Latest / The Diary of a CFO / How the Best Finance Leaders Operate, Plan, and Forecast, with Christina Ross

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How the Best Finance Leaders Operate, Plan, and Forecast, with Christina Ross · The Diary of a CFO

0:04
Welcome back to the Diary of a CFO podcast, the
0:06
podcast where finance leaders share the lessons,
0:09
challenges, and wins that shape their careers
0:11
as well as their organizations. I'm your host,
0:14
Waseea Kamani, and today I'm so delighted to
0:16
have with me Christina Ross. She's a serial CFO
0:19
turned founder and CEO of Cube, a no -code FB
0:23
and a platform for modern finance teams. Christina
0:25
is a two decade finance veteran from startup
0:29
to public companies and a former finance transformation
0:32
leader at Deloitte Consulting, managing large
0:35
scale technology projects for the office of the
0:37
CFO. After growing frustrated with the manual
0:40
nature of FB &A, we've all been there, and after
0:43
an implementation of a leading solution gone
0:45
wrong, Christina set out to build the next generation
0:48
of FB &A technology, and she founded Cube in
0:52
2018. Welcome to the show, Christina. Thank you.
0:56
I'm so excited to be here. Thank you. I'm very
0:59
impressed because, one, we've been so frustrated
1:02
with how manual FP &E is, but you did something
1:05
about it. So very curious to hear about your
1:08
career journey, what drew you into finance in
1:11
the first place, and did you have a picture yourself
1:13
as a CFO or a CEO? Thank you and great question.
1:18
I definitely started out my finance career not
1:21
thinking I wanted to be in finance I knew that
1:23
I wanted to be in the world of business So when
1:26
I went to school, I was a business major. I was
1:29
in I studied operations management, which is
1:31
like a mix between industrial engineering and
1:35
the real world, and think about process, supply
1:38
chain, all of those things. I love seeing how
1:40
things work, and this is really nerding out.
1:43
I was a member of the American Production Inventory
1:45
Control Society, so that gives you a sense of
1:48
how much I loved manufacturing in that entire
1:50
space. Really, I wanted to understand the world
1:53
of business and to understand business, you have
1:55
to understand the numbers. And the reality was
1:58
not everyone speaks the numbers. And that's still
2:01
a challenge for finance leaders today is how
2:03
do we translate this language that we speak to
2:06
others who don't speak it. So I felt that if
2:09
I ever wanted to be in business, work for a business,
2:11
run my own business one day, I had to become
2:13
an expert in the numbers. And more importantly,
2:16
I had to learn how to speak this. very specific
2:18
language. So that's how I got into finance to
2:21
begin with. And I started out in the early 2000s,
2:24
back when GE was considered, you know, the Google
2:26
or Amazon or Apple of its time. Yes, those those
2:30
were that was a long time ago now, but I joined
2:32
working in their finance team and moved around
2:35
the world in different types of finance roles.
2:37
So I got to see it from a number of different
2:39
angles, see where it was different in different
2:41
industries and different types of businesses
2:43
and where it was similar. And it was a really,
2:45
really awesome work for someone in their early
2:47
20s. You get to travel the world to work a million
2:49
hours a week, which in those days just, you know,
2:52
was something that helped me to learn a lot faster.
2:55
And then I moved over to Deloitte consulting
2:57
and did finance transformation work. And that's
3:00
a very fancy way of saying we, we supported these
3:03
large scale system implementations, which if
3:06
you've ever been through these, especially at
3:08
enterprise companies, you know, it's not just
3:10
about the software. It's really about. Just like
3:13
everything in this world, it's all about the
3:15
people. And so it's about training. It's about
3:18
mapping out how people use software. What are
3:21
the jobs to be done? How do you trace this across
3:23
different teams and geographies and regions and
3:26
help do these large scale rollouts and deployments?
3:29
So I did that with Deloitte for about three and
3:30
a half years. And then I was ready to run my
3:33
own finance team. And I got lucky quite a few
3:36
times. I joined some amazing companies, two out
3:39
of three of which went public. And I joined them
3:41
in the very early days. So the first one was
3:44
this little 50 person company that I joined called
3:47
Rent the Runway. And of course, it's now a public
3:49
company and it's been around for quite a few
3:51
years. For all of the listeners wondering, yes,
3:54
I did get free clothes to wear and borrow was
3:56
definitely one of the perks of the job. But I
3:59
learned the world of early stage finance at the
4:01
time. So I went from very large scale enterprise
4:04
to as early as it comes and understanding how
4:07
to fundraise and You know, I tell a lot of stories
4:10
from these days around how it wasn't my job to
4:12
just roll up the numbers. I had to buy the soap
4:14
as well for the bathroom. After Rent the Runway,
4:17
I went to this company called Criteo. Also again,
4:19
a publicly traded company. I was there for about
4:22
two years where I met my husband, which is exactly
4:25
why I left the company. Definitely don't want
4:27
to work around your spouse for too long. And
4:30
then joined another company called iView. We
4:32
got to see another 10x growth journey. And then
4:35
It was there, and this is probably the more interesting
4:37
part of the story, where I became frustrated
4:42
with what I think so much of the market and so
4:44
much of the finance world is still challenged
4:46
by today. And that is the following. We live
4:49
in a world of really bad options, or at least
4:53
we did when it comes to financial planning and
4:55
analysis. And those two bad options really are,
4:58
you could stick with your spreadsheets forever.
5:00
And there's lots to be frustrated about. They
5:02
don't scale. They're not databases. They have
5:05
limited collaboration functionality, especially
5:08
with Excel, which most finance professionals
5:11
find superior to Google Sheets except for the
5:13
collaboration functionality. There's so much
5:15
to love there, but so much that doesn't work.
