CFO THOUGHT LEADER

Back in the mid-1990s, before email became widely used across corporate America, the executives of Frito-Lay’s northern California region suddenly found their mailboxes full.

“We were getting all of these letters from people asking, ‘What did you do? What’s going on in northern California?,’” explains Tom Fitzgerald, who at the time was finance director for the region, a geography known to be a sales laggard among Pepsico’s 24 business units, within which Frito-Lay itself was a particularly heavy bottom dweller.

Thus, as Fitzgerald relates, there was no shortage of intrigue concerning a sudden and steady sales climb inside Frito-Lay’s northern California business. Looking back, he observes that the explanation of the phenomenon was not necessarily pleasing to neighboring regions, which were known to be on a constant lookout for cunning new sales promotions or incentives.

“Northern California, oddly enough, was the only unionized market for Frito-Lay in the country. Meanwhile, we had a direct store delivery business, which meant that we went to every store at least once a week—and often every day—to merchandise and sell the inventory,” explains Fitzgerald, who notes that the “direct sales” approach afforded the region larger numbers of employees than other locales, which in turn allowed Frito-Lay to at times operate inside the region more like a “military organization.”

Like those of many of his peers, Fitzgerald’s Pepsi career routinely opened new chapters as the packaged goods company rotated its finance executives into new regions and business units. Fitzgerald’s arrival in the northern California region brought a new set of eyes to Frito-Lay’s local challenges and paired the finance executive with a divisional leader who was prepared to listen.

“I told the leader that too often the business had one answer one day and a different answer the following week. I said, ‘Let’s just pick three, and then we’re going to lock in and stay there,’” comments Fitzgerald, who credits a newfound focus and the regional leader’s willingness to collaborate with having propelled the snack maker to the top of the region’s 24 business units within 3 months.

As for the details behind Fitzgerald’s “three answer” prescription, the finance leader reports: “Two were top line–driven, operational metrics that we could measure. The other was related to how our team worked and coached the frontline salespeople.”

For Fitzgerald, the remedy was less about strategy and more about focus.

“It’s not necessarily about how good your strategy is,” he says. “Frankly, there may have been three better ideas along the way, but because they changed the strategy and moved to the next thing too quickly, they couldn’t get all of their people aligned to execute it well.”

Adds the finance leader: “I became a big believer in the notion that if you have an ‘A’ strategy but a ‘C’ execution, you’re going to miss your numbers every time.” –Jack Sweeney

When consultant Steve Player died last month at the age of 64, the business function that he had tormented, ridiculed, and war-hammered for more than two decades stood quivering in the shadows.

Still breathing, the beast of a business process known as budgetary control had withstood its most notorious assailant’s heaviest blows—in itself a resounding tribute to those industry high priests who had given the process life in the first half of the 20th century.

However, many agree that it’s only a matter of time before budgetary control succumbs to its many injuries and a proper warrant is issued certifying the death of a business function that may have served all of industry better had it lived only half as long.

It’s just such an acknowledgment that makes Steve Player and others of his ilk appear to be as worthy of our acclaim as those who helped to institutionalize this business function in the first place. Perhaps it’s no surprise that both groups have been made up mainly of management consultants, a clan that I know only too well. Or so I thought, until I met Steve. NOW LISTEN - Jack Sweeney

The following is a Holiday Replay of a popular 2022 episode.

Last October, shortly after being named CFO of machine learning start-up MOLOCO, Brandon Maultasch decided to forgo yet another welcome coffee to instead engage with a wide flock of MOLOCO employees on the virtues of discounted cash analysis.

“The last thing you want a new people leader talking to the entire company about!,” confesses Maultasch, before launching a stirring defense of the fall discussion that he refers to as a “teach-in.”  

“We have 65 data scientists and machine learning engineers at the company. If they can build the things that they build, they are smart enough to understand finance, which isn’t all that complicated,” remarks Maultasch, whose approach is notable as much for what it does focus on as for what it doesn’t.

By exploring a framework for discounted cash analysis, Maultasch rejected the more traditional point of engagement for incoming CFOs: the company’s future IPO.

