Today I'm going to talk about becoming CFO. The skills that landed you in the office of the CFO aren't all likelihood different than the ones that are going to keep you there. So I'm going to share some of my observations, experiences and experiments to help you generate ideas and foster the right conversation inside your own organization. My grandfather immigrated to Canada as a young boy in 1923. He left school after grade 11 to work as an office boy at Abbott Laboratories in Montreal to help support the family during the Depression. However, by the end of his career, he was the Canadian president of Abbott Laboratories, and twice president of the Canadian pharmaceutical Association as a business A student in university i'd often visit my grandfather, you think a man who would achieve so much in the business world would be able to offer me profound advice to help me in my own studies that advice, the secret to business.

He'd often say to me, as I was leaning in ready to take notes, it's about the people. In all honesty, I felt a little disappointed with the advice at that time. It didn't feel like an answer to any of my upcoming midterms, nor had any of my professors even raised this as something that important. So at the time, I remember discounting the advice and focused instead on my debits and credits. Sadly, my grandfather passed away in 2002. And at the time, I was working as a financial model jockey in a large public company, and hadn't given us words of wisdom much second thought I was master the debits, credits and all things financial.

It wasn't until 2006 when I left the company to go work with George RR Martin and his private equity fund. Did his wisdom suddenly seems so relevant? What it made me successful in the first half of my career suddenly felt like it was not enough. So today, I'm going to share with you some of my own transition between management and executive roles and what I've learned. The first investment George had me work on was a company by the name of fishery products International. Now, it's been a few years since this company was around, but at the time, it was a Newfoundland, headquartered seafood company with almost $900 million in sales, and sadly, no profit.

George gets himself involved in a lot of turnaround situations, a small public companies, these are companies that don't have vast resources to dedicate to hiring seasoned veterans or paying for consultants to tell us what to do. No. Instead, we tend to hire a lot of young, ambitious people figure stuff out for ourselves and promote from within whenever we can. My first lesson during my career transition happened early, I began my FBI assignment working with the president of the US division, which is accounted for about half of FBI sales. And he had me convinced that we had a strategy problem. He believed that the key strategic issue was whether FBI should continue promoting a brand, which is very expensive, by the way, or should just co pack for private labels and let them spend the money on the branding.

I was wringing my hands with the light, I was going to model this all the way to the Grand Banks, because that's the thing that had made me successful in the first half of my career, building complex models. However, upon hearing this, George said, Listen, Blair, you're not going in the right direction with this. This company may have a strategy issue but as the execution issue that's killing it. The situation was the more seafood this company was selling, the more money it was losing, so I first refocused to unravel this mysterious lack of profitability. I spent the next few months learning the business from the ground up and arrived at the conclusion that the biggest problem we had an FBI was it it was full throttle and broken brakes. It became clear To me that the sales organization was disproportionately driving this train.

This sales teams were constantly coming up with new ways to promote sales through complex schemes, schemes that the rest of the organization and our systems could not keep up with. For instance, our invoices were more often wrong than they were right. As that sales driven organization, there was a belief that bending over to please our customers was that key to creating value, not inconsistent with what you would read in many marketing textbooks. But without a functioning set of breaks. Our customers abused us worse than Cinderella stepsisters, we agreed to Bogo sales events. Buy One Get One to get our products on the shelves of big retail customers.

But as soon as these Bogo events were over, these customers would delist our products. We create a unique menu items for some of our special foodservice customers and then the same special customers turned around and hung us with any excess inventory. We accommodated cut Customers who requested last minute orders sometimes shipping a pallet or two across the nation in otherwise empty truck, or even more costly air, shipping their orders. We lost money each and every time we did these sorts of things. And that's the heart of every issue. The finance function should have been standing up and said, Hey, this doesn't make sense.

But they didn't. They couldn't because the sales guys were miles ahead of them. Adding on new business before the back office even knew what was going on. The throttle was overpowering the brakes. I wrote Georgia memo called 101 things to do with FBI, many of which related to this lack of a braking function. This memo led to my appointment as CFO of the US division.

I summarized my turnaround plan into a three stage Maturity Model. I defined my current state as stage one compliance. It recognized that finance may be on the same train as the rest of the organization but was lagging far behind. work was getting done but barely so In most cases on the backs of a few key individuals, level one compliance was exhausting because we were working like crazy to catch up, but never did. We never saw what was coming and only saw things after they happened. I also observed that there always seem to be new surprises or excuses every month as to why profits were off, or reports aren't available or why they're inaccurate.