5:18
It doesn't scale. And then on the other hand,
5:20
you have, I would call it traditional legacy
5:22
platforms or point solutions that sit in the
5:25
second category, which is really like very scalable
5:28
technology, but very difficult to use, very difficult
5:32
to learn and to adopt and to implement. And really
5:35
you're replacing your spreadsheet. So on the
5:37
one hand, you have what you know and what you
5:39
understand and what you've effectively built
5:42
a language on top of Excel and spreadsheets are
5:44
the lingua franca of finance. But then on the
5:46
other hand, you finally get the power and scalability,
5:49
but you have to relearn effectively how to do
5:51
FP &A. So harking back to those days. in doing
5:55
finance transformation. It's not just about the
5:57
software. You have to change how you run your
6:01
operations, what people are using the software,
6:04
how they use it, et cetera. So these tale of
6:07
two bad options basically left me in a very difficult
6:10
situation where I finally decided to go for option
6:13
number two. I was a technical person. I implemented
6:16
a leading solution. They told me it'd be six
6:18
weeks. Six months later, I was still mid implementation.
6:22
and realizing that I couldn't get my numbers
6:24
out. And my team didn't want to use the platform
6:27
and they wanted to go back to Excel. And they
6:29
built a backup model in Excel, which again defeats
6:31
the purpose. And my board and my leadership team
6:34
told me, quote, I'm not logging into that thing,
6:37
but you can spread, send me a spreadsheet. And
6:39
I realized very quickly that spreadsheets aren't
6:42
going anywhere. And so why fight it? And instead
6:45
developed the first fully spreadsheet native
6:47
FPNA platform. And what that means is we built
6:50
an entire backend that connects seamlessly to
6:54
everywhere you work. Because it's really, FP
6:58
&A is not just about financial planning and analysis.
7:01
It's about harnessing the collective intelligence
7:04
of the organization. So that means, can you capture
7:07
it? It lives in people's heads. It doesn't live
7:09
in a source system. That's the crazy thing about
7:11
planning. It really does become your system of
7:14
record. So you have to capture that information
7:16
and you also have to share it back with people.
7:18
And so the best way to do it is where people
7:20
work. And so Cube has this really integrated,
7:24
powerful data engine, calculation engine, but
7:27
it connects to all the different areas where
7:29
you work. So that's Excel, that's Google Sheets.
7:32
That's Slack, that's Teams, and then coming soon,
7:35
of course, is PowerPoint and slides. So all the
7:38
ways people work. So that's a little bit about
7:40
me, how I got my start and why I'm so passionate
7:42
about FPNA and why I'm so passionate about finance
7:45
and about how making it a better, how we'd love
7:47
to make it a better place, not just for finance
7:49
professionals, but for all of their organizations.
7:52
That is so empowering and inspiring too, because
7:56
you saw something was broken, actually did not
7:59
exist. and you turn into something to where it
8:03
is today. So what would you say helped you in
8:06
that transition, right? Because there's something
8:09
to see something and you wanna change it, but
8:11
actually doing something about is quite different.
8:14
So what would you say are some of the things
8:16
that helped you, especially coming from, I think
8:18
you were CFO and then you went into being a founder.
8:22
Well, I think the best thing I'm gonna talk a
8:23
lot about people in this session is my village
8:26
of... Folks who I know who are in finance to
8:29
validate the idea because it's one thing to have
8:32
an idea It's another thing to start taking action
8:34
on it So I'm sure for listeners out there who
8:37
have a really great idea who are inspired by
8:40
something and want to start a company I'll tell
8:42
you I spoke to endless number of people who said
8:44
I have this idea and I really want to do something
8:47
about it and Only so many people my network who
8:50
actually went and started a company and the reason
8:52
I share this is because it's it's really not
8:54
that hard to take the next leap, but it does
8:57
take a lot of blind faith and a huge amount of
9:00
risk. So I'll tell you, my first step was realizing
9:03
that this was something that I wanted in my life.
9:06
So it's not just about the idea. So many of us
9:08
have so many brilliant ideas that we want to
9:10
take action on. For me, it was really a personal
9:13
decision of am I willing to take the risks that
9:17
go along with starting a company, which really
9:19
means taking your income down to zero. So if
9:21
you're working in finance today and you're and
9:23
you're employed, like that means that you're
9:26
going to go intentionally to zero. And maybe
9:28
if you're not employed, now is a great time to
9:30
start thinking about what's next in the future
9:33
of finance. So I would say that that was maybe
9:35
unexpectedly the biggest decision that I had
9:37
to make. And then I started to create small milestones
9:42
for myself. So I always referenced the book or
9:45
I didn't read the book. I watched the movie Moneyball.
9:48
which is if the goal is to win the World Series,
9:52
you really want to just focus on getting on base.
9:55
You want to do one small thing at a time. And
9:58
for me in the early days, it was figuring out
10:00
who I was selling to. When I was building this
10:02
FP &A platform, I thought it was going to be
10:04
exclusively for small businesses. And I started
10:07
talking to small business leaders who I knew,
10:10
folks in my network. And I started to understand
10:12
they didn't look at finance the exact same way
10:14
that you would in a larger company and larger.
10:16
I just mean mid market. It could be 50, 100,
10:19
250, 500 employees. But if you're a mom and pop
10:23
shop, I mean, I remember very distinctly, one
10:25
of the answers someone on my network gave me
10:27
was like, I was like, how do you think about
10:29
cash flow? And he's like, what do you mean? And
10:31
I'm like, cash flow, like, how do you plan on
10:33
what you're going to spend? And how do you think
10:36
about receivables and payables? He's like, sorry,
10:38
Christine, I'm confused. We have money, we spend
10:40
it. We don't spend it. What do you mean? And
10:42
certainly not all small businesses are like that,
10:44
but it was a little bit less of a FP &A focus
10:47
that helped me figure out who my customer was.