“The IPO is an important milestone, but it’s not the destination,” notes Maultasch. “The destination is building a generationally important company that adds value in the long run. I wanted to make people understand that the durability of cash flows is what drives long-term value creation.”

Once armed with a deeper understanding of discounted cash flows, Maultasch says, employees at large can bring forth more of the insights, processes, and technical solutions that are needed to move the levers of value creation.

“I want to line align our conversations around durability and long-term margins. These are the levers that move our revenue, move our profitability, and move our position in the value chain,” he adds.

According to Maultasch, an added benefit from “teach-in” discussions is that they sometimes expose what the finance team has gotten wrong.

“Some of the things that we thought were inputs turn out to be outputs,” he observes, “so it’s this process of discussion, argument, and learning that aligns everyone toward building a great company.” –Jack Sweeney 

The following is a bonus replay of one of 2022's popular episodes.

When Herald Chen was growing up in a town not far from Pittsburg, he dreamed of someday running the small town’s steel mill. Years later when he was graduating from the University of Pennsylvania, the steel mill no longer occupied Chen’s maturing career aspirations.

“My two job offers were to either go make soap for Procter & Gamble at a manufacturing plant in Baltimore or go to Wall Street,“ remembers Chen, who adds that the offers for the seemingly different jobs came as a result of having graduated from UPenn’s Management and Technology program—a curriculum that offered a dual degree in engineering and finance.

Chen chose Wall Street and in 1995 landed at KKR, the private equity firm that had feasted on leveraged buyouts in 1970s and 1980s.

Recalls Chen: “I had a front row seat for meeting many CEOs and CFOs and invested behind a couple dozen of them, so I learned a lot about what the good, the bad, and the ugly look like in these companies.”  

Twenty-seven years later, KKR can arguably be seen to have been the mother ship of Chen’s finance career, a place that over time he would leave and then return to as the investment house provided him with the wherewithal to open new professional chapters—the longest being from 2007 to 2019, when he headed KKR’s Technology, Media, and Telecom practice.

Along the way, Chen demonstrated a rapport with C-suite members and company boards that distinguished him from other investors, a trait that led to a growing number of invitations to sit on different company boards.

“I had figured out that I wanted to be building businesses, but I also knew that I wasn’t the smartest or brightest or most charismatic person in the room, so maybe the best way for me wasn’t actually sitting in the CEO seat but instead was investing and sitting on boards and helping CEOs,” comments Chen, who has held a number of board seats, as well as served as board chair for such companies as Internet Brands/WebMD, Optiv, Epicor, BMC Software, and Mitchell International. 

With a boardroom track record that few of his CFO peers can match, Chen attributes his success in part to being a good listener.  “I would invest behind CEOs and CFOs whom others just didn’t understand—they just didn’t comprehend what these people were trying to do—because I would find that I could create a lot of value with them just by taking a little extra time to hear them through,” remarks Chen.

When asked to offer advice for CFOs seeking to lower the temperature of certain boardroom discussions, Chen shares a story involving notable KKR financier Henry Kravis: “When I was at KKR, I made a mistake in some of the numbers one time. It was late in the transaction, at the point where on Wall Street you’d expect to get yelled at and there would be this big blowup—but I remember Henry Kravis just getting very calm and saying, ‘Hey, we’ll get through this and come out the other side.’” –Jack Sweeney

Brett & Jack discuss what might be a popular response to employees "quiet quitting" or what among managers has been dubbed "quiet firing" - the withdrawal of coaching, support and career development to an employee, which results in pushing the employee out of an organization.

This episode’s featured Workplace Champions share their different perspectives on how to manage their organization’s talent as a collective unit. Brett believes that human capital pain points are challenging finance leaders to carefully reconsider how to best manage employees and forfeit dated models that may have treated employees as just another asset that can depreciate overtime.

This episode features the workforce insights and commentary of CFO Brian Gladden of Zelis, CFO Razzak Zallow of Floqast, CFO Kevin Rubin of Alteryx  and CFO James Moylan of Ciena.

Back in the year 2000, as Arthur Andersen saw a stream of young accountants exit the firm to join dotcom start-ups, Kevin Rubin’s workload continued to escalate as the public accounting firm felt the pinch of a constricting workforce.

