Arguing Agile

AA186 - Bridging the Finance-Product Gap: 13 CFO Lies (Mostly) Debunked

• Brian Orlando • Season 1 • Episode 186

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As a product leader or agile practitioner, do you struggle to communicate value to your finance team?

In this episode of the Arguing Agile Podcast, Product Manager Brian Orlando and Enterprise Business Agility Coach Om Patel muse on 13 common misconceptions CFOs face and how they impact product and organizational success. 

Listen as we discuss:

  • Demonstrating the ROI of business agility
  • Balancing short-term gains with long-term strategy
  • Improving cross-departmental communication
  • Showcasing the value of tech investments

Learn how to improve communication between finance and product teams and how to finally bridge that pesky gap between finance and product in your organization!

CFO, product management, agile, finance, ROI, strategy, communication, organizational culture, tech investment, risk management, budgeting, leadership, business agility

#ProductManagement #AgileLeadership #FinancialStrategy #BusinessAgility

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welcome to the Arguing Agile Podcast, where Enterprise Business Agility Coach Om Patel and Product Manager Brian Orlando argue about product management, leadership, and business agility, so you don't have to. Welcome back to the argument. Agile podcast. I, we have an interesting one about CFOs today. Om sent me an article. Some social media platform could be a good social media platform Could be one that used to be good and isn't anymore could be anyone Yeah, you never know because they all have the same features now anyway Sadly the post said it was from an individual who does, they do have their CFO chops. They've been in a CFO for at least 10, 11 ish years. So they do, I trust that they know what they're talking about. That for the purposes of the podcast, the jury accepts that this person is an expert in CFO wing. It's a thing. CFO wing thing. Yeah. And he says 13 lies. Every new CFO hears, . I have not pre read the list. This is the first time I'm reading the list. All right. Number one, compliance is someone else's problem. Compliance is someone else's problem. So while I haven't heard that myself, I have seen Well, you're not a CFO. I'm not a CFO, so of course I haven't heard it. But I have seen Direction in a company where the attitude has been build it ship it And if it's broke if it's not compliant, we'll patch it up I've heard that now having said that just to be fair because we like to be fair i've also seen the opposite in regulated industries So I've seen both sides of the coin here. When CFOs hear compliance is someone else's problem, I can only imagine that this is probably not in a regulated industry. Probably because it would be a huge risk otherwise. And I'm not talking about risk when something goes wrong with the users necessarily, just like on face value of, of whatever the software is. I'm talking about reputation damage, right? Which is many times worse. So in a non regulated industry, compliance where it's needed is someone else's problem. Is the CFO hears that? If I, if you're a CFO, I'd like to hear more from you about this because I would think if I were a CFO, I wouldn't want to take a chance on not having something released out in the wild. What type of compliance are we talking about in this bullet point? It could be regulatory is what I'm thinking. I mean, well, I mean, the CFO has got to make sure that all their stuff is done in accordance with gap and whatever other industry standards that they're aligned with, but that stuff is directly the CFO's responsibility to make sure that you are compliant with your financials. I can't see what other job the CFO has, even spending more than we're taking in, like that's, that's not even really the CFO's job. The CFO just kind of waves a flag and hopes that the CEO. Makes the right decision, but the CFO so compliance, like what kind of compliance. It's a vague statement that we read, right. As a bullet point, just says compliance. So we're left to our own devices to interpret that. And about the only thing I could come up with is this is something that is not severe. If you were to be in breach of compliance, where the CFO could say, well, let's just get it out there sooner rather than later , just because quicker time to market means more cashflow for them. It's compliance, like a, like an operations type of compliance we've got these things that we've got, we've got these contractual obligations and I'm going to trust. That the operations people are on top of it. I can't do that as CFO. I can't just trust that they're on top of it. I could read it from that perspective. There are these financial penalties coming up. Right. And I need to be in tune with them. That's interesting because we don't really think of the CFO, or whatever, finance or whatever you want We don't really think of them as stakeholders to development teams a lot of times when you cast the net as a product manager to figure out who needs to have input into this new product or this new thing, like considering finance, not at the top of my list. And rightly so, I think from a product perspective, it shouldn't be right. I mean, so yes, they do control the purse strings. But at the same time, they don't get to make the decisions on the product. That's product's role, right? So it's interesting to me. I really don't think this has anything to do with any hard regulatory type of compliance, but yeah, maybe there's bodies you have to be compliant with depending on the domain you're in, where if you're not compliant, the worst that would happen is. a slap on the wrist or fine in which case to see if we could say let's just get it out there Let's start getting those dollars in and we'll absorb it. It's pretty weak. I think as a point. All right Well, let's go to point number two then point number two forecasting accurately is just guesswork that that's a lie Told to CFOs. Which side do you want to be on with this one because I'll be on the CFO side for a change because I want to say, listen, my world is all about numbers. There's no ambiguity in numbers. So give me something that is absolute, right? So how is it that forecasting accurately is guesswork? I want to know numbers. You know, sure. Give me, give me a swag, give me a plus or minus, but give me a number. All right. Heard, understood, accepted. Now here's my counterpoint. Thank you. Uh, Om, Mr. CFO uh, Brian, the senior product manager who thinks very highly of his product management ability is going to tell you how much money do you want to spend trying to break into this market, trying to