The CFO role has been evolving from analyzing and reporting on the past to providing strategic, forward-looking insights. But nothing accelerated this process like the disruption of 2020. In this episode of Connected & Ready, host Gemma Milne talks with Jack McCullough, founder of the CFO Leadership Council, about how CFOs have addressed challenges over the past year, common traits among companies that responded successfully, and the importance of investing in both technology and company culture to prepare for the future. Register for Finance Reimagined on February 24, 2021. Connect with finance leaders and gain valuable insight as we respond to, recover from, and reimagine the future beyond the global health crisis: aka.ms/msftFinanceReimagined Microsoft Dynamics 365 Finance helps organizations monitor the performance of global financial operations in real time, predict future outcomes, and make data-driven decisions to drive growth. It empowers users to do business anywhere anytime with an intuitive user-interface personalized for their role and preferences. Request a live demo today: https://aka.ms/AA8l72b
Gemma Milne talks with Jack McCullough, founder of the CFO Leadership Council about how CFOs can keep up with accelerated forecasting demands without sacrificing accuracy, the impact of automation on finance org functions, how CFOs can shift to make more proactive decisions, and some of the biggest near-term opportunities CFOs should be preparing for.
About Jack McCullough
Jack McCullough is the founder of the CFO Leadership Council, a global organization whose mission is to empower CFOs through cutting-edge professional development programs and peer networking. He is a CPA who has served as CFO for 26 different organizations during his career. He recently published his first book, Secrets of Rockstar CFOs, based on conversations with more than 40 of the world’s best financial executives. Jack is also a contributor to the Forbes CFO Network, where he shares insights on the issues facing CFOs and their teams. Jack holds an MBA from the MIT Sloan School of Management, and lives in Massachusetts with his wife and two teenage sons.
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Gemma [00:00:05] Hello and welcome. You're listening to Connected and Ready, an ongoing conversation about innovation, resilience, and our capacity to succeed brought to you by Microsoft. I'm Gemma Milne. I'm a technology journalist and author. And I'm going to be exploring trends around how companies are adapting to a disrupted world and preparing for tomorrow. We're going to speak to the innovators who are bringing products, operations, and people together in new ways. In today's episode, I'm chatting with Jack McCullough, president of the CFO Leadership Council, about how CFOs must invest for the future, embrace technology, and prioritize culture. We'll look at the challenges and pressures the CFOs are facing, the secrets of those who have been most successful at navigating the ever-changing landscape, and why digitization and technology must be an integral part of their strategy in order to ensure sustainable momentum.
Gemma [00:00:54] And we ultimately uncover how companies can balance their risk tolerance for becoming more proactive to not only revolutionize the way their finance teams operate, about how they get their organizations forward to invest for the future. And if these topics are something you want to keep learning about and engaging with, there's actually an event that you can register for called Finance Reimagined, it's going to be held on February 24th, 2021. You can connect with finance leaders and gain valuable insight as we respond to recover from and reimagine the future beyond the global health crisis. You can access the event at aka.ms/msftfinancereimagined. The link will be in the show notes, of course.
Gemma [00:01:35] Jack, thank you so much for coming and joining us on the show, and we'd love to hear it to begin with who you are and what you've been working on.
Jack [00:01:42] Sure. I'm Jack McCullough. I am the president of the CFO Leadership Council, which is a national member organization for chief financial officers and their teams. We have about 25 chapters across North America, and I'm also a senior contributor to the Forbes CFO network. And in 2018, I wrote my first book, I'm sorry, 2019 "Secrets of Rock Star CFOs". And actually this is the first time I've said this publicly, but I'm working on my second book. It's called "Psychopathic CEOs: What to Do When Your Boss is Nuts." So that should be out in June. And other than my family and a couple of coworkers, you're now the only one who knows about that.