10:50
And I built a product for that market. That is
10:53
awesome because now your platform pretty much
10:58
can work in different sides of companies. So
11:01
what would you say for your own experience working
11:03
in a small business versus larger companies,
11:07
especially when you're trying to go in that stage
11:09
where you're trying to go public? What is something
11:11
people often miss in that period when it comes
11:14
to the importance of FDNA? I mean, even understanding
11:18
that it is probably the most important, critical
11:23
and strategic function within an organization.
11:26
And I think anyone who's been through early stage
11:28
finance organization has seen this. There's usually
11:32
a. track where companies hire finance. So it
11:36
starts with the most basic and the most important,
11:38
which is like, we need someone to pay our taxes.
11:41
Like they may be doing bookkeeping through a
11:43
register, but at the end of the day, you got
11:45
to pay your taxes. So they hire a CPA or they
11:47
hire a bookkeeper. That's step one. As businesses
11:49
get a little bit larger, they hire a full -time
11:52
accountant. They'll get QuickBooks or Xero and
11:54
they start to build again. That's finance is
11:57
like, we just need to keep track. of the comings
11:59
and goings of expenses. Then as business starts
12:02
to get a little bit larger, and maybe the founder
12:05
or the CEO can no longer manage it with just
12:08
the accountant or small bookkeeping team, that's
12:11
when FP &A usually starts to become really relevant.
12:14
And we tend to see that generally around the
12:16
time a company hits somewhere between 50 and
12:19
100 FTEs. So, usually 100 is around the marker
12:22
where FP &A starts becoming more and more relevant.
12:25
And usually by 200 employees, most companies
12:29
have a head of FP &A. Maybe that head of FP &A
12:32
is titled VP of Finance. Maybe it's their CFO.
12:35
But there is a leader whose job is wholly focused
12:39
on managing not just what happened in the past,
12:43
but what will happen in the future. Okay, and
12:46
then in that in that moment when the company
12:49
is growing What would you say are some things
12:52
that as finance leaders? we should pay attention
12:55
to right because the things that matters when
12:57
you a Smaller company are different from when
13:00
you meet size versus a growing company and you've
13:03
worked in all three So I'm very curious to hear
13:05
what have you learned in those different stages?
13:08
I go back to the famous song mo money mo problems.
13:12
It's just as things become bigger, the scale
13:14
becomes more complex. So in the early stage days,
13:18
it's more like it's more of setting up a foundation
13:21
culturally in an organization of why Managing
13:26
to the numbers, I'm going to sound, it sounds
13:27
very rudimentary, but I've seen it a million
13:29
times. Why managing to the numbers is critical.
13:32
I'm talking early stage at this point. So sub
13:34
a hundred FTEs, oftentimes remember these organizations
13:38
have come up over time, maybe haven't been as
13:41
focused on the financials. They've been focused
13:43
on building. a business through sheer will, through
13:47
great sales and marketing, through customer focus,
13:50
et cetera. So trying to stab a culture and a
13:52
foundation that finance is important and here's
13:55
why. And oftentimes the role of the finance professional
13:58
is to help teach and communicate to the rest
14:01
of the organization why it's such a critical
14:03
function and why they need to pay attention to
14:05
it and how it ultimately serves them. So that
14:08
I found in the very early stages is critical.
14:11
As you start to become a larger company, it's
14:13
about setting up all your people process operations
14:16
again. You need more than just a bookkeeper.
14:18
You need a strategic finance person, whether
14:21
it's manager, VP, C -level person focused on
14:26
the future and planning. And that's really critical.
14:30
Finally, as companies start to get bigger, you
14:32
start to see planning cycles move from once a
14:35
year, twice a year to being constant. I don't
14:37
mean just forecasting. Typically in most organizations,
14:40
we all have our Excel models or our models somewhere
14:43
that we're just updating real life changes as
14:46
they happen. That is a version of forecasting,
14:49
but I'm more referring to formalizing forecasting
14:52
throughout an organization. So it goes from having
14:55
a once or twice a year budget to having that
14:58
plus having then a quarterly forecast, then having
15:01
a monthly forecast, then having a real time forecast.
15:05
That's what we usually start to see as you become
15:07
larger and larger in terms of organizations.
15:10
It's just that planning maturity. And in terms
15:13
of planning maturity, I like how you said first,
15:16
you start with, you know, learning the basics
15:18
of the numbers and then you turn into strategic
15:21
finance. What would be your best definition of
15:23
what strategic finance is? Because when you come
15:25
through college and finance, you know, you know,
15:29
accounting is just accounting or finance is just
15:31
this number, but you're not thinking strategically
15:33
necessarily. So how do you grow into that and
15:36
get into really what strategic finance is about?
15:39
The way that we define strategic finance is powering
15:44
strategic business decisions with financial clarity.
15:47
It's kind of a buzzword now, strategic finance,
15:49
and you see a lot of even job definitions changing.
15:52
I think rightly so from FP &A or finance manager
15:55
to strategic finance business partner. And I
15:58
think it really reflects the world understanding
16:00
the role of the finance professional. We have
16:04
a framework at Cube that we use to think about
16:07
how to become more strategic and what is strategic
16:09
finance. You can get it on our website and we
16:12
call it the strategic finance hierarchy of needs.