impress that new user base or trying to, Win this business you break off that amount of money and then you give it to me at the end of me spending that money or at the end of the, time period we agreed to, maybe I need to update you every 30 days or whatever. We'll make a little micro agreement between the two of us. And that's how we'll handle it. So I'm not telling you that accurately forecasting is guessing, but I am telling you, if you want to break into a new market, if you want to do things that are completely unknown to us, the company, it is guesswork, it is guesswork that doesn't mean that it's completely opaque and you don't get a view as we move things along. so going back to our podcast on strategy, where I can align with you on this one is. You're going to tell me, Brian, I'm not giving you money if you have no plan. I'm not giving you money if you can't give me names of customers and features that you plan to deliver to them and a plan, with dates on it and maybe little bars that connect the start to the end date on the chart. You know? Like suddenly we find ourselves with a Gantt chart, you know what I mean? Because the CFO wants it. Yeah, most CFOs live in that world, right? So, but there is also a case to be made for breaking into a new market where you don't really know what you don't know. So in that case, as a CFO, what I'm not going to do is to say, okay, go do whatever it takes. So that's carte blanche, right? That's not, that's not how I would think as a CFO. What I might say is, what do you think you know, how long would it take? How big is your team? And I will back into a number from there and say, Okay, Here are some guardrails for you so you have about let's say i'm just making a number here hundred thousand bucks. It could be a million doesn't matter whatever number it is And say, go spend that money to learn what you don't know. And to your point about frequent updates and keeping the CFO in the loop, I think that's critical. Because when you start to go through that budget, right, they need to know if you're going to run under or over. So a CFO is surprised when you run out of that initial seed corn funding of 100, 000 in my example. And then you go, go back to the well and say, Hey, guess what? We're doing great. We just need another 50. It doesn't give me a good feeling, right? Whereas if I'm in the loop the whole time and I know where you're at and I'm seeing progress, I might be open to finding that money from somewhere. Right. Which magically always seems to happen. Yes. Yes. It always happens. When the good ideas come, or the golden children in the organization come out, or the chosen executives come out, We always seem to find the money. I just feel like with this category of forecasting stuff like that, this kind of shows the cracks in the armor that like most product teams, product people, they're not treating those folks as part of the team. You know, that they're there to help you. In your day to day, you just haven't asked for help, I'm going to take a little tangent on this podcast Sure. One of our least watched podcasts is titled asking for help. It is a podcast that we spent the whole time talking about why people don't ask for help, how people can ask for help. how can you bring it into your day to day work? Of being more open to ask for help and not being perceived as like weak or lacking or whatever because you're asking for help and is shockingly one of our least viewed podcasts. I don't understand it. Maybe we'll link it to this one and let people go check it out. But yeah, I agree with you. I think seeing asking for help as a weakness is the weakness. If you see that as a weakness, that is the weakness, as opposed to actually asking for help. if you're asking for help for the right reasons, you probably will find help, right? So, coming back to this bullet here forecasting, enabling the CFO to make the right decisions, make informed decisions, right? We'll tend to weigh in your favor as opposed to just saying, well, I don't know how much I need. Give me some and I'll let you know later when I'm running out of that. It's like, nah, that's not going to happen. All right. Point 0. 3. This is a lie. Every CFO hears micromanaging shows attention to detail. and before I see you shaking your head, yes. But before I'm gonna intercept you right now because I have been with engineering leaders that think the same thing They're like if you're not micromanaging if you're not in the details, you know not any of this like founder mode nonsense that I'm hearing now, right? They're talking about truly being in the details, like micromanaging the details, telling you how to do things. You know, invite me to all your sprint plannings. I'm the manager. I manage these people. I should be there anyway So what it really shows is you were confused. About priorities and you do not trust definitely lack of trust and exertion of control is what it shows, right? You're flexing your management muscle. They're saying, well, I'm the manager, right? I need to be there. Why? What are you adding? I think this is very, very prevalent. First of all, unfortunately. And typically we see this from that middle management layer that is uncertain about what their role is, right? The teams are self organizing, so they don't need a manager, right? The leadership is entrusting the teams. So where do you fall as a middle manager? It's in that tricky space where you're grappling for Something, right? Make sure that you have longevity in the organization. So what are you going to do? You can't lodge yourself in the in the details, so to speak, at the level above you. They don't want you there, so you're going to exert yourself on the team and you'll embed every in every meeting and go in and start creating noise. And that's terrible. Because it disrupts any level of psychological safety you may have on the team, right? So micromanaging is not attention to detail. Don't confuse those two things. Attention to detail is knowing enough and then knowing when to step away. As a manager, right? So we talk about this topic often on the podcast, the difference between a manager and a leader. It's a gray area sometimes because your title might be manager, your development manager, your QA, whatever, whatever manager, right? You're an X, Y, Z manager, but that doesn't mean you're not a leader. Being a manager makes you a leader. You're leading those people. So lead first, manage, let them self manage. You never hear anyone say the teams are self leading. That term I've never seen. Self managing, self organizing, yes. So as a manager, be their safety net. Be there to help catch them, right? If they're, imagine they're trapeze artists. You're really