CFO THOUGHT LEADER

Last winter, when China ordered tens of millions of people back into a pandemic lockdown, executives inside the $170 billion automotive aftermarket parts industry took a deep breath.

Jeff Shepherd, CFO of aftermarket giant Advance Auto Parts, says that the possibility of another China shutdown had just not been part of Advance’s procurement calculus. Still, parts “in stock” at Advance stores during 2022 have dropped only a few percentage points from their usual inventory level in the “mid-90th” percentile, according to Shepherd, who credits the anticipation of yet another China-related event as further evidence of Advance’s astute procurement practices.  

“The last time China hosted the Olympics, they shut the power down and they shut the factories down. So, during the Games, you can’t get product out and it’s not being manufactured,” explains Shepherd, who notes that Advance’s procurement team anticipated a China shutdown in February due to the Beijing Olympic Games.

 “We started doing a lot of buying late last year and very early this year,” comments Shepherd, who reports that not unlike those of its competitors, Advance’s 2021 supply chain troubleshooting efforts were related mostly to bottlenecks at U.S. ports and a confounding shortage of truck drivers.  

“We’re not out of the woods now—I will tell you that it’s not perfect,” remarks Shepherd, regarding the existing supply chain challenges inside the U.S. However, if Advance’s “in stock” levels stay in line, the company may have a read on future developments in China.

Says Shepherd: “I can’t take credit for knowing those things, but we were indeed able to get out in front of the China shutdown, and our ‘in stock’ percentages are now nearly back to their pre-pandemic levels.” –Jack Sweeney

It was nightly business conversations at his parents’ dinner table that first led Prashanth Mahendra-Rajah to consider alternatives to business when it came to building a career.

“As most small business owners do, my parents worked all the time—and as with most small businesses, things could at times be financially challenging,” explains Mahendra-Rajah, who vividly recalls business rent increases, outstanding receivables, and the dynamics behind supply and demand that pervaded his parents’ dinner conversations.

Nevertheless, it was this same scrutiny of supply-and-demand dynamics that Mahendra-Rajah credits with helping him to “come full circle” and ultimately led him to business school.

At the time, Mahendra-Rajah was working full-time as a senior process engineer for chemical giant FMC Corp., a career-building stint that afforded him the real-world insights required to enrich a master’s thesis that he needed in order to complete a chemical engineering degree from Johns Hopkins.

“It was my first job out of college, and the plant manager’s M.O. was to always beat me up and demand more cost reductions and better process yields,” recalls Mahendra-Rajah, who notes that his immersion into the business side of manufacturing quickly escalated when FMC received a large order for a synthetic that the company no longer manufactured.

“I was given the task of refurbishing an old factory and getting it up and running in a matter of weeks,” remembers Mahendra-Rajah, who adds that the production of the once-discontinued synthetic led the plant manager’s mind-set to suddenly pivot.

“He was pushing me to spend as fast as I could. I was told not to negotiate with suppliers, and if I needed overtime for the maintenance workers, to ‘go for it’—schedule was paramount, cost was secondary,” explains the career finance leader, who credits the experience with helping him to open a door that he had once shut.

Says Mahendra-Rajah: “It kind of brought me back to the table with Mom and Dad and made me realize how so much of our world is really driven by supply and demand and how finance is the oil in the gears." –Jack Sweeney

Even after serving in multiple CFO roles and spending 10 years on Wall Street, Manish Sarin still marvels at the plus-size experience that he acquired in the mid-1990s when he worked for Price Waterhouse as a financial advisor in its Nairobi office in Kenya, East Africa.

At the time, Sarin recalls, an abundance of available funding from the World Bank and IMF was enticing growing numbers of state-owned business in the region to privatize their operations as a prelude to jump-starting their capital market strategies.

“These were businesses like steel mills, aluminum plants, car dealerships, and commercial banks—for me, it was just an amazing introduction to how businesses work, what makes them successful or not successful, and how to actually evaluate businesses from a capitalistic perspective,” explains Sarin, who reports that he was the most junior member of the East African privatization practice, a team of 10 people within PW’s 100-employee Nairobi office.

Says Sarin: “Our clients were really the World Bank and IMF—we would go and work at state-owned businesses at their request and then prepare and present our analysis to both the World Bank and the national government.”    