16:15
So if you're familiar with Maslow's hierarchy
16:18
of needs, the idea is before you can achieve
16:21
self -realization, self -actualization, you first
16:24
need to have food and water. and you need to
16:26
have a home and all of those things. The equivalent
16:30
in finance is at the top of the pyramid or at
16:32
the top of the mountain is being strategic. So
16:36
driving alignment, decision making, et cetera.
16:39
But before you get there, I'm going to send shivers
16:41
down everyone's spine. The data has to be right.
16:44
There's four layers to the pyramid. And the bottom
16:47
layer is data management or data fidelity or
16:51
data integrity. And that is making data usable
16:54
and trustworthy. so that we can then make strategic
16:58
decisions. So first you need your data clean.
17:00
And most folks when they come to cube are struggling
17:03
with this as anyone would. It is not just a finance
17:06
challenge, but I'll also describe what makes
17:08
this challenging for finance professionals. More
17:11
so than I would argue anyone else in the business.
17:13
Finance is the most downstream function in an
17:16
organization. And what I mean by that is if you
17:18
think at the top, top of the org. If you think
17:21
about a data structure, everything that happens
17:23
in the business gets captured somewhere. There's
17:25
a data capture in your CRM. There's data captured
17:28
in your ERP. There's data captured in your HRIS
17:31
platform. All that information then needs to
17:33
be transformed and centralized in a way and translated
17:39
so that finance can report at the end of the
17:41
month, quarter period, et cetera. And finance
17:44
is the last stop before that data hits executives
17:48
and leadership. or goes external and goes to
17:51
Wall Street or to a board of directors. Last
17:53
Touch means finance is dealing with every single
17:56
mistake, issue, data imperfection that happens
18:00
in the organization. And by the way, we're the
18:03
ones who sign off our name with that we go to
18:05
jail if it's wrong, like see if it's wrong. It
18:08
is a big deal. And so again, think of broad lower
18:12
layer of the pyramid is data management. The
18:15
next layer is reporting and analysis. So now
18:18
you've got the data right. Yes, I can finally
18:21
do something with it. And that's translating
18:24
numbers into actionable insights. So now I can
18:27
say I have my numbers reporting is not just about
18:29
putting it into a report reporting is about figuring
18:33
out what that story is behind the numbers. Reporting
18:36
is oftentimes about getting your data now into
18:39
a format where you could then perform more analysis.
18:42
So now we're getting more and more into the parts
18:44
of the job that I know I love and I know CFOs
18:47
and finance professionals I speak with actually
18:49
enjoy doing. Very few folks love the data management
18:52
piece. So now we're on the second layer. Great.
18:54
Now I have the reports that I need. I've analyzed
18:57
the data. What's next? Reporting is typically
19:00
in the past. Next comes planning and modeling.
19:03
That's looking at the future. That's the next
19:04
layer. That's about keeping plans current and
19:07
connected to reality. One of my favorite sayings
19:09
or one of my famous sayings is if we were great
19:12
forecasters in finance, we wouldn't be doing
19:14
this job. We'd be in Vegas betting on horses
19:16
or basketball teams or something. It's not about
19:20
perfect prediction. What it is about is understanding
19:23
the drivers of your business. And when the world
19:26
turns and the unexpected happens, that we're
19:29
prepared to make changes in real time. That's
19:32
really the power of planning. So again, the frequency
19:35
of planning, the quality of your inputs, the
19:37
quality of your model really matters. Now you
19:41
have these three layers, think of them like Lego
19:43
blocks or think of them like layers of the pyramid.
19:46
Now you can finally ladder up and drive alignment
19:49
and decision making. So that's how we think about
19:51
what is strategic finance and how to get there.
19:53
And I'm sure most of the listeners would be like,
19:55
wait a minute, I do that and I don't have all
19:57
these things perfect. That's okay. But typically
19:59
if you're going to sit in front of an executive,
20:01
and they're going to ask you, hey, even what
20:04
happened last month, you're going to use all
20:06
those layers. Number one, you got to have clean
20:08
data. Number two, you have to pull a report together
20:11
to look at the information and analyze it. Number
20:13
three, you have to have a plan of which you're
20:16
comparing against. So you can say, hey, we grew
20:18
20 % last month. That could be the most amazing
20:20
thing in the world, or that could be absolutely
20:22
terrible, depending on what your plan said you
20:24
were supposed to do. So there's the planning
20:26
component. And then the why and the so what becomes
20:29
the strategic finance. So as we think about how
20:32
to be more strategic thinking about checking
20:34
a box on each of each of those really important
20:37
layers Oh, I I love I love that pyramid. I love
20:41
how you explained it and I definitely want to
20:43
spend time at the bottom, right? Um, because
20:46
when you said I was like, oh I feel this To get
20:51
the data clean like you said because the data
20:53
lives in so many different So if you're using
20:58
Salesforce, you know that you have regular field
21:00
and 10 ,000 custom fields. And then you go into
21:03
your HR and you have. regular fields and 10 ,000
21:07
fields and we call them differently. So that's
21:10
where I think business partnering comes into
21:13
place and you have to work well with your accounting
21:16
team. You have to work with different partners.
21:19
So what do you advise people to do at that stage
21:22
when you come in and you realize, ouch, I have
21:25
a data integrity problem or I have difficult
21:29
relations with other departments because I need
21:32
their data by X date in order to do my report,
21:35
but they have their own struggles. Like how do
21:38
you navigate that kind of stuff? I mean, I could,
21:41
we can do a whole session on just this one. So
21:43
maybe next time we could, we do an hour on it
21:46
or a half an hour. There's a few different, if
21:48
you think of it in a framework, which I love
21:50
my frameworks, there's people processing technology.