Gemma [00:02:22] How exciting. And what a hilarious title. Hopefully that will help get it in the hands of people that need it to help manage those kind of relationships, which I guess we can hopefully touch on a little bit in this discussion. But before we do all that, let's think a little bit about this past year, of course, is the top of everyone's lips. What's been going on with the Coronavirus crisis. Now organizations have been impacted in many ways. And of course, that's accelerated the change in the role of the CFO and finance team. So tell us a little bit about what it is that CFOs have been up against.
Jack [00:02:52] Sure. I think the evolution was happening anyway. The job was becoming more strategic. It went from being a historical job back in the 80s and 90s when I was the CFO to forward looking. And the current crisis really just accelerated things a little bit. You don't see successful CFOs living in the silo of finance and accounting other than the president. And I suppose arguably the senior HR person, it's the most cross-functional job within a company. It's also more external. You see CFOs working with investors, with customers and whatnot. And the fundamental thing about the crisis businesses are facing is it is a financial crisis. So unless you happen to work for one of those companies where the CEO is a former CFO, as a CFO, you're the only financial expert and strategic thinker on the leadership team, which has been invaluable in the last year. And also there's been a lot of surveys that show CFOs are the most trusted of all executives amongst people. So that puts them on the front lines of communications because of the CFO says it she's telling the truth or he's telling the truth.
Gemma [00:03:59] Tell us a little bit about what kind of problems CFOs have been facing then, because, of course, if they're more strategic, they're no more external as well. And having to play that comms role, of course, I can imagine there's a myriad of new kinds of problems that have been brought to the fore beyond - I don't want to see simply the management of finances because of course, that is not a simple task. But thinking about that kind of extending beyond it. And specifically, have there been any sort of seemingly unsolvable problems that have perhaps popped up this year?
Jack [00:04:28] They certainly seemed it, because when you think about it, CFOs and I suppose all executives, too. But this is an unprecedented crisis. There's just no way you can prepare for it. There's no blueprint for surviving a pandemic. The closest thing historically, I suppose, is the Spanish flu of 1918, but it’s not like you can call the CFOs from 1918 and ask what they did. So they were kind of solving problems and figuring it out on their own, which is kind of difficult.
Jack [00:04:58] And these weren't exactly challenges. And I'd go so far as to say and I guess I can say this, since I am one of the prior generations of CFOs having not been a CFO for ten years. Ten, fifteen years ago, CFOs would not have been prepared for this challenge. It was even though the evolution had started, it was nowhere near like it is today. So it's everything when, you know, communications with the team, working with customers, cybersecurity, basically all the things that go into keeping the company afloat. And when you think about it, Gemma, we're taking a lot of the stuff that we did for granted. A lot of people have forgotten how hard it was back in March when this all happened. I mean, I'm the president of a small company, and just like the challenges with my team, we have 26 people.
Jack [00:05:47] I had like two or three people who live alone. You've got a lot of parents taking care of their school age children. That was unanticipated. I had a couple of people, they have elderly parents living with them. They have to take care of them now. And just like my own situation, I'm the father of two autistic teenagers. So that puts some challenges there. And then plus all the business challenges. How are we going to protect data? We all used to work in the same building. Now, all of a sudden, we’re distributed all across the country. Just crazy challenges. And, you know, to our credit, we came through it and, you know, did an awfully good job with it.
Gemma [00:06:21] So tell us a little bit about that. You know, what does it mean to do a good job? What kind of sets apart from your perspective, both from your own experience, but also, of course, being connected up with this network of CFOs? What has been perhaps the traits or the behaviors or the decisions or whatever that is, I guess, being part of more successful reactions or at least stabilization of the back of CFOs versus those that have perhaps not been quite so successful.