Nevertheless, Rubin’s career ambitions remained in lockstep with the public accounting house. In fact, even today he believes that he may have stuck with Andersen had the accounting house not collapsed in the aftermath of the Enron scandal.

Andersen’s fate, the implosion of the dotcom bubble, and the September 11 terror attacks each in its own way contributed to the future trajectory of Rubin’s career—a convergence of events and circumstances that Rubin still finds difficult to untangle.

“Somehow, the circumstances opened up an incredible opportunity for me,” recalls Rubin, when we ask about MRV Communications, a client company of his that ultimately appointed him vice president of finance before 3 years later naming him CFO.

Meanwhile, months prior to Rubin’s arrival at MRV, the company had announced that its CFO, Edmund Glazer, had been on the Boston-to–Los Angeles flight that had crashed into the World Trade Center on September 11.

“It was more coincidental than anything else,” remarks Rubin, who refers to the late Glazer as a friend and the CFO who succeeded Glazer as one of his great mentors.

Still, the repercussions of the early 2000s were not yet behind Rubin. Shortly after his arrival, MRV’s market cap—once more than $6 billion—fell to roughly $60 million in a plunge that would together task Rubin and his new CFO mentor with finding a way forward.

Says Rubin: “We had to make some pretty dramatic changes pretty quickly to be able to re-orientate the business. In the end, we emerged as an operating company with three distinct business units.” –Jack Sweeney

It was nearly 18 years ago that Icertis CFO Rajat Bahri stepped into the CFO office for the first time.  

Thus began a stretch of time that Bahri, not unlike many of his CFO peers, has populated with various distinguished CFO career chapters ranging from 3 to 5 to 8 years in duration.   

Still, for Bahri, "18 years" means more than this, as it also represents the amount of time he invested prior to receiving a CFO appointment, making it a worthy touchstone with regard to which we can seek out some thoughtful CFO reflection.

Icertis’s CFO doesn’t disappoint us. It seems that back in 2004, after Bahri had turned the corner on 17 years with Kraft Foods, Inc., he found himself handicapping his CFO prospects for the top job. Certainly, such aspirations were in no way foolhardy on the part of Bahri, who had already served as CFO of Kraft’s high-growth frozen pizza category as well as CFO of Kraft Canada, where he got to double down on his operations experience.

However, Bahri explains, time began to weigh on him: “I could have stayed at Kraft for another 8 to 10 years and gotten the top job, but my thinking was that if I stayed and didn't get it, I could have become stale and it would have been tough to make job changes.”

Of course, this is a quandary that many long-tenured finance executives face annually, not to mention that especially challenges the sense of responsibility of those executives who take pride in being loyal corporate soldiers.  

Still, Bahri reports that his decision to exit Kraft was not only a hedge to mitigate the risk of his skill base growing stale but also a step that allowed him to check two new boxes.

“In addition to allowing me to enter a different industry, joining Trimble put me with a publicly traded company,” remarks Bahri, referring to the technology firm that he joined following Kraft and where he would serve as CFO for the next 8½ years.

Says Bahri: “It was a great win-win. Trimble got a guy who was strong operator, and I got my wish to learn IR and how to manage the Street and investors.” –Jack Sweeney 

If you had told Brian Gladden in 2006 that he would shortly be working for a Saudi crown prince, the 14-year GE finance veteran may have replied using a shorthand equivalent to “when pigs fly.”

As a GE finance executive, Gladden had served in a string of senior roles, including a number in which he reported directly to GE CEO Jeff Immelt.

Nevertheless, when GE announced in 2007 that it had signed a definitive agreement to sell GE Plastics to Saudi Basic Industries Corporation (SABIC) in a deal valued at $11.6 billion in cash, flying pigs no doubt appeared before Gladden’s eyes.

“Brian and his world-class team now have the right resources to truly transform this industry globally,” reads a comment from a GE press release announcing the deal that subsequently relocated Gladden for 12-month stint in Saudi Arabia, where his new boss—a crown prince—was waiting.

“I had to stay for a year to lead the business through the integration, and this was a challenging time for me culturally,” recalls Gladden, who would step into a CFO role at Dell upon his return to the U.S.

