By the Numbers
“There are lies, damn lies and statistics” Mark Twain
One of the biggest obstacles people new to the C-level face is understanding the numbers. Even with your MBA and managerial experience understanding financials can be daunting (unless you came from the CFO position). And using them properly can be the ultimate exercise in frustration.
CFO’s love to create elaborate spreadsheets with thousands of row and columns and dozens of links to other enormous spreadsheets; You just want to know how to answer the questions your investors are going to ask you at the next board meeting.
Finance people can be a lot like programmers in that they want to tell you in excruciating detail where all the numbers came from, how each one links into other pages and each ones importance. In essence they want you to love their spreadsheet as much as they do – just like developers want you to love their code.
What to do? Well, here’s what you don’t do. Don’t fake it hoping you’ll “catch up along the way”.
Here are some options:
- Along with your CFO sit down with a representative of your investor(s) and/or board and have them detail to both of you what they want to see and how they want to see it. The sooner the better. If phrases and acronyms that you don’t understand are thrown around suck it up and ask for an explanation. Better now than getting caught later.
- Use your network. You didn’t get to this point without establishing friendships along the way. Some of those people are or have been CEOs. Call them, visit them, buy them dinner. Allow them to become your confident. Believe me, you’ll find it useful for more than just financial jargon.
I once worked with a guy who had a sign in his office that stated: “When someone tells you it’s not about the money it’s about the principle…it’s about the money”.
If you’re in a C-level position no matter what people may say otherwise…it’s about the numbers.
This is a good start Greg. A good finance exec knows that their best use of time is the creation of shareholder value through a number of avenues. Keeping score is "table stakes." I think a CTO we both know attributed a quote to me - 'It's only practice if you're not keeping score." A good CFO will not bury their partners in data - but will provide timely, accurate, actionable, business intel to the team. They will listen to their stakeholders to find a balance between what they need to run their business and what the shareholders need to see. A great CFO will then provide downstream consequences and potential action plans that can help the managers understand the shareholders' information needs. This is necessary so that they continue to have faith that the direction the team has charted is the correct one and that the risk and opportunities are correctly managed / harnessed.
Greg - Thanks for the post and the "real-world" advice. If you don't follow Greg, you should. Former CxO and product management exec. What more could you as for.