Jack [00:06:47] Sure I just remember talking to a lot of my members and this was at the beginning of it. And, you know, at the time, they were just thinking, if we can just survive 90 days, we can do it. There's an expression in the Navy or with sailors generally, shorten the time links. So your goal might be to survive five minutes and then solve another problem. So if your boat’s sinking, there's no master plan. You're just trying to survive for the next five minutes, 10 minutes, and then worry about what comes next after that. And that's what we did. Rather than a long-term view, we thought what do we need to do to survive this week, this month, this year? And then eventually it opened up. And, you know, they had some advantages. Technology today is amazing. We do have the resources of history's most well-educated workforce to rely upon. And hopefully, if you've done a good job of recruiting a great team, this is when they've responded. You've got some great people. You've treated them well, you've empowered them, let them go do their jobs. You know, they're going to figure it out. And eventually you get out of survival mode and then you start thinking about growth. And the companies that were able to think about growth quickly are the ones that are going to be successful in the long term.
Ad [00:08:02] Microsoft Dynamics 365 Finance helps organizations monitor the performance of global financial operations in real time, predict future outcomes, and make data-driven decisions to drive growth. It empowers users to do business anywhere anytime with an intuitive user-interface personalized for their role and preferences. Request a live demo today by following the link in the episode description.
Gemma [00:08:31] So we talked a little bit then about mindset there, but also around thinking about perhaps culture or at least belief in people. Can you talk a little bit more about some of the other, I guess, elements as well that are part of, I guess, company success or detriment? I'm thinking company processes. I'm thinking particular uses of technology. Perhaps you can give us some examples of how CFOs have been able to navigate their teams or their organization through those challenges, through those perhaps more high level or strategic or operational concerns.
Jack [00:09:04] Culture is sort of everything, right? If you've got a good, strong culture, people want the company to succeed. People feel empowered. That's going to account for a lot. And that, again, is why the CFO is so important when you're having a virtual company meeting and, you know, people are worried, am I going to have a job tomorrow? And you know what happens? They need the voice of the CFO to sort of say, yes, it's going to be OK. You've known me. You trust me. I'm telling you the truth now, just like I always have. And this is why I'm optimistic. And the CFO, of course, can't lie. Right? You know, you can't just say that to calm people down. And it had better be the truth. But, you know, it also it's a technology and people, people in technology, you know, whatever you want to put it in, they're both so, so critical. If you have the right technology, the capabilities to continue functioning during this type of crisis, if you've made the smart investments in technology, then I think you can go really well and go far. And also, if you have the right people, you've trained them well so they know how to do their job with independence, trust them. They're going to take care of the kids and they're going to get their work done. You know, I was getting emails from my coworkers at one o'clock in the morning. That's when they found the time to get their job responsibilities done. I kind of wish they didn't have to, but I'm certainly not alone. I heard stories like that all the time. And you asked me like about an example. And an interesting one is Etsy. I spoke to the CFO, Rachel Glasser. The focus initially - just take care of the team, communicate with them, let them know the sky's not falling, that we're going to be here, reinforce their roles, and empower them. The team then took care of the customers and you know the customers that they sort of have that crafts community. It's an online retailer. But you know, as I learn the business a little bit, it's a little bit of an unconventional one. So you had people working with that community just making sure - let's keep this thing going. They were helped a lot by the need for masks too. Here's the market opportunity, let's do this better than anyone in the world can do this. And to their credit, they did. But, you know, largely simply being supportive, keeping them focused, keeping them confident and empowering them, it's going to make all the difference in eventually being successful. You know, like I said, it was the number two stock of the year, right? I mean, there's a reason for that - in the United States. Not in the world.
Gemma [00:11:23] Yeah, absolutely.
Gemma [00:11:25] And I think the focus on people and culture, of course, has been a theme throughout so many of the chats that we've been having, not least because this is, of course, a crisis that's extremely emotional for so many different reasons, but because it has those underlying, I guess, indirect benefits that are that are hugely important for companies. I want to push you a little bit more on this question of technology, because you mentioned earlier the companies that had made those investments, that have seen the potential of technology and I guess done the work up front to some degree, were a little bit more successful. But then we also spoke a little bit earlier about this idea of shortening the time frame and thinking only five minutes ahead. Now, of course, you're referring when you're specifically in a crisis, but that's one of the biggest tensions when it comes to making decisions about investment right, it's like short-term thinking versus long term thinking. So how do you think about striking that balance in periods of crisis for CFOs where, you know, investing in technology early on, I guess, as we know now, would have been a good thing to do. But at the same time, there are so many other things that desperately need money and with that uncertainty was hard to make those calls. So tell us a little bit about that balance.