It made it awful difficult to provide control for the business. I did a lot of hoping and praying, not sure when the next shoe would drop in those early days of becoming CFO, as I didn't have complete confidence in the finance function. So level one was not a whole lot of fun. Stage two of the turnaround plan was what I called the Center of Excellence. At this level, you've got a full complement of staff to fulfill your mandate, finances now moving together with the rest of the organization, a passenger on the train, if you will, perhaps even in first class. The reporting systems deliver both credible external reporting and insightful internal reporting.

The finance function fully supports the execution of the existing business. Generally speaking, writing with a finance function performing at a level one is short sighted. Yeah, many small businesses and distressed businesses we first get involved with run their finance departments this way, most often the logic being that finance is nothing more than another cost center to manage. However, once you begin to break that perception, it still takes a year or two to move from level one to level two with a concerted effort. So what could be possibly left for Stage Three? stage three is what I call world class finance.

It's audacious. It's a state where the CFO is working together with the CEO in the strategic pursuit of growth. In level three, that CFO changes that perception of finance from one as a cost center to one as a value creation partner, others in the organization seek out the advice of those in finance to make better decisions. We are proactively managing capital allocation, minimizing our cost of capital to afford the pursuit of more opportunities. Our reporting systems evolve into real time systems with real time performance indicators, allowing us to be that much more responsive. Finance provides visibility into the future, which allows the organization to confidently plan and execute strategy.

Achieving level three is not like flipping a switch and waking up someday realizing Hey, I know how to drive a train. A Level three finance function takes years and a committed team to achieve but I like the idea of throwing it out there just to capture the imagination of people, even if they're presently stuck in the caboose. So lesson number one is to first make sure your brakes are the same size as your throttle. There's no point in adding another engine if you have no ability to control the train, having two functions that challenge each other sales and finance make for better business decisions. Let's drill further into the people aspect of finance transformation. What I learned During the first six months FBI was that no matter how good my ideas were, no matter how much passion I had, I couldn't implement change alone, I suddenly needed people.

I had the border director support and they provided wonderful air cover, but it was only half of what I needed to reach my destination. I also needed a crew inside the organization to buy in and help out, which is much harder to obtain when you're asking them to do things differently or work harder. The biggest difference between being a CFO or a corporate director for that matter and other management and professional roles is the amount of time spent on the people. Our business programs in our professional designations do a wonderful job building our financial expertise which predominate the first half of our career. However, in the second half of our career, we need to retool executive competencies such as leadership, team building coaching and communication play a much more prominent role in our day to day. One skill is having the ability to distinguish between good people And the right people and devise ways of closing this gap using either recruitment or training the right person in the sense of the role you need them to play to execute strategy and act on your ideas.

Beginning of 2006 and continuing today, I've been working on developing a competency map for the finance function. A competency is a definition of what you can do, which includes both what you know as well as your ability to apply it. So technical competencies address your gap finance tax. Enabling competencies would further refined personal attributes that make you effective in your financial role. These competencies relate to areas such as personal productivity, teamwork, communication, business, acumen, etc. The competency map defines proficiency of each role and of the entire finance function.

And the first application of a competency map is for job design and recruitment. Next, by assessing your staff against the map, you can determine in support where you have existing strengths and weaknesses. In your team, which feed into your assessment of the maturity model. So back at FBI as a result of this assessment, it became clear with all the craziness going on, then my controller was unable to fulfill all the competencies attributed to a controller role. So this actually resulted in me hiring a second controller as an experiment. confusing.

Yes, unorthodox absolutely doesn't work. Yeah, it works when you need an extra pair of hands to transform the finance function from level one to level two. The competency map also allows you to develop individual and group development plans. Back in Boston, one of my team competency gaps identified was that the finance team didn't understand the business making it that much harder to get the accounting right, let alone provide any insight into the numbers. So each week I would organize speakers to come in over lunch and talk about various aspects of the business. This idea of using a competency map to help plan and manage your staff continues to evolve.

I'd begun talking about it more of my CFO Leadership Program. And the idea seems to resonate with participants who have been looking for a tool to put their foot against a tool to help them apply best practices, or broaden the view of what finance can offer, which justifies a request for resources. I was recently on a call with some people at performative the world's largest website for senior financial people. I simply made the comment that they should consider organizing the performative Academy around a competency framework. Once again, the idea struck a chord and now I'm working on a project with performative to take this idea to a much bigger scale. individuals and their managers will complete a competency assessment, and the website will configure content based on this assessment.