Twenty years later, as Sarin prepared to open his first CFO chapter, some of those presentations undoubtedly came to mind as he began to formulate his own vision for the role and the broader business contexts that Wall Street now expects 21st-century finance leaders to deliver.

Along the way, Sarin tells us, he has learned that a broader perspective is being demanded not only by outside stakeholders.

“A few years ago, a head of sales told me, ‘You have great ideas, Manish, but you need to provide greater context and better explain why you are doing the things that you are doing,’” remarks Sarin, who says that he took the advice to heart and has found that adding more context has accelerated his relationship-building with different parts of the organization.

“If a CFO approaches the role from the perspective of occupying a finance swim lane, I think that this is a very narrow view of the role—it has to be much broader, and you have to be thinking, ‘the entire company and what is happening in every department are part of my concern,’” explains Sarin.  - Jack Sweeney

When Mark George first joined Otis Elevator’s accounting team back in the late 1980s, he found fixed asset accounting to be different from what he expected.

Says George: ”We had to run around the company and put barcodes on any new piece of furniture that the company had purchased.” What’s more, George tells us, he roamed the corridors as a deputy in the accounts payable department, “punching A/P vouchers” and acquiring any necessary signatures.

“I was always thinking, ‘How do I get away from doing this?,’” comments George, who notes that as a 20-something-year-old he sometimes felt like a “fish out of water” at Otis, which back then—as it is now—was part of the larger conglomerate patchwork that is United Technologies Corp.

“I understood accounting to a certain degree, but I was definitely not an accountant,” recalls George.

Less than enamored with the Otis accounting career ladder and potentially facing years of manual work, George began to speak up as he roamed the office and suggest changes to certain policies and processes that could eliminate the work that he personally disliked. He also began championing the adoption of new technologies that could automate manual tasks, despite the fact that such automation would more than likely put at risk his own position “with puncher in hand.”

“If at some point if they fired me, I was young enough and naïve enough to think that I would just go and get another job, as if that would be just that easy,” explains George, who adds that over time, his suggestions found wider support—and as more tasks became automated, he found himself in greater demand, not less.     

“I would solve a problem, and they would give me more problems to solve,” remembers George, who observes that he began to view his early years at Otis in a new light after returning to the United States from a stint as CFO of Otis’s South Asia operations.

“I had moved around the company quite a bit by then, and I considered why I had already reached a certain level while others who had joined Otis at the same time had languished,” notes George, who credits his aversion to manual work with having opened the door to more opportunities in process improvement, beginning with a job in Otis’s treasury department and then leading to stints in financial planning and corporate development.

“Eventually, due to some M&A work and my treasury background, I got some exposure to some international M&A roles overseas, and our regional headquarters then asked me to take a permanent role,” says George, whose stint as Otis’s South Asia’s finance chief became the first of several CFO tenures within UT—including a term as CFO of Otis itself. –Jack Sweeney

Looking back on her career as a corporate finance executive, Angela Pierce says that the call of leadership arrived at a moment of unvarnished frustration.

Sixteen years ago, when the management of Level 3 Communications was expressing a keen interest in acquiring Pierce’s then-company, Broadwing Corporation, it was not the first time that Pierce found herself sitting across from Level 3 corporate development executives.   

In fact, as Broadwing’s vice president of finance, Pierce had been involved in two earlier engagements when Level 3 executives had expressed similar sentiments—only to have nothing come out of the exercises in M&A due diligence.

For Pierce, the third engagement necessitated a more direct approach—one that signaled to Level 3 that Broadwing management was confident that further negotiation was not necessary.

“At some point, you have acquired the required competence from your past experiences, so I said to the executive, ‘Look, I don’t want to do this again, so here’s the deal,’” recalls Pierce, who adds that she shortly received a term sheet for a $1.4 billion deal that would be signed only a few days later.

While Pierce says that she was just expressing a sentiment shared by Broadwing’s wider management, her grasp of the deal’s fundamentals and confidence in her own ability to deliver the message abruptly quelled any angst concerning her future leadership roles.   

“At that moment,” she observes, “I realized that I wanted to be the one to make the call.” –Jack Sweeney 

Among the career milestones that CFOs prefer to highlight for us during our discussions, there’s little question that examples of driving business growth are an ongoing favorite.

However, for Jason Keen, who built his finance career inside midsize construction firms, management’s growth goals have always needed to be mindful of a company’s organizational culture.