21:54
So going back to the. to the consulting days,
21:56
I can talk about each one of those. But let's
21:58
also break down how to get to good data management.
22:02
And we think of it like combining, cleaning and
22:05
controlling the data. The most important piece
22:08
is having good data governance as a foundational
22:11
layer. So this is probably like, maybe it's a
22:13
little the honorable, but you need to have good
22:15
data governance before you can. know that your
22:18
data is going to be right. And you brought up
22:20
a really important part, which is how do I work
22:22
with my accounting team or how do I work with
22:24
my sales team to have the data? At the end of
22:27
the day, this goes back to a really important
22:29
part about data integrity, which is the point
22:32
of capture. We cannot. So number one, we need
22:35
to set the right sort of governance around making
22:38
sure I'll use the classic examples to salespeople
22:41
accurately put information in Salesforce. There's
22:44
a lot of work to be done around that. And at
22:47
the end of the day, it will not be perfect ever.
22:49
I've never seen an organization be like, oh my
22:51
gosh, our salespeople are the best. They do everything
22:54
as they're supposed to and they put the data
22:56
into Salesforce. So we have to think of it in
22:59
two ways. Number one, what is the sort of overall
23:02
data governance and expectations that we're setting
23:05
to make sure that data is clean? and captured
23:08
properly, that will include a control process.
23:11
So as finance professionals, this is part of
23:13
our jurisdiction is to say, OK, if data is going
23:15
to get cleanly into Salesforce at the end of
23:17
the month, what controls are we are we giving
23:20
back to finance or whoever maybe is rev ops or
23:22
who their sales leader is? Maybe it's part of
23:25
their commission plan to make sure that that
23:27
data is captured appropriately. That's part one.
23:29
Part two is assuming it's going to be wrong.
23:31
So that's where the data cleansing process comes
23:33
in. And going back to like a very common example,
23:36
I think we've seen over time the trying to match
23:39
up vendors or things like there's walmart .com,
23:43
there's walmart, there's wal -mart, there's data
23:45
that's spelled different ways. Yes, you're rolling
23:47
your eyes. We've all been there. We spent way
23:50
too many hours, then we get a new file and it
23:52
looks a little bit different and you have to
23:53
match these things. So we talked about people
23:56
in this, we talked a little bit about processing
23:58
controls, and then we talk about technology.
24:01
As much as I'd love to make this a full pitch
24:03
for cube. And of course, this is one of the things
24:05
that we do best. There are a number of different
24:07
types of technology to help you cleanse your
24:10
data, whether it's through, you know, at a most
24:12
basic level, doing it in Excel and capturing
24:15
all these different spellings and creating mapping
24:17
tables all the way through buying technology
24:20
to cleanse these. This, by the way, is where
24:23
I think AI is going to become very interesting.
24:25
And we're starting to see the beginnings of this
24:27
because. taking a step, a little bit of a side
24:30
to this. Automation is extremely precise and
24:35
works very well, but you have to program it.
24:38
So automation is you saying Walmart is the same
24:40
as Wal -Mart, which is the same as walmart .com.
24:44
Intelligence starts to find these patterns over
24:47
time and is saying Walmart. without you having
24:50
to program it is saying these three things are
24:52
the same. So that's where artificial intelligence
24:55
and these LLMs are going to get a lot smarter
24:57
over time around matching different data sets
25:00
and handing them to you saying, do you agree
25:03
that these are a match? That's where our job
25:05
is going to get a lot more fun over time. And
25:07
we're going to start to see more and more of
25:10
the early layers of the pyramid become automated
25:13
and start to see us be able to spend more time
25:15
on the upper layers of the pyramid. The dream.
25:19
Yes, the dream Now going to the second layer
25:23
in terms of reporting So what I realized is sometimes
25:29
especially when you fresh in finance Your reporting
25:32
is often based on what you understand what makes
25:36
sense to you when Reporting is for really your
25:40
customers, whether internal or external. So what
25:44
would you say, especially for the next generation
25:47
of leaders, how can you accelerate learning?
25:49
What kind of reporting works for who and how
25:52
can you really be a better storyteller? How can
25:56
you really make your reporting come alive and
25:59
be useful? I love these questions. the foundation
26:06
of good strategic finance business partnering.
26:09
And we've done this a number of different ways,
26:12
but I think the first best, I'll just go in like
26:14
very specific examples. The first one is when
26:17
you're meeting with your executives, department
26:19
leads, et cetera, I always recommend that that
26:22
you come with something because if you sit down
26:25
generally with a marketing leader, you're going
26:26
to get a sense of they're going to tell you what
26:28
they like to measure. So they'll come in with
26:30
the same perspective that you're coming in with.
26:32
Like, here's what I think you should measure.
26:34
And they're going to say, here's what I think
26:35
I should measure. Set up a listening tour, come
26:38
to the table prepared with something. However,
26:42
have a look at what they like to measure and
26:44
how they're measuring their business. But it
26:46
also goes up a step further, which is like, what
26:48
are your goals as a marketing organization? And
26:51
almost what is your mission as a marketing organization?
26:54
So I like to start all the way at the top. And
26:57
we have something we use internally at Cube for
27:00
all of our departments is we have Every single
27:02
month we review the same sort of document and
27:05
it starts for each department that's presenting
27:07
the department mission. Because these things
27:09
believe it or not do change over time. Maybe
27:11
a marketing team is really focused on getting
27:13
leads and bringing new business in the door.
27:15
Maybe a marketing team is more focused on brand.
