great business tracking and reporting allows
00:37:23 --> 00:37:26 us to see when those changes are about to happen
00:37:26 --> 00:37:29 so we can execute on that plan. And knowing how
00:37:29 --> 00:37:33 to execute on that plan is speed. So speed and
00:37:33 --> 00:37:37 preparedness by having lots of different, what's
00:37:37 --> 00:37:39 called sensitivity or scenario planning, allow
00:37:39 --> 00:37:42 us to move faster and to stay ahead of the pace
00:37:42 --> 00:37:44 of business. That's where finance really has
00:37:44 --> 00:37:49 a superpower in this highly volatile era. Love
00:37:49 --> 00:37:52 it. And then speed, going back to what you said
00:37:52 --> 00:37:55 earlier about people, process and systems. How
00:37:55 --> 00:37:59 do you build that ability for speed and preparedness
00:37:59 --> 00:38:02 in your people, in your processes and in your
00:38:02 --> 00:38:06 systems? I go back to the most simple. I'm a
00:38:06 --> 00:38:09 big fan of simplicity, so I could again talk
00:38:09 --> 00:38:11 to you about finance transformations and all
00:38:11 --> 00:38:14 these ways to do it with. software, but I always
00:38:14 --> 00:38:17 start with people first. And it starts with does
00:38:17 --> 00:38:19 everyone know what they're supposed to be doing
00:38:19 --> 00:38:24 as it relates to the finance process? So, you
00:38:24 --> 00:38:26 know, do you do the budget owners know who they
00:38:26 --> 00:38:29 are? Do they know what their role is? Do they
00:38:29 --> 00:38:31 know when they're expected to do things? Do they
00:38:31 --> 00:38:33 know what the expectations are? Do they have
00:38:33 --> 00:38:36 a rules of engagement? This is actually a very
00:38:36 --> 00:38:38 important one. If you've ever rolled out a budget
00:38:38 --> 00:38:41 cycle. or a plan or done budget versus actuals.
00:38:41 --> 00:38:43 And they've had a million questions and they
00:38:43 --> 00:38:45 ask the same questions over and over and over
00:38:45 --> 00:38:48 again. Like, can I roll this budget over to next
00:38:48 --> 00:38:50 quarter, et cetera? I want to trade this one
00:38:50 --> 00:38:52 head count for three. Can I do that? But they're
00:38:52 --> 00:38:55 not thinking about overhead or space, et cetera.
00:38:56 --> 00:38:58 I always like to start with my budget owners
00:38:58 --> 00:39:01 and my business with rules of engagement. Here's
00:39:01 --> 00:39:04 how we operate as a finance function. Here are
00:39:04 --> 00:39:07 definitions of things. Here's what matters to
00:39:07 --> 00:39:09 us as an organization, and here's the calendar
00:39:09 --> 00:39:12 of what you can expect from us throughout the
00:39:12 --> 00:39:14 year. So that no one is like, what do you mean
00:39:14 --> 00:39:16 I was supposed to get you that last week? It's
00:39:16 --> 00:39:18 on the calendar, you got the reminders, et cetera.
00:39:19 --> 00:39:23 So I like to set up everything in place so that
00:39:23 --> 00:39:26 we can move with speed when it's time. As opposed
00:39:26 --> 00:39:28 to just like anything else in life, being reactive,
00:39:29 --> 00:39:32 it's about being proactive. Mm -hmm. Love it.
00:39:32 --> 00:39:35 Love it. This was so good. I have two last questions
00:39:35 --> 00:39:38 for you. But we definitely need to do a part
00:39:38 --> 00:39:42 two, so... Let's do it. Yes. So what's the best
00:39:42 --> 00:39:45 career advice you've ever received? I did a post
00:39:45 --> 00:39:50 about this one. I met a CFO at an IPO conference
00:39:50 --> 00:39:53 and I was... more junior in my career and you
00:39:53 --> 00:39:55 know at the time there weren't as many women
00:39:55 --> 00:39:57 in the room and I just really looked up to her
00:39:57 --> 00:40:00 in her career and I invited her to lunch and
00:40:00 --> 00:40:04 we sat down and she started talking to me all
00:40:04 --> 00:40:07 about sales and I was like what like I thought
00:40:07 --> 00:40:10 we were gonna talk about finance you're a CFO
00:40:10 --> 00:40:14 and she said no no no Christina finance is all
00:40:14 --> 00:40:17 about sales And I also learned, now that I'm
00:40:17 --> 00:40:21 a CEO, everything is about sales. And hear me
00:40:21 --> 00:40:23 out, because I know finance and sales oftentimes,
00:40:24 --> 00:40:25 we're like, what do we have in common with one
00:40:25 --> 00:40:31 another? But sales is actually about just understanding
00:40:31 --> 00:40:34 where the other person is coming from and tailoring
00:40:34 --> 00:40:38 your communication and messaging and process
00:40:38 --> 00:40:42 to what becomes a win -win between the both of
00:40:42 --> 00:40:46 you. And where that applies in finance specifically
00:40:46 --> 00:40:49 is that example we just talked about, about setting
00:40:49 --> 00:40:52 a proactive finance organization, working with
00:40:52 --> 00:40:55 your business partners. It's about hearing them
00:40:55 --> 00:40:57 and selling these ideas to them. Coming into
00:40:57 --> 00:40:59 the room and saying, no, you can't spend money
00:40:59 --> 00:41:03 is very different than saying, here are the constraints
00:41:03 --> 00:41:05 we're working with. I'd love to help you figure
00:41:05 --> 00:41:07 out how to make this work. Let's talk about some
00:41:07 --> 00:41:09 options and maybe you come with some things in
00:41:09 --> 00:41:13 your back pocket. Maybe there's a way that you,
00:41:13 --> 00:41:16 when you do have a little extra to allocate,
00:41:16 --> 00:41:18 you send it their way. So it's a way of building
00:41:18 --> 00:41:20 relationships, but at the end of the day, it
00:41:20 --> 00:41:22 is about selling. It's not just saying, and by
00:41:22 --> 00:41:24 the way, I've been this person before because
00:41:24 --> 00:41:26 I came from large organizations where finance
00:41:26 --> 00:41:28 rolled all and it's like, finance asks for something,
00:41:28 --> 00:41:31 you got to send it, is making finance more of
00:41:31 --> 00:41:33 a partner. And that's by learning how to sell.