just their safety net. So you're there to make sure that they don't fail. But you're there to support them. Not necessarily to micromanage under the guise of being detail oriented. Just so you can write up some reports for your Managers or your leaders, right? That that's just fake. Yeah. Well, I'm glad you're, I'm glad like listeners and viewers here are, are are hearing you say that because we have a whole nother podcast. If you want to listen to us ramble for 45 minutes or 40 minutes or whatever it ended up being about the illusion of control. Oh yeah we have a, we have a episode for you to listen to the illusion of control of why people do these kinds of things. So number four, the numbers always speak for themselves. this is, I don't know if I can take the opposite side of this one, because as a product manager, I like to be led by the data, but I also have interacted with a lot of people that can really distort data. they can do a , tap dance and tell a story and kind of obfuscate the details, throw out outliers, to the point where the data basically fits whatever story they're trying to tell. and it's been more than one person in my career that I've met that can do that. So I sort of have the opinion now that even if you're looking at data. You know, like visualizations made off of data. I don't trust any numbers. it's a terrible curse because it means that I need access to the raw data. Every report that I look at, which is terrible. I don't have that kind of time to go through every report. so I have to be clear when I want to see reports compile. First of all, I don't ever ask people to compile reports for me I know enough about SQL and data visualizations and I can work in Python like enough where I just compile the reports myself and I compile the dashboards based off of real live data. Right there. So we're always looking at a live data dashboard and I don't deal with this anymore in my career. it's too important for us to agree on the truth for the data to be skewed. but again I am not a CFO, so I don't get talked at by people in different departments that are skewing data because they want something. First of all, the data can be manipulated by those that want to do that and it will, and it yes, absolutely. So it's a little bit of a mirage. You know, you see something that's not quite there. And often in the context of today's conversation with CFOs, Data can be manipulated such that it plays to the advantage of those presenting the data. The CFO only sees one side of the data. They only see what you present. They don't have access to the raw data. They're not data people, right? So unlike your skill set where you can actually take the raw data And do what you want with it. They don't have access to that. They have access to only the dashboards or the graphs or the charts that people present. Maybe I will slightly push back on what you're saying, because I once worked with a CFO who was in the data, like it was a small company. So I guess larger companies, I sort of agree with you. Okay, large companies, I'm willing to let this go and we can move on to the next point for purposes of time. Small companies. I think those CFOs are in the data and I think they do pull the data for themselves and Start scaling the company and start expanding then you have this problem. I don't think small companies deal with this problem I think those CFOs really are in the data. So in that case, it'll be hard to pull the wool over their eyes I think it is very difficult. Yeah. Sorry, I'm reading bullet point number four again And I'm not even really sure if we like the numbers always speak for themselves the numbers never speak for themselves, , the numbers speak for themselves. That's not even true in product management either, because I'm taking the numbers and the raw data means nothing data is not information. It's not even knowledge or wisdom. It's just data. It's nothing like the story that I'm telling. I'm leveraging the numbers, but it's about the story. sometimes people tell stories that don't even have data. It's about the story. So if the data can support the story, this is, this, I guess is where I'm going. I didn't know I was going to this destination, but now that we've arrived at this destination, I'm happy that we're here. So I went on a hike and I decided I need to fire all my product managers, is there data underlying that? Not really. There's a feeling. So at that level, the C level are they making data backed decisions? We like to think so. You and I like to think so. Yeah. you would like to think so. Reality. Yeah. it's different. Reality is different. Listen, sometimes the data, to your point about raw data, not meaning anything. Absolutely. They like bricks. You see a pile of bricks, what does that tell you? it's how you arrange 'em that forms a picture. you could say to your CFO, we lost. X number of dollars last quarter, year, whatever. That's just a number, right? That's data. You could say we lost that, but we gained X, Y percent mindshare. Market share, mindshare, whatever it might be. If you're a brand new company, you lose money, but you gain mindshare. The CFO isn't necessarily judging you on the former, because maybe, maybe the VCs, they want you to get mindshare now, so you can capitalize on it later. So data is all about context without context. Data means nothing. I think of all the companies that are out there, they're like, we're just trying to build stuff and make customers happy and like numbers, what number is like, I've seen that in, in financial reports in projections too. Oh man, they disguise them under these things being forward looking statements, speaking of disguising things, let's move on to bullet point. Number five, risk management can wait. Focus on profits. This is all short term thinking right here, AKA the Silicon Valley strategy right here, which is like, Hey man, expand your questionable cab service into this new city. Don't worry about their laws or licensing or whatever , I think like in the UK to like, have like a I can't remember what they're called, like the, the black car taxis, the black cabs, the black cabs, like you have to have a special license and Oh, we'll just create our own like Uber black cab and we'll just drive around the UK. Like you can't just do that, man you, I mean, yeah, first of all, yes, you can, you can just do that. But yeah, this is an interesting one because Maybe I'm going to take the other side of it. Okay. Maybe you can do that because all you want to do is just to show that you've got presence in the UK with these black taxis of yours, enough where your VCs could give you round two. Right. So if that's your goal to secure round two funding to heck with the