Jack[00:12:27] You're right, Gemma. Theres probably, a lot of companies that deferred some technology investment in 2019 that kind of wish they hadn't, it would have been good if we'd adopted the AI strategy or the block strange strategy in a more robust fashion. But 2020 was a great year for tech spend. You know, look at all the tech companies that are doing really well. So even if people were a little bit late to the game, they did recognize, hey, we want to survive, we're going to have to make the investments in team and technology. I will say what we can learn from the Great Depression is the bold companies, the innovative companies - those are the ones that are going to survive. You know, when you think about it as take two companies in the same industry. One does some layoffs and says we're not going to spend any money on noncritical tech until the crisis is over. A different one goes out. They start hiring aggressively. Hey, there's a good market of unemployed people. We can get some of those engineers we couldn't get our hands on. Let's make the investment in that technology that'll give us a long-term advantage. Which company do you want to work for? You're putting your money for an investment. Which company do want to invest in? Right. It's those companies that are bold, that are forward thinking, that recognize that no crises last forever. You know, as you navigate crises, they don't last forever. And sure, you got to survive. But survival isn't just about today. You need to sort of balance surviving today, surviving the week, but also surviving to 2023, 2024.
Gemma [00:13:57] So let's build a little bit on this point of being, I guess, proactive and bold and knowing that finances, I guess, historically been more reactionary, leveraging past details and reports. How can CFOs shift to this more proactive approach and what do they need to have at their disposal to make the shift happen? Is this a case of just having more real-time data or is a bit more layered than that?
Jack [00:14:20] You know, to a degree you have to just kind of make it happen. You make your own history, right? And the great CFOs, they make history. They don't report history. So find the right opportunity. You know, it's easy to say it during an economic robust time or tougher during a slowdown, but continue to bring value to the boss, continue to build relationships to the board of directors, make them understand the strategic value that you can bring to the organization, continue to work cross-functionally with the executives. The best CFOs I know actually go on customer visits and they have those types of relationships. They're not siloed anymore. And it's been an interesting evolution. But one of the best CFOs I know, for example, she's in, I'm going to say her fourth gig as a CFO. And one of the things she does when she becomes a CFO of a new company she actually calls the CFOs of the five biggest customers she has and she gets to know them and she's not selling anything. She's just building a relationship between the two companies.
Jack [00:15:20] And when you think about it, isn't that an invaluable thing to have done in 2019? Right? You're trying to figure out what the revenue is going to look like for the rest of the year. And everybody's kind of guessing and the salespeople, they're doing the best they can. What if you call your pal, the CFO, your biggest customer and say, hey, you know, in the past you bought this much, what's it looking like for this year? You know, what can we do to help you survive? You know, a discount’s a big thing, deferred payment terms. Let me help you to keep this thing going for both of our companies a little bit. So those are the types of things that CFOs are uniquely positioned to do. And the other thing is there's just a lot of technology and tools that are out there. It's a little bit unfair. Forecasting has always been part of the game and now they have to do it a lot faster than ever before. You've got to be right almost all of the time, whereas in the past there was a little bit more tolerance for not being right. If that makes sense.
Gemma [00:16:15] So let's build a little bit on technologies then and kind of usage of these tools in order to enhance the role of the CFOs. What technologies have you seen be prioritized or more heavily invested in that is particularly enabled companies and finance leaders to really innovate their business? I guess we always try to focus here on this point on this podcast, not just to survive the crisis, but actually to keep growing companies forward and keeping them competitive.