27:18
Maybe a marketing team is focused on... launching
27:21
campaigns, each one of those things will determine
27:24
what type of goals they have. So that might change
27:27
what KPIs they're looking at, depending on what
27:29
their mission is for that particular team. So
27:32
number one, start out with the mission of the
27:34
organization. Once that department leader has
27:37
told you, here's what I'm focused on, you already
27:39
have your list that you've come with and you
27:41
can start to merge those lists together to figure
27:43
out what's most important. This is the part where
27:46
most organizations run into challenges. There's
27:49
a very big difference between KPIs and reporting.
27:53
Oh, Lord. Any. Yes. Yeah, let's walk right here.
27:58
Yeah, let's let's let's let's put it. Let's start
28:01
with this one. Anything more than five is a report.
28:04
Any more than five metrics is a report. You can
28:07
have three. I like one because then you know
28:09
if you're really on track. But you you have to
28:12
go through this uncomfortable forcing exercise
28:14
of stack ranking. If I'm only going to pick three
28:17
of these or five of these to review every single
28:19
month with you, every single quarter, what are
28:21
they? And then you can keep the rest, you know,
28:24
maybe it's in another tab, another report somewhere.
28:26
But the second you get more into more than three
28:28
to five metrics, it's a report. So I always like
28:32
to figure out what are the most high level ones
28:34
that sort of capture all that data behind it.
28:36
That's the second piece. And then you have your
28:39
reporting. And typically, then you're able to
28:42
do, then you're able to have real strategic conversations
28:44
where you're looking at those metrics and you
28:46
can double click on them if they're working or
28:48
not working. So then that goes back to what was
28:50
the plan and what was the actuals. Very simple
28:53
red, yellow, greens. Are we on track? Are we
28:54
not? If red scares you, use Harvey Balls. Throw
28:58
back to Harvey Balls, those are great. But if
29:00
you're on track or not on track, then you can
29:02
use it to double click into your. your broader
29:05
set of reporting and analysis. But going back
29:07
again, it really is a team building motion and
29:12
you can use this as an opportunity to let that
29:16
other executive know that I'm on your side. I'm
29:18
here to listen to you to understand what are
29:20
the metrics that are most important to you? What
29:23
are you being driven by? How are you being ranked
29:25
and scored? You can also figure out through this
29:28
if there is a mismatch in terms of their incentives
29:32
and alignment. and what the organization is looking
29:35
for. So again, let's use that marketing example,
29:38
a classic one, as I've seen lots of marketers,
29:41
maybe they're measured or comped on leads. And
29:44
then an organization is like, what do I do with
29:46
these leads? They're not converting into real
29:49
revenue. The sales team or the customer team
29:54
is not able to convert those leads into something
29:55
that drives revenue. So then maybe there's an
29:58
opportunity then to partner with leadership to
30:00
figure out. is marketing being incentivized in
30:02
the right way to drive the right sort of benefits
30:05
for the organization? That's where this starts
30:07
to get really interesting. So this is more on
30:10
the revenue side, right? And I'm glad that now
30:12
you have your own company. So you have, I should
30:17
say, a better understanding on the other side
30:19
when it comes to fundraising debt and cash, right?
30:23
Because sometimes when you get into traditional
30:25
FP &A, you are often just focused on the P &L,
30:29
on the EBITDA. and you don't necessarily think
30:32
about the balance sheet. Okay, what does it mean?
30:36
You have debt covenant. You can only borrow so
30:39
much. Can you speak a little bit about - These
30:40
are the hardest questions. I love these, sorry.
30:44
Thank you. But can you speak a little bit about
30:47
how do you transition to stretch your thinking
30:51
beyond just the P &L? Because really every decision
30:54
a business make is a capital allocation. Like
30:57
i'm spending cash on this while i'm spending
30:59
cash on that and I can now have to stay within
31:02
the guardrails of my covenants Yes, yes. Yes.
31:06
Okay i'll take a i'll take a big step back or
31:09
a big a big You know 30 000 foot view of this
31:12
but before we can even get into P &Ls versus
31:16
balance sheet. It goes back to what we talked
31:19
about with marketing. It's like, what are the
31:20
goals of the organization? And I think as a finance
31:23
person, I've fallen into the trap in the past
31:25
where my CEO showed up at my desk and was like,
31:28
hey, we need a plan. And I'm like, okay, what,
31:31
what kind of plan? Yeah, we need a plan for next
31:34
year. So can you put one together and I'll take
31:35
a look at it. And I'm like, yeah, I mean, I can
31:39
put a plan together. What do you want to do with
31:41
the company? So step one is and and believe it
31:45
or not, a lot of organizations, sometimes finance
31:48
has to drive those strategic planning sessions
31:51
and sometimes the best finance leaders and the
31:53
ones who really become the chief operating officers
31:55
of an organization are driving those strategic
31:58
planning sessions. And the way I love to do this
32:01
is to is to make everything a cycle or make everything
32:04
scheduled, because my my catchphrase for the
32:07
year, my one of my New Year's resolutions was
32:09
what gets scheduled gets done. And so you can
32:12
think about, yes, you can think about a planning
32:17
calendar. So in the beginning, maybe three months
32:20
prior to the beginning of the fiscal year, you're
32:22
going with your executive team over what are
32:24
the strategic goals of the organization. You
32:27
use those and those KPIs you've already put together
32:29
to say for each department or team, what are
32:32
my top three KPIs? You use that to build a plan.