risk, to heck with anything, just get it out there. Yeah. And you've seen that I don't know if this is contained to Silicon Valley, or if this is, I think, it's definitely, let me think about how to say this, this strategy is definitely more in their wheelhouse. This is a regularly accepted thing in Silicon Valley, in fact, there was a recording, which I think we should do a whole podcast reaction to the recording because recording is only 45 minutes where Eric Schmidt was speaking, who was the, he was the CEO of Alphabet, which is the parent of Google. Yeah. And he was speaking at Stanford to, I think it was a class of product managers might be wrong about that, but I think, I think that's who it was. Yeah. And he told them something along the lines of this, which is break in, conquer the market, figure out the legal legalese later. Yeah I mean, it was almost verbatim. I almost want to, I really wanted to like play that video. It sort of breaks our working agreement, so I haven't pushed it, but I almost want to play that video, like in the middle of our window here with the podcast and just have video playing and we'll just react to it. That was a good one. Yeah, I kind of want to do that. I think it would be a really fun podcast. and it would be worth like people that listen to this podcast, it would be worth them to listen to the whole video because if you're a product manager or if you're in the business agility space or whatever, it is important to think how people like that, like people that run the holding company of Google, like how they think which is breaking a new business. Dominate the market, let the lawyers figure out if it was legal after you did it and made a profit. I think there's something to be said for that. Listen, I'm on that side of it because if you did that, what's the worst that would happen, right? People will say, well there's this thing going on. The lawyers would take years to figure it out, right? In the meantime, time is of the essence when it comes to capturing the market, entering and capturing a market. So if you can get ahead of that in terms of time and yes, while there's this legal thing looming. People will get attention initially on that and then it will just pass, right? And yes, the lawyers will be fighting it out in the background and eventually it'll get settled and nobody to hear about it But at the same time risk management is a term that encapsulates so much under that umbrella So maybe what about launching a product that isn't really Perfect for the market It falls short. It maybe only serves 50%. It's got rough edges all over It's risky from that perspective. You don't know what you don't know about how people will be using that. Get it out there anyway. Get it out there and let people use it. And if they use it in a way they're not supposed to, guess what? You learn that and version 2 can come out a little later. This is funny because we, we we're agreeing with what he's claiming is a lie in this category. I think so. He says the lie is risk management can focus on products focus on profits. we're sort of saying, no, no, no, no. You're wrong about that. No, it's not a lie. This is the, it is the way that most people do business. Right? Let me, try to defend his point of risk management can wait focus on profits. That's great that you have that viewpoint that, Hey, risk management. Forget about that. We'll figure it out in three to seven years when, when all the legal battles, subside and all the news media beating us up subside and we can just pay some settlement costs and we'll eat a sausage and everything will be all right lawyers, I don't know how they handle this stuff but. Yeah, that's great. But there is some survivorship bias happening in that example, because 95 percent of the companies, they don't get to become so big 95 percent of the companies get. sued out of existence. So like the Eric Schmid's of the world, the people that run alphabet who have Google with a profit amount larger than some countries, GDPs, they can afford to do this and be super shady. But the CFO who's saying, listen you guys are engaging in some super risky strategies. We need to de leverage ourselves and not do this real risky stuff in these market segments where we're obviously breaking the law. Okay on that, on that side of it. For the rest of us and by rest of us, I mean 95 percent of the companies out there. Yeah. He's right you probably shouldn't just decide to run black cabs through London and be like, yeah, license Schmeichens. We don't need any of that. if you're the silverback gorilla in the market, you can get away with it for sure. In the case of Eric Schmidt, yes, of course, right? They can, they can afford to do this. So either the companies get sued out of existence or they will fold up or they will sell up or whatever. But they will somehow deal with this risk if they decide to take the plunge in this way. Not that we're recommending that, if your profits are so big that you could afford an army of lawyers to defend this, then go for it. So it's all about context again. Right? So if you're just a regular company, not a Google or an alphabet, you probably should listen to your CFO and he, if you don't, he's probably got his resume updated, just saying. These guys move around pretty quickly. He definitely does. Alright, so risk management. Talking about risk management, talking about being sketchy leads us into point number six. Short term gains justify ethical compromises. I mean, that basically speaks for itself. What you do to show a profit quarter over quarter like irrespective of other Quarters of a long term or whatever like we both talk many times on the podcast We've talked about it's super easy to show accordingly like cool book all my work that came in this quarter and then fire half my staff and then it'll look like We're amazing on paper Buy another yacht super easy and then we'll spend the next two years trying to figure out how we're Like we don't have anyone to work on this contract that we just booked and yikes that's someone else's problem We got our yachts. That's right. See you later. Yeah, and again, unfortunately We know this is pretty common out there Unlike the last category this one. Yeah. Yeah, there's no benefits of this one and if you're one of those people who engages in this thinking, you're just going to basically hop around and collect your millions, it catches up with you quickly because reputation doesn't just follow you in these situations, reputation will catch up with you and overtake you. Pretty quickly. So you find yourself out of gigs soon. Yeah. So yeah, this is, this is one that I think we can agree that's, yeah. it's as a CFO when you hear this, is this