So this idea continues to gather momentum and I'm quite excited by this. But there's still an element missing before people will fall into line. Principles of persuasion suggest that you need to make a credible appeal to both the logical and emotional mind. Believe it or not, the logical mind doesn't exist. Law its behavior nearly as much as the emotional mind, maturity models and competency maps, those are logic driven. They just make sense to reach your staffs emotions and change their behaviors.

You need to build personal relationships, coach them along and set emotional context. During many of the sessions I present, I pull participants and observe that very few organizations or leaders know how to use these concepts in a way that drives performance. I believe mission, vision and value statements are above all else and emotional connection among your people. When you're in the turnaround business, you need to cut through the BS rather quickly, and you rarely hear George use mission, vision or value terminology. However, George is extremely good at conveying these concepts through any conversation. It's part of his term though it scares the crap out of some people.

He stood up at a town hall meeting in Boston and in front of the entire staff expressed the words Listen, if you guys don't want to adopt some of our ideas, there's a saying that goes some things are worth more more dead than alive. I think George was just trying to give everyone insight into an investor's perspective, we could have doubled the stock price just by liquidating the company. Now I don't recommend casually throwing around these words unless you're in the mood for rebuilding your organization from the ground up, mass resignations ensued. But what resulted is a pile of promotions and a flood of new ideas which got the turnaround jump started. A mission statement specifies the purpose of an organization or in this case of the finance function. The act of committing it to paper or having the words haunt an organization is George's did is intended to bring focus and avoid the mixed messages.

Our goal is to get more control over the water cooler conversations, which typically arise when people either don't know what's going on, or what is going on is inconsistent with what they've been told. As a team. We discussed what the meaning of each of the key words and phrases you see underlined. For instance, credible credible means we are honest and forthcoming and our advice and insights are backed up with analysis. For me, I like having full proof mechanisms to support the implementation. So besides living these words myself, I incorporated them into the performance evaluation process.

In doing so, your staff and their supervisors are triggered to document examples of employees demonstrating competency, fulfilling the mission or living the values or perhaps not. These sorts of mechanisms help retain the people you want and help with succession while at the same time helping those not as well aligned, realize for themselves that perhaps they aren't the right person for the position or they need to improve. So what became of FPI, the company was broken up and sold off as a going concern with the US division being acquired by highliner in late 2007, with only half of my 101 items listed dressed, the value of our investment tripled in the year and a half George and I were involved and we made an exit. So apart I believe there is a return on moving the finance function from Level one to level two just by focusing in on execution.

But I haven't even told you the best part of this story. Let me tell you about a director of food service at FBI in 2006. George like this guy from the start and promoted him to VP of sales, and then to co president, all within eight months of getting involved. today. Keith Decker is now the president and chief operating officer of highliner foods, the acquirer of the FBI business. It turns out, Keith had some serious latent executive skills that George was the first to recognize and Once identified, he wasn't afraid to give the top job to someone who a few months earlier was buried in middle management.

Equally as impressive is the highlighter stock charts since 2008. highliner has been really successful and now addressing the strategic issues of the business highliner has been consolidating the US seafood industry for the past six years. As the throttle ratchets up, finance should be right there evolving into a stage three We function in our Maturity Model. When we are successful, the returns can be enormous. So stepping back and reflecting on the second half of my career thus far, it turns out my grandfather had a right all along, it is about the people. Transforming the finance function to the next level requires you to consider first getting the right caliber or breaks in place to complement the size of the throttle. investments in brakes come with an expectation of return.

So the onus is on us to make sure we fulfill that expectation. Second, using a competency map to distinguish and develop the right people from the good people. And third, making it an emotional appeal to your people to get buy in and build alignment. When you combine these three elements into your own staff management practices, you have created a formula structure mechanism for ensuring the right conversation is always taking place. We all want to manage our staff more effectively, your payback for investing your time and your people is that you now have a plan for staff development and succession, you will likely notice higher levels of commitment and staff productivity. And you can now support a request for the resources to break a narrow view of finance and fulfill a higher value mission.

Each of you watching this video now want to make a valuable level three contribution to your organization and it's about the people to get you to that stage.