“This was my first public company CFO job—and Dell was a $60 billion-a-year firm—so it was huge stretch for me,” remarks Gladden, who would log nearly 6 years as Dell’s finance chief.     

“Every relationship is different—Michael Dell was fantastic with customers and with the company’s vision as far as where technology was going,” comments Gladden. “As finance leader, you discover where to fill in and partner with the leader based on their strengths.”

So, what do Jeff Immelt, Michael Dell, and a Saudi crown prince have in common? The answer is Brian Gladden. –Jack Sweeney

Back in 2009, as businesses navigated the repercussions of Wall Street’s collapse, Razzak Jallow found himself standing at a departure gate with a boarding pass that read simply “SaaS.”

To be clear, Jallow had just nabbed a spot on Adobe Inc.’s Creative Suite finance team, and the journey on which he and his colleagues were about to embark was the software company’s migration from a perpetual, boxed software model to one based on SaaS subscriptions.

While Adobe was not alone, and the path to SaaS was crowded with many software firms, few were faced with exiting a legacy model that operated at the scale and robustness of Adobe’s, in which 27 products were clustered under the banner of the developer’s “master collection.”

“This meant that 27 R&D teams had to ship their product on the same exact day,” recalls Jallow, whose comment seems to expose both the madness as well as the unmatched rigor behind Adobe’s legacy model.   

Still, cracks were visible inside the perpetual world.

“We were selling fewer units every single quarter, and meanwhile we were spending more and more on go-to-market initiatives to try to get customers to upgrade,” continues Jallow, who notes that the migration to a subscription business model got into high gear only once Adobe management uniformly agreed that “it was time to do what was right for the customer.”

According to Jallow, the customer-centric message began to gain momentum inside the Creative Suite business unit where he had been spending his days modeling revenue predictions to better serve the investment community.

Still, a finance leadership challenge remained. At the time, Jallow remembers, Adobe’s then-CFO, Mark Garrett, stated: “Our current investors may not like it because they trade us on quarterly revenues and EBITDA  – but I’m going to go find us new investors.”

Garrett’s resolve to find new investors rather than muddy Adobe’s customer-focus message further buttressed the company’s stance.

Says Jallow: “Observing a CFO who saw beyond his own world and understood the products and customers and how the different teams worked together was just really impactful for me. Moments like that just don’t come around very often.” –Jack Sweeney

When Checkout.com CFO Céline Dufétel tells us that her career decision-making has been driven not so much by titles or status but by an inner push to acquire the next level of skills or types of skills, we can’t help but note a mysterious coincidence.

It seems that a former McKinsey & Company partner had just shared the exact same thought with us almost word for word. Moreover, so, too, had a former CFO of T. Rowe Price. Of course, there’s a sound explanation for this concurrence, and—much like with the solution to an Agatha Christie mystery—the answer is perhaps best read out loud: “The former McKinseyite, the former T. Rowe CFO, and Checkout.com’s CFO are the same person.”

For Dufétel, the path to the CFO office at Checkout.com began at McKinsey, where 10 years ago she was the leader of the consulting firm’s North American Asset Management practice. Two years earlier, Dufétel had been named a McKinsey partner, a prestigious milestone for an up-and-comer who would ultimately spend 10 years at the firm.

“Being a consultant, not only did you have to come in with a good strategy answer for your client, but also you had to convince them that it was the right answer for them,” comments Dufétel, who credits the strategy house with strengthening her “influencing skills.”

Dufétel left the strategy house in 2014 to serve as global head of marketing for investment management firm Neuberger Berman—a 3-year stint that ultimately allowed her to switch tracks.

“Leaving McKinsey to take on a much more operational role was very informative, and it was helpful for making certain that I was in tune operationally and would be able to execute well,” remarks Dufétel, who exited Neuberger after an executive search consultant had gauged her interest in a CFO position with asset management T. Rowe Price.  

At T. Rowe, Dufétel also acquired COO responsibilities before ending a 4-year CFO tenure there in order to be named CFO and COO of Checkout.com.

And so it goes inside the time-bending career of Céline Dufétel, whose resume no doubt stress-tested the selection criteria for more than one “40 Under 40” list. (she appeared on Fortune’s back in 2020). –Jack Sweeney