really a lie? Short term gauge justify ethical companies? I mean I'm, I'm sure it does at some companies that, they're in survival mode but they're like you like to say, they're circling the drain. They are, they are a moribund company. That's what they are. Okay, well number seven is pegged as a lie. It says technology won't improve financial operations. I don't, I don't this one might need a little context because I, I I could be on either side of this one. Which side would you want to be on this one, with this one? I'll be on the CFO side. Okay. So I'm saying why invest? Why pump more money in technology? When you're trying to improve your your financial ops, right? Why it's just, everything is a drain. So technology, I'm going to buy new systems or new, which will require new skill sets that I have to pay for. I'm not on board with all of that. How is it going to improve my financial ops? Well, wait a minute. That, but that's a lie. That's the lie. So like he's saying that technology will improve your financial. So if finance, if technology is not going to improve your financial operations, like the idea is you can implement some technological improvements to make it easier to deal with finances I worked at a company one time where we rolled our own, billing system, basically it was backed by great plan. So it wasn't really truly roll your own, but the actual system that sent out invoices to customers was completely custom. We rolled our own system because it was what we needed at the time when we built the system. This was many years ago. This is not like in the last two years where I would never build it basically a billing and invoicing system there was nothing robust enough. And, customizable enough back in the day when we built the system. But we built this system to be able to generate invoices When customers incurred charges, basically. It would invoice the customers for the charges. so that the company could get paid faster. we did create a technology solution that improved operations. The financial operations that we approved were things didn't have to sit in AR for Yeah, you improved your AR cycle. things didn't have to sit in AR for 60, 90 days. Things sat in AR for a week or two. And that was a big advantage to the company, bringing that overhead of floating money things that have been delivered, but haven't been paid for bringing it down I mean, that was millions of dollars. So I don't know how many, let's just 10 ish million dollar software right there. That's real money that the company could collect sooner because we built something again. that was like 20 years ago. So it'll pay for itself in no time. Well, no, it certainly did. Cause it was, it was built by a team of like two. Yeah, yeah, yeah. So the only kind of point in the other column, so to speak of that would be if you're rolling your own, you have to support it. Right. But again, not a big deal. Bolting it onto an existing backbone that's third party, like Great Plains or whatever. That's where your risk is because if, if that company goes under, you're toast. Now you've got to build something from scratch, but all of that is just, these are weak points against, I guess. Right. The other side of the coin would be, okay, well, we were doing all these things in our Financial house. Why don't we just simply this is today, right? So you could simply outsource it all. Yeah, right. And let someone else take care of all of that. Accounts payable, accounts receivable, payroll, all of that and I will tell you there was a period of time with that particular system that the strategy was The original developers who developed it left the company. We had nobody who understood the system. We did outsource the development and maintenance of the system for a while. Then we brought it back in house. And when we did this, We had to bring it back in house because we needed to make updates more rapidly through the system than the offshore development cycle, to make for example some of the updates we had to make to the system, we had to be able to charge tax in the localities in which the tax was incurred. Okay. We had to be able to apply discounts and more dynamic pricing. To different customers. So one pricing didn't fit all customers over time. Because of the sales relationship with different customers develop because of volume, some customers were small, some customers were big, so system needed to change to handle that all, all these kinds of little things the forced the system from like a, sort of like a maintain state it's a grow, maintain, and sunset. It, it, it forced the software from a maintain back into a grow state. the technology in that case, Improved our financial operations, because what would happen is you'd run all the transactions through great planes, and then some accountant would have to go. Figure out where the cost was incurred, what city, state, locality, municipality, special tax district, stuff like that, apply the changes. And it was a lot of manual stuff. It's just like people that run payroll, it's like you're gonna run payroll and you're gonna apply a bunch of manual stuff to pay. Like if you're running payroll and you are in a company where everyone lives in different states, like a full-time remote company now you run payroll, you gotta do a bunch of different things. It's not really that many different things, but there are different manual steps you gotta take. Sure. Well, it'd be better if the software just supported that. And then just took care of all those little business rules. the application of business rules the asynchronous application of a bunch of different business rules to a synchronous process, running payroll. It's so much better when the technology just deals with it for you. Absolutely right. And also in that example, keeping up with all the changes, Right. Laws change every year, right? Different states and whatnot. Listen, today the alternative is, is outsource all of these ops, right? Outsource. So companies, there are companies that exist for the sole purpose of Providing these services to small, medium, even large companies, right? So if you have a small company, 100 people or less, whatever, that want to do payroll, AP, AR, all of these things, you could do this in house. Or you could. Outsource it to companies like Gusto or companies like that, right? There are plenty. And you'll find It's actually more economical to do that than to manage it in house because they'll take care of all of the different state nuances laws Etc, but they'll also apply the latest ones. So every year you don't have to go learn those, Right. And keep people on payroll for that kind of thing. So for this one, yes, absolutely. Technology will improve