32:36
But then comes to your actual question, which
32:38
is like, where does the balance sheet come into
32:40
this? The reality is depending on whether you
32:43
are a profitable organization looking to meet
32:47
the capital constraints that you have. Well,
32:49
all businesses have capital constraints in theory,
32:52
whether you're looking to meet the financial
32:53
constraints or if you're some venture backed
32:57
listeners, it's a runway question of how much
32:59
burn do you have that you want to allocate for
33:02
a period of time. But you have two things that
33:04
you have to look at. You have the business strategic
33:07
goals. and then you have your financial goals.
33:10
And typically, that's a conversation with the
33:11
CEO. Again, you can make recommendations of how
33:15
long do you want your cash burning organization?
33:17
How long do you want the runway to stretch out
33:19
for? Maybe it's indefinite or maybe it's we want
33:22
it to last the next 36 months. If you are a profitable
33:25
organization, you have a certain amount of cash
33:28
flow that you can dip into, like what sort of
33:31
reserves are we looking for? What's our what's
33:33
our appetite for taking risk? How much debt do
33:36
we want to use? those are constraints that you
33:39
then use to plug into your plan to back up against
33:43
the strategic and financial goals and blend them
33:46
together to do a little bit of iterative work
33:50
to make them match as closely as possible. This,
33:53
by the way, is the part that breaks everyone
33:54
in the budget cycle is like these two things
33:56
do not match ever. And so that's when we go back
33:59
to the people part of setting a schedule for
34:03
building a financial planning process of Okay,
34:06
great. We started three months before the end
34:09
of the year. We have the strategic plan. We have
34:12
our financial goals. Finance oftentimes puts
34:15
together a first pass. It's usually top down,
34:18
bottoms up, and a bottoms up of how to make these
34:21
numbers work. Top down says it makes sense. Bottoms
34:24
up says it's impossible. Now we start fighting
34:26
the good fight, and we start meeting with each
34:29
of the different leaders to say like, hey, I'm
34:32
not going to be able to grant you all your headcount
34:34
wishes next year because we've got a gap to make
34:37
up. Go back. Let's get creative is my favorite
34:41
term. Let's get creative with this amount of
34:43
resources and tell me how you'd get this done.
34:46
And then that's when finance can really start
34:48
leaning into its leadership role. And instead
34:51
of saying you can't have this or you can't have
34:53
do this, or you can't do this, you can start
34:56
really co -creating with your business partners
34:59
on how to make something happen. Love it. And
35:03
now back into your CFO days, because this, you
35:06
can tell you were CFO for a long time, right?
35:08
Because a lot of technology, people in technology
35:11
didn't necessarily have the finance background
35:13
you have. And I want to speak a little bit now
35:16
with the uncertainty in the economy, in just
35:19
the world right now. What are some things that
35:22
we as finance leaders should really pay attention
35:24
to? You spoke a little bit about reserves. You
35:27
spoke a little bit about constraints. Like what
35:29
are that? What are something we should just be
35:31
mindful of, right? We think AI is disrupting
35:34
this, supply chain being disrupted, industries
35:37
flipped upside down. What would you say are some
35:40
things that finance leaders, CFOs today should
35:43
really pay attention to or get ready for? I will
35:47
say it in one word, and that is speed. And the
35:49
reason why speed is so important, it goes back
35:51
to the example of we're not perfect forecasters.
35:54
We can't predict the world. we would be buying
35:57
stocks and in Vegas, et cetera, like no one can
36:00
predict what's going to happen. But the ability
36:02
to adapt to that change and to plan quickly and
36:05
to make adjustments and to be prepared is by
36:09
far the most important thing. So think of back
36:12
to the early days of COVID or when the asset
36:19
class of venture capital blew up post -2021,
36:22
all these unexpected events and we've lived through
36:25
so many black swan events through the last 10
36:27
years, we know that the world is more volatile
36:29
than ever. And it goes back to the old saying
36:32
about evolution, which is it's not the, what
36:36
is it? Not the smartest or strongest that survives.
36:40
It's the one that's most adaptive to change.
36:42
And so as finance professionals, we have to think
36:45
of ourselves as the ultimate. in sort of driving
36:48
the evolution of our organizations. And that
36:50
means that when something inevitably happens,
36:53
we have to be prepared for it. That's two things.
36:56
Number one, we have to have a plan for that.
36:58
It's no longer okay to have a plan A, or even
37:01
a plan A and a plan B, we have to have a plan
37:04
C and a plan D. And that's when having these
37:06
really good planning cycles and thinking ahead
37:08
allows us to, when the inevitable happens, something
37:12
dips in a not good way, something accelerates
37:14
in a great way, We know we have a plan for that
37:17
and we know how to adapt to it. Having really
37:20
great business tracking and reporting allows
37:23
us to see when those changes are about to happen
37:26
so we can execute on that plan. And knowing how
37:29
to execute on that plan is speed. So speed and
37:33
preparedness by having lots of different, what's
37:37
called sensitivity or scenario planning, allow
37:39
us to move faster and to stay ahead of the pace
37:42
of business. That's where finance really has
37:44
a superpower in this highly volatile era. Love
37:49
it. And then speed, going back to what you said
37:52
earlier about people, process and systems. How
37:55
do you build that ability for speed and preparedness
37:59
in your people, in your processes and in your
38:02
systems? I go back to the most simple. I'm a
38:06
big fan of simplicity, so I could again talk
38:09
to you about finance transformations and all
38:11
these ways to do it with. software, but I always
38:14
start with people first. And it starts with does
38:17
everyone know what they're supposed to be doing
38:19
as it relates to the finance process? So, you
38:24
know, do you do the budget owners know who they
38:26
are? Do they know what their role is? Do they
38:29
know when they're expected to do things? Do they
38:31
know what the expectations are? Do they have
38:33
a rules of engagement? This is actually a very
38:36
important one. If you've ever rolled out a budget
38:38
cycle. or a plan or done budget versus actuals.