Jack [00:16:40] Right. And that's what I say to people like where can you spend money that'll increase the top line, also create some operational efficiencies, and increase collaboration with your employees. The list is one thing. It's technology, right? It's evolved. It used to be saving money and increasing efficiencies. But now smart executive teams use technology. It's part of the long-term competitive advantage, which is why I think it's so critical that you continue to invest in it during a downside. It's arguably more critical now than it was a year ago. You know, it's easy to say there are companies that are struggling and whatnot, but I'd say find a way to do it if it's at all possible. But you asked me about which ones. And, you know, sort of in particular, RPA is a big thing, artificial intelligence that used to be a little bit spooky to people. But, you know, I think finally in 2020 artificial intelligence, blockchain, they’re sort of realizing their potential and they are being accepted and deployed by mainstream chief financial officers in a way that they never had before. I’d put blockchain in the mix too, it's being forward looking companies, they are doing a lot of blockchain. Data analytics as I mentioned earlier. There's a lot of pressure to make better, quicker decisions. Fortunately, there are a lot of phenomenal forecasting tools out there that simply didn't exist two or three years ago. So invest in those types of technologies and recognize, you know, digitalization can save the company, literally it can save the company if you do it smart and do it thoughtfully.
Gemma [00:18:15] You mentioned RPA for anyone who perhaps hasn't come across the term before. I wonder if you could tell us a little bit about what that is and why it's really important for a finance team to be looking at that, specifically and automation as a whole.
Jack [00:18:28] Sure RPA stands for robotics process automation. And the whole idea is simply taking mundane, repetitive tasks and making them electronic. It saves a lot of efficiency. It's also empowering to your teams because they can get away from repetitive things and sort of be more involved in the decision-making process. That's one of the things culturally that's held automation back. A lot of CFOs have said, you know, if I automate, geez, I might have to lose some of my people. The reality is it hasn't worked out that way. It's actually created jobs and made jobs more interesting. So, you know, use automation. It's a money saver. It's an empowerment tool. And the other thing is use it thoughtfully. If you have lousy processes throughout your company, don't just change them by automating. They're still going to be lousy. It's a chance to sort of rethink how you do everything and then get it into the automation cycle in a way that's beneficial, that makes your company more efficient, that saves money and, you know, depending upon the function, maybe actually makes the customer process a little bit more efficient as well. So it's a chance to step back, think and really improve things. Top line, bottom line and everywhere in between.
Gemma [00:19:141] So we spoke about the speed of development of all these new kind of forecasting tools and new ways of doing things, but also the importance of just having to be accurate. How do CFOs do this? Is it about picking the right tools or is it a mindset thing, what does that look like in practice, balancing these - keeping up with speed whilst also just getting it right?
Jack [00:20:01] Sure. I mean, a lot of it, are the tools. So make that investment, buy the tools that work for your company. The other thing is, I think it's communication and always be talking to your engineers, understand, or you know whoever makes the product. When's the next milestone really going to happen? Talk to your salespeople. Are these targets achievable? No? Ok, what is? And I mentioned previously, the CFO that has relationships with the CFOs at her biggest customers. Prime those relationships, have the communication going constantly back and forth and, you know, that's sort of your best source of information. CFOs tend not to lie at all and certainly not to each other. So you know build trusting relationships with the CFO, your customers, that's your best idea into what's going to happen in the future. Understand their financial health, what their needs are, help them stay healthy and help them achieve their needs. And you can really do some great things with forecasting. So technology, communications.
Gemma [00:20:58] So let's actually go to, I guess maybe a step higher then, because we can talk about specific technologies and you've mentioned some of them here. But I guess really what it's more about is about defining what actually needs done and being able to, I guess, build a bit of strategy and needs and then build the technology into that, as opposed to starting with technology and kind of using it as a tool in need of a problem, shall we say. So what does it look like to, I guess, for CFOs, redefine operations and best practices and put on that strategic hat?