financial ops. Yeah. Yeah. There's no doubt. Let's let the tech do that. I mean, again, we built systems for this, but yeah, let the tech do that for your people to deal with one offs and problems and bugs and things that Really increase user value and increase the happiness of people when people have problems someone's on it They're making it their responsibility. They're seeing it through to the end. All right. So number eight a single bad hire won't affect your finance team I mean you can delete team from this one a single bad hire won't affect your team. Well, that's obviously a lie That's a big fat lie It is absolutely a big fat lie. I can't take the other side here, right? I just can't I mean well I can't do it. Number nine, you have a budget problem, not a strategy problem. This is interesting. This one's interesting. So a CFO is told that you have a budget problem, not a strategy problem. Right? Is that a lie? You're a CFO. Budget is a tool. That's how I think of it, anyway. Strategy is something that trumps budget all day long. For me. So, how is this? How is this not a lie? You have a budget problem, not a strategy problem. That's a lie. You have a strategy problem that, that shows up in your budget. That's how I like to think of it. I could see this from the perspective of a CEO who is burning money like it's going out of style. Burning money to stay warm. On assumptions. Strategy, untested strategies. we need to get in with all these market segments. You know, I, I see that you're, you're telling me I need to have an an ideal customer profile, but I think you, I think that's nonsense. I don't want to spend time doing customer profiles and talking about what customer needs and that kind of stuff. Every customer profile needs our software. So I'm attacking several different markets and several different ideal customer profiles and it's not landing with any, this is every pre market fit, company that I've ever seen that is just flailing and have not dedicated themselves to the problems of one Specific user. So the strategy is not focused, is misguided or not defined? Not focused. the strategy is not focused. or they've not niched down their problem set to a specific user, a specific problem. They've not done the Mike Miller one to one to one type of thinking. They're trying to be everything to everyone. or they don't have a strategy. They just have goals and visions, which we have touched on before on a different podcast. right. please. Go back and listen to, I believe it's Arguing Idol 179, It was 179 was winning product strategies and the MVPs that led to those strategies with Nisha 179. So If you want to find out why companies are so bad at this, listen to that one, and then listen to, I believe, 185, the podcast that will go up right before this one, about what companies do instead of strategies to find out why people are so bad at this one. So we have two podcasts to deal with this one problem. Item, you have a budget problem, not a strategy problem because, what will happen is a company will run out of the money they got from investors or whatever. And then they'll go back to the investors and say, Oh no, we can be successful if we just got a little more money, said no company ever again and again and again. yeah, absolutely. But again, I go back to my point though on this specific bullet strategy that is not focused strategy. That's not even defined or that. How does that manifest itself, right? You don't have these things. Ultimately, it reflects itself in the budget. You're losing money, to your last point. If you're losing money, that's a budget issue. you're in the red. it comes out in the numbers, ultimately or pretty quickly. You don't have a strategy. That's not something people can see, You can wax lyrical about what you're doing, but the numbers in this case do speak for themselves, right? Because they will reflect your lack of strategy or your lack of definition Well, a lot of companies their way of dealing with this one is they call it a North star metric. I usually don't use that term in normal conversation. Cause it's like MVP. It's one of these terms. it's so saturated in the market that it means everything to everyone. North Star Metric, like for YouTube, would be like number of hours of videos watched that's their metric. same thing for Netflix, so like number of hours watched. For Twitter, it would be like number of posts created by users. for our podcast, it's number of watch hours. People that have consumed our content and watched it, Sure. You know, it could be continuous. Continuous watch segments, like the number of minutes that you continually, because sometimes people will take our content and continuously watch a nine or 10 minute segment in the middle of a podcast and I'll go see the stats and I'll say, Oh, I wonder what section they're going to look at to it's, that's important to them. So it's, it's a, not a budget problem. It's a strategy problem. Yeah, it is a strategy problem. And like what metrics you use in house can make this way worse. They can make it a lot worse. I agree with that wholeheartedly, all right. So number 10 financial culture is just about cutting costs and ROI financial culture. I don't understand what that means. it's just about cutting costs and ROI. you could peel this whole thing back to the role of the CFO is just about cutting costs in ROI. I could see that as an argument. He's saying that's a lie, which is interesting because this is what I usually see from the finance people. Sure, they just want to cut costs and, and, and reduce them. And they just want to cut costs and they only want to give money when a ROI is met. Specific ROI is guaranteed, which means that all the agile stuff is off the table because it's very difficult to give an ROI to like, I'm going to send people a training. What's the ROI on that? I mean, I can't tell you what ROI of training is going to be. How do you quantify that? We're investing in people's futures. Well, that doesn't sound like that. That's going to be any ROI the company, so I'm not going to give you any money for training Om! Boom, very real conversation right there. Very real. Unfortunately, I've seen this in real life where they say, well, training, they train their own time not on the clock, right? So there's no motivation for people to do that, first of all. So yeah, I mean, in the end, you're going to lose some good people. That's, that's really the net net out of this, but definitely agree. Most financial folks will have this outlook of reducing cost. So the counterpoint to this is hard to take as well. Reducing cost. Well, okay, you can reduce cost, but at what cost are you reducing cost? Or what's the, what's the opportunity cost