38:41
And they've had a million questions and they
38:43
ask the same questions over and over and over
38:45
again. Like, can I roll this budget over to next
38:48
quarter, et cetera? I want to trade this one
38:50
head count for three. Can I do that? But they're
38:52
not thinking about overhead or space, et cetera.
38:56
I always like to start with my budget owners
38:58
and my business with rules of engagement. Here's
39:01
how we operate as a finance function. Here are
39:04
definitions of things. Here's what matters to
39:07
us as an organization, and here's the calendar
39:09
of what you can expect from us throughout the
39:12
year. So that no one is like, what do you mean
39:14
I was supposed to get you that last week? It's
39:16
on the calendar, you got the reminders, et cetera.
39:19
So I like to set up everything in place so that
39:23
we can move with speed when it's time. As opposed
39:26
to just like anything else in life, being reactive,
39:29
it's about being proactive. Mm -hmm. Love it.
39:32
Love it. This was so good. I have two last questions
39:35
for you. But we definitely need to do a part
39:38
two, so... Let's do it. Yes. So what's the best
39:42
career advice you've ever received? I did a post
39:45
about this one. I met a CFO at an IPO conference
39:50
and I was... more junior in my career and you
39:53
know at the time there weren't as many women
39:55
in the room and I just really looked up to her
39:57
in her career and I invited her to lunch and
40:00
we sat down and she started talking to me all
40:04
about sales and I was like what like I thought
40:07
we were gonna talk about finance you're a CFO
40:10
and she said no no no Christina finance is all
40:14
about sales And I also learned, now that I'm
40:17
a CEO, everything is about sales. And hear me
40:21
out, because I know finance and sales oftentimes,
40:24
we're like, what do we have in common with one
40:25
another? But sales is actually about just understanding
40:31
where the other person is coming from and tailoring
40:34
your communication and messaging and process
40:38
to what becomes a win -win between the both of
40:42
you. And where that applies in finance specifically
40:46
is that example we just talked about, about setting
40:49
a proactive finance organization, working with
40:52
your business partners. It's about hearing them
40:55
and selling these ideas to them. Coming into
40:57
the room and saying, no, you can't spend money
40:59
is very different than saying, here are the constraints
41:03
we're working with. I'd love to help you figure
41:05
out how to make this work. Let's talk about some
41:07
options and maybe you come with some things in
41:09
your back pocket. Maybe there's a way that you,
41:13
when you do have a little extra to allocate,
41:16
you send it their way. So it's a way of building
41:18
relationships, but at the end of the day, it
41:20
is about selling. It's not just saying, and by
41:22
the way, I've been this person before because
41:24
I came from large organizations where finance
41:26
rolled all and it's like, finance asks for something,
41:28
you got to send it, is making finance more of
41:31
a partner. And that's by learning how to sell.
41:33
And selling is not just about saying, would you
41:35
like to buy this pen? And that old, sell me this
41:38
pen. conversation, it's actually about what,
41:41
you know, what are you looking to do in your
41:43
job? And turns out that they need to sign a paper
41:46
to sign a very big deal that's going to close
41:49
at the end of the month. They really need a pen.
41:51
And what if I told you I could get this to you
41:54
in the next five minutes? So how do you work
41:57
with the teams in your organization to make their
42:00
lives better? That's what sales is really all
42:02
about. Love it. Yeah. We all in sales and I,
42:05
yeah, I learned it. a bit late. I'm glad you
42:08
learned it earlier than I did. So my last question,
42:12
what do you like to do outside of work? Because
42:14
being a CEO, I don't know how much time you have
42:17
left, but I'm a mom of two, I have two nine year
42:22
olds, so I have twins. So I spend most of my
42:24
time with my family. And I will say, I know this
42:28
isn't as exciting, but have you ever heard of
42:30
the four burner theory? No, mm -mm. Okay, so
42:34
the idea is you have four burners on your stove,
42:37
and there's health, family, work, and recreation.
42:42
And if you want to be really good at anything,
42:44
you have to turn one of the burners off. A lot
42:46
of listeners are not going to like this. No,
42:47
no, we can do all this. You can, you can. If
42:50
you want to be great at anything, the idea is
42:53
you have to turn a couple of the burners off.
42:55
For me, the two burners that I turned off were
42:58
recreation, And I do try and be healthy. But
43:02
really, I spend most of my time either with work
43:04
or family, and that really fulfills me. So that's
43:07
where I spend most of my time. Also, I am extremely
43:09
organized, and I love just organizing my home.
43:11
I mean, maybe that goes with the finance thing,
43:13
but I call that a hobby. Spending a lot of time
43:16
in the container store these days, yes. Oh, that
43:19
is so funny you said that because that's my father,
43:21
my husband. I very organized at work and then
43:24
you go look at my closet, you're like, whoa,
43:26
what's this? That didn't translate well for me,
43:30
but thank you so much Christina for being on
43:34
the show. This was super helpful. Thank you.
43:37
It was so fun. And that's it for today's episode
43:41
of The Diary of a CFO. Thank you so much for
43:44
tuning in. If you enjoyed the show, don't forget
43:46
to like, review, subscribe, and share with others.
43:50
Our website is thediaryofacfo .com. That's where
43:53
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43:57
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44:00
media links. It is also the place where you can
44:03
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44:06
about how you can sponsor the show. As always,
44:09
if there is any topic you would like me to cover
44:11
in the future, just email me at AskAtTheDiaryOfACFO
44:16
.com. Again, the email is AskAtTheDiaryOfACFO
44:20
.com. See you soon.