Jack [00:21:29] It's interesting because I think the word pivot is one of those words in 2020 that was probably a little bit overused. But I've I'll add to the pile and a lot of businesses simply had to pivot. You know, if you think that the way you did business before the pandemic is going to be the same as it is during and after the pandemic, you know, you’re probably wrong, Gemma. I have a friend, good guy. He owns one of the simplest businesses in the world. He's a barber, you know, on the surface, not much to it. You go and you get your haircut and you leave and that's it. But there is a lot more to that that he never had to think of. The whole business model is changed. So when you think about it, if a business model that simple can change, certainly any business sophisticated enough to have a CFO is going to change. Take one of the great American companies, Disney. Right? You know, that's a company that seemed about as untouchable as any company could be. All of a sudden, theme parks are closed, movies are closed, so no one could go to their movies. You know what saved them is Disney Plus. Digitalization saved Disney, you know, literally, you know, what would they've been? You know, I know they had huge cash reserves and whatnot, but they completely changed their business model to, you know, Disney Plus. And they were adding 10 million subscribers a month during the opening months right at the beginning of the pandemic. Think about that. That's, you know, that's more than New York City's population. And they were doing that every month for like five, six, seven straight months. They couldn't have foreseen that type of business. They couldn't have foreseen that their theme parks were closed and that people wouldn't be able to go to the movies. But look how bold they were and look how technology truly pulled them out of the fire and saved them. I don't know other businesses, you know as well as the CFO would. But think about your business and how can digitalization fundamentally transform what you're doing and how you're delivering value to your customers?
Gemma [00:23:23] Yeah, absolutely. It seems like so much of our discussion has come back to this point around culture. What seems like really basic things, but so often is forgotten, particularly in moments of crisis and when people are just kind of at the panic stations and thinking those five minutes ahead to just keep afloat. I've got one final question for you, Jack, and I suppose I want to end on a little bit of future gazing. What do you see as, I guess, the biggest opportunity, particularly for leaders thinking about technology or digitization, thinking about growth, perhaps coming out of the pandemic or even further ahead. What do you see as the biggest opportunity for the future ahead?
Jack [00:23:59] Yeah, I would say there's a couple of things. And I do often come back to culture and digitalization, but to me and to a lot of CFOs I've spoken to, digitalization can be transformative and it needs to be run jointly with CFOs and CIOs together making good decisions. CFOs have the strategic and financial acumen and some technology acumen. But CIOs or CTOs, you know, each company calls it a little different. They have the technical expertise to really drive things forward. And that needs to be fully supported by the CEO and the boss as this is a strategic imperative. And sometimes it even needs to be supported at the board of directors level beyond that. The other thing is always be thinking about your customers, what their needs are likely to be, be in touch with them, think about the team. You want to be known as a great company to work for because Generation Z, they're starting to enter the workforce. They are the most technologically savvy generation in history. They're slightly larger than the baby boom generation. So there's a lot of them extraordinarily smart, very diverse, highly educated and technologically astute. So you want to create a culture that's going to be attractive to them because they're your future, you know? So I would focus on those things long term. But the CFO, they're in a great position to be transformative. Don't think about history. Build a team around you that can sort of make the trains run on time, be that strategic visionary that your company needs be on the front lines with customers setting strategy, understanding the business landscape, and it's a lot more fun and a lot more rewarding as well.
Gemma [00:25:38] Amazing. That's a really lovely, hopeful, optimistic note to end on Jack. Thank you so much for coming and joining us on the show and providing us with all these different insights and examples and provocative ideas that hopefully all listeners are going to gain something from and be able to take into their day to day work moving forward. So thanks so much for coming on the show.
Jack [00:25:55] My pleasure. Thank you for having me.
Gemma [00:25:59] That's it for this week. Thank you so much for tuning in. You can find out more about Jack's work and indeed some of the broader themes we discussed today in the show notes. If you enjoyed the episode, please do take a few moments to rate and review the podcast. It really helps other people discover the show. And don't forget to subscribe and tune in next time to continue our conversation about innovation, resilience, and our capacity to succeed.
Ad [00:26:27] Learn how Microsoft Dynamics 365 Finance is helping organizations monitor the performance of global financial operations in real time, predict future outcomes, and make data-driven decisions to drive growth. Request a live demo today by following the link in the episode description.