00:41:33 --> 00:41:35 And selling is not just about saying, would you
00:41:35 --> 00:41:38 like to buy this pen? And that old, sell me this
00:41:38 --> 00:41:41 pen. conversation, it's actually about what,
00:41:41 --> 00:41:43 you know, what are you looking to do in your
00:41:43 --> 00:41:46 job? And turns out that they need to sign a paper
00:41:46 --> 00:41:49 to sign a very big deal that's going to close
00:41:49 --> 00:41:50 at the end of the month. They really need a pen.
00:41:51 --> 00:41:54 And what if I told you I could get this to you
00:41:54 --> 00:41:57 in the next five minutes? So how do you work
00:41:57 --> 00:42:00 with the teams in your organization to make their
00:42:00 --> 00:42:02 lives better? That's what sales is really all
00:42:02 --> 00:42:05 about. Love it. Yeah. We all in sales and I,
00:42:05 --> 00:42:08 yeah, I learned it. a bit late. I'm glad you
00:42:08 --> 00:42:12 learned it earlier than I did. So my last question,
00:42:12 --> 00:42:14 what do you like to do outside of work? Because
00:42:14 --> 00:42:17 being a CEO, I don't know how much time you have
00:42:17 --> 00:42:22 left, but I'm a mom of two, I have two nine year
00:42:22 --> 00:42:24 olds, so I have twins. So I spend most of my
00:42:24 --> 00:42:28 time with my family. And I will say, I know this
00:42:28 --> 00:42:30 isn't as exciting, but have you ever heard of
00:42:30 --> 00:42:34 the four burner theory? No, mm -mm. Okay, so
00:42:34 --> 00:42:36 the idea is you have four burners on your stove,
00:42:37 --> 00:42:42 and there's health, family, work, and recreation.
00:42:42 --> 00:42:44 And if you want to be really good at anything,
00:42:44 --> 00:42:46 you have to turn one of the burners off. A lot
00:42:46 --> 00:42:47 of listeners are not going to like this. No,
00:42:47 --> 00:42:50 no, we can do all this. You can, you can. If
00:42:50 --> 00:42:53 you want to be great at anything, the idea is
00:42:53 --> 00:42:55 you have to turn a couple of the burners off.
00:42:55 --> 00:42:58 For me, the two burners that I turned off were
00:42:58 --> 00:43:02 recreation, And I do try and be healthy. But
00:43:02 --> 00:43:04 really, I spend most of my time either with work
00:43:04 --> 00:43:07 or family, and that really fulfills me. So that's
00:43:07 --> 00:43:09 where I spend most of my time. Also, I am extremely
00:43:09 --> 00:43:11 organized, and I love just organizing my home.
00:43:11 --> 00:43:13 I mean, maybe that goes with the finance thing,
00:43:13 --> 00:43:16 but I call that a hobby. Spending a lot of time
00:43:16 --> 00:43:19 in the container store these days, yes. Oh, that
00:43:19 --> 00:43:21 is so funny you said that because that's my father,
00:43:21 --> 00:43:24 my husband. I very organized at work and then
00:43:24 --> 00:43:26 you go look at my closet, you're like, whoa,
00:43:26 --> 00:43:30 what's this? That didn't translate well for me,
00:43:30 --> 00:43:34 but thank you so much Christina for being on
00:43:34 --> 00:43:37 the show. This was super helpful. Thank you.
00:43:37 --> 00:43:41 It was so fun. And that's it for today's episode
00:43:41 --> 00:43:44 of The Diary of a CFO. Thank you so much for
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