of reducing cost? Training is a great example. You're not investing in your people really. Right. Especially if you want to invest in your people and that's going to pay off, but it's hard to quantify the payoff. let us know in the content below, because we would love to hear from you. How do you quantify such investments, right? ROI is not the only measure, by the way, it is one measure. There are other financial ratios that, and measures that people look at. Y. But I gotta think for a second I started this category talking about every other category. Thing that mattered to me that wasn't ROI like watch time or number of clicks or a number of times that you know News media article was shared or something like that on social media Yeah No That is ROI None of that is our way and none of that would be exposed to the finance people either because they don't have those numbers Unless they know to ask where they happen to be in the meeting where we talk about that So are they are they? True North North star metric, or sorry, I forget, I forgot what it was called. Or is it ROI? Like, because like, we can talk about it with all the product teams or Our North star metric is the amount of time people watch the, the amount of time people are watching videos. Cause we run YouTube for example. And then at the board meetings. We only talk about ROI when we talk about new investments. So like, wait a minute wait, wait, I thought our North star metric was this thing. Well, yeah, you're right. But when in front of the board, then the C suite sings a different tune or whatever, That can't be. That, that can't happen , if that's your corporate culture, you have a big mismatch, and now you're, there's gonna be a lot of fighting behind the scenes, and there's gonna be problems like this, Financial culture is all about cutting costs and ROI. I, again, only because I'm a product manager. I don't think I've said ROI in eight years. I don't think I've used the term ROI. Who cares about ROI because our North star metric generates revenue. If we've picked the North star metric, this does not generate revenue. That's a different problem. Now we're back to our strategy as a problem why, why are we pursuing a strategy that doesn't have money at the end? Yeah. Now we're back to a problem, ROI, get out of my office with this. Listen, I feel like this concept of. Return on investment is a little bit date also your ROI formula. It's all made up. Anyway, It is made up It's dated as well. I feel like it's surpassed now with other measures even back in the day You know when I learned this stuff in business school, it was one aspect. But then there are other aspects return on time invested to turn on capital invested, right? Capital employed ROCI metric. There's so many other ways of looking at this. Yet all we hear is ROI because it's ingrained. So I think some somewhat historic. But yeah, Definitely. This is a Well, this took a good amount of time. Let's get to one that I don't think is going to take a large amount of time, which is number 11. Everyone already understands your financial reports. Oh boy. I'll be the first one to say nobody understands your financial reports. They're deliberately obfuscatory, right? So if you look at financial reports for public companies, you'll see statements in there that make you feel really warm and fuzzy. And then you come out of that and you go, yeah, this is a winner. This is great. But what you don't know necessarily, or you may not know, is that it's been very carefully crafted to give you that feeling without having raw, hard data that these decisions are based upon in all under the guise of two things. One is, well, these are forward looking statements. So it's, We're basically forecasting the future. And then the other is past performance is no guarantee of future results Right, but yet if you look through it carefully everything that you see in there is based on past performance So beware Beware the fallacy of straight line extrapolation. First of all you'll see that a lot in financial reports that say Last year we did this year before we did this therefore this year we're going to do x and next year we're going to do you know, X to the power Y extrapolations are very fallacious when you come think about this like that, right? So be careful with that. So yeah, absolutely. Everybody understands your financial reports. No they don't. But they feel good about it when they read them. I think we all agree that they don't, they don't. Number 12, you don't need to communicate with other departments before you dig into this one. First of all, I'll take the lie side of this one. Okay. I'll take the last side of this one. Listen, as a CFO why am I going to talk to a bunch of people that don't speak my language anyway? Like the technical people are all, pedantic about talking about databases and scaling and all I don't want to talk to agile coaches and stuff. Cause they keep talking about this. Portfolio planning and scaling and like this scrum method and that scrummy method or whatever I don't want to talk about any of that. I'm not interested in any of that. And I don't want to talk about it. And also every time some technology leader, product Person or whatever that can't distinguish between product and technology. Anyway, first of all, every time they talk to me, their bets and their language and their processes and the outcome of their work. They do not quantify it with regard to financial impact. So basically they're talking, they might as well be talking in a completely different language to me because I don't care Unless you're going to massage what you're saying into financial impact into my world I'm not going to pay attention to it. I'm too busy I'm a C level executive. I'm super important. That's what I'm saying right here, Om. The company didn't hire me because I have empathy and I can listen to people. And he can't put a number on it. Exactly. You can't put a number on empathy. That's right. I understand where you're coming from. If you're talking to agile coaches and, analysts and people like that, that's Cannot express what they're trying to say in a language you understand. You absolutely shouldn't be talking to them. They're doing their profession a disservice, right? So if they're talking about story points or velocity, some stuff like that, that you don't understand, you're right to not talk to them. Because what does that mean to you anyway? But I'm taking the other side now. Not talking to your people just because they don't speak your language will mean there is a gulf created between what the company is striving toward. And what they're doing to get you there. Cause you're not talking to them. They don't, they don't