Inside the construction realm, where multigenerational, family-owned businesses survive and thrive, growth goals are often tempered by enduring organizational cultures that are apt to cast a cautious eye upon those who choose to champion change.

As just such a champion, Jason Keen has had few milestones for driving growth that have resembled the double-digit feats commonly recounted to us by CFOs from other sectors. Instead, Keen tells us of the unique challenges that finance leaders sometimes face within multigenerational firms.  

“Part of what I do is to get a foundation in place—which is what I have done three times now—and then structure the company to be ready for growth,” he reports. “This means putting the right type of team in place and preparing them for this smart growth so that both the top line and the bottom line grow together.”

It’s an approach that most recently led Keen to step into the CFO office at Mills & Nebraska, a family-owned business specializing in the manufacture and installation of doors.  

Says Keen: “We want to be ready for growth in a smart way.” –Jack Sweeney 

Steve and Jack discuss how growing concerns about a possible economic recession are helping fuel CFO aspirations for creating a more agile finance function, and Steve reflects on how different career experiences and backgrounds influence how CFOs lead and make business decisions. Featuring commentary and FP&A insights from Planning Aces: CFO David Barnes of Trimble, CFO Komal Misra of Starry, Inc. and CFO Jason Keen of Mills Nebraska.

Generally, when legendary CEO Roger Enrico wasn’t happy, just about every PepsiCo executive from junior grades on up knew about it. So it was that when David Barnes was told he would be presenting to Enrico on a subject known to inflame the CEO’s ire, he knew that his presentation—one way or the other—would be career-defining.

“Enrico was known to be very impatient with those who would present a bunch of facts but offer no insights,” remembers Barnes, whose tryst with destiny surfaced via the guidance of none other than Indra Nooyi, PepsiCo’s future CEO, who Barnes tells us was his “great mentor and sponsor” during his Pepsi years.

“Pepsi had hired a big consulting firm and they had dumped a lot of data on us, but they couldn’t find any insights, so Indra asked me to work with the consultants and actually get the insights out of the data,” continues Barnes, who had been hired in the mid-1990s to be part of a strategy group within PepsiCo that had been tasked with integrating strategy and finance across the company.

As it turned out, Barnes’s presentation succeeded in delivering a number of new insights related to the profitability (or lack thereof) of PepsiCo’s restaurant business in China.

“We had a small, money-losing business in China at a time when the Asian economies at large were experiencing deep recessions, so the questions being asked were ‘Do we give up?’ and ‘Do we double down?,’” recalls Barnes, who would soon open a new career chapter in China—an indication that perhaps his presentation had gone well.

 “They wanted a known quantity in China—someone with the company’s corporate interests at heart—so I became responsible for finance as well as our development activities around new stores for KFC and Pizza Hut,” explains Barnes, who would subsequently use data to better expose an opportunity for new stores inside China’s smaller tertiary markets rather than in big cities.

“We figured out that there was a better way to do capital resource allocation just for these markets,” comments Barnes, who recalls the business leader who ultimately made the call when it came to opening new stores as saying: “Let’s get at it!” –Jack Sweeney 

Among the many strategic changes that finance leader Danielle Murcray has helped to put in motion during her multi-chapter CFO career, perhaps none better reveals her mantle as a strategic leader than the move by cybersecurity firm AttackIQ to adopt a 100 percent–remote U.S. workforce.  

With the arrival of the pandemic, Murcray—like many of her CFO peers—became laser-focused on the company’s finance liquidity and operational efficiencies. At the same time, though, she felt compelled to communicate the health and well-being of the company more broadly.

“I really sought to promote stability across the organization and looked to instill trust with employees and investors,” comments Murcray, who credits the same aspects of her leadership outreach with helping AttackIQ to leverage the advantages of a remote workforce.

“I spend quite a bit of my time making certain that we are overcommunicating and collaborating in different ways so that people feel that we are together even though we are not physically together anymore,” explains Murcray, who moved to Montana from California back in late 2020 after the company announced that its U.S. operations would be moving to a remote model. It subsequently closed its Santa Clara headquarters and San Diego offices.

“From the results of our own surveys, we realized that most employees did not want to go back to the office anymore, so we could see that being 100 percent–remote would be a huge competitive advantage,” reports Murcray, who adds that since the decision, more than a dozen AttackIQ employees have relocated out of the state of California.

Says Murcray: “I think that leading through the pandemic is now become something of a defining moment in my career. –Jack Sweeney