get the messaging. If they're doing well, you can tell them that if they're not doing well, if you're not communicating period though, how do they know? Right. so for me, this is a non starter because you have to communicate, even if they're speaking a different language, you can bridge that. And that's where you need to rely on people like product managers and coaches that can turn what they're doing into language that you understand. If you can't do that, that's a problem for enterprise coaches to come in and help you. I understand what you're saying. However, let me, let me turn that camera around for a second and focus on the CFO , you're a C level executive. So, theoretically, you're a leader in the organization. That's the way you like to see yourself. C level executives like to see themselves as bold leaders, forging the path to the future. If you're a leader, There are some responsibilities that you have, some accountabilities that you have you cannot get out of, okay? Part of your accountability is if you have a bunch of people that every time they talk to you, you don't understand what they're saying. you need to offer coaching to them to help them come up to the level that you're at or to help them better communicate with you. Right. Maybe you only speak CBO executive, which, by the way, is only spoken in yachts and golf courses. I don't understand it. Don't worry. Let's move on quickly. Part of your job, again, if you read the Marty Kagan Transform book, You're welcome. It's all about Agile transformation without using the word Agile transformation. If you read that book, you're welcome. He does tell you in that book, the roles of managers, quote, managers, meaning executive type. In the modern organization, your role is all about people leadership and people leadership in that book is defined as coaching the people in the hierarchy under you on better ways of working, how to resolve problems, how to better communicate coaching on them, whatever they need. If you cannot offer that coaching to the people below you, it's time to move on You need to get somebody in that can help you Do that coaching if you can't do it yourself So I understand that some people got in that position because they were just lucky we don't talk about that in business. We're not allowed to say some people just got lucky Which is totally true, but some people just got lucky and they are in that position. They don't have the skill to do it. So then they need to bring someone to help them understand how to be a better coach and to help them do the coaching until they come up and they, they skill themselves up to the level where they can do it on their own. We don't talk about that often, the idea that, You can just do your job in a vacuum and not talk to people that you don't understand and not have empathy for people that are basically doing work like that. All of this is not true. So I'm, I'm with him on this one. You don't need to communicate with other departments. That is a lie, a flat out lie, bad advice. It's hashtag bad life advice. But it's not only as bad, it is going to hold you back in your career, whatever career you have. If you're a product manager, agile coach, whatever developer, and you think, Oh, I don't have anything in common with finance. I don't need to talk to those people. You right there that you've just expressed a fixed mindset. You're holding yourself back. You need to push through that and say, what, what can they tell me that I don't understand? And I'm telling you, it's a lot, it's a lot, and leadership, not you're not being open to or willing to offer that coaching, whether it's internally or they get an expert in, that's a failure. That's a leadership failure right there. So let me wrap this one up. number 13 long term strategy isn't your concern. Just hit the numbers now. This is that, short term thinking. So maybe there are cases again, I'm going to take the other side. Just because maybe there are cases where this is not because all you care about is making the numbers now, long term strategy could be two years out, five years out, used to be 10, 15 years ago, but now it's much shorter. Still, that's not your purview. You just care about making that number so that you can hit that IPO. And in that case, yeah, this is not a lie. just make the numbers. Actually, back in the heyday of the internet, I worked for an incubator company that was the golden child of the internet. And basically our mandate from the CFO was, To make those quarterly numbers and we had pretty lucrative bonuses hinged on that. But was there any long term thinking there? No, he wanted to get us to a number that would get us to an IPO and then everybody would get rich. Unfortunately, the bubble fell out and I'm still here doing podcasts. So there you go. And there are no yachts to be seen. No yachts, not even paper ones. No long term strategy. So, This is probably the number one thing that gets a bad rap. the CFOs focus on quarterly results as opposed to the product managers and the Agile coaches of the world who are focused on building something more permanent for the future. I wonder if the pressure to balance the quarterly results versus the longterm, like I'd like to talk to a CFO the pressure of this cause like my product manager, like very very focused thinking like my tunnel vision product manager thinking about this is if you're constantly investing in the longterm, The short term is gonna fall into place. That's the way I feel about it, but I would imagine that at a higher level, there are more factors influencing than that simple view of the world. Yeah, I mean, it sounds like we're always dumping on leadership for having a short term vision, but They have people that they're accountable to, right? Shareholders. What is interesting about this topic to me, though, is that the difference between, Western organizations versus organizations in, say, Japan, they don't seem to be suffering from this kind of thing as much. And somehow they managed to balance that. It would be fun to dig into this. I think on a different podcast, figure out what is their secret sauce? Why is it that they're not encumbered by short term thinking? And they're still successful on the whole. So how is it that they're managing to navigate this in a way that Western CEOs, CFOs are not able to? that'd be an interesting one. We have one topic left and then we're done with this podcast. It's not on his list, but it's one that we didn't explore, which is that CFOs view product managers, product managers, agile coaches, people that involve people that are involved in organizational design, that kind of stuff. They view them as overhead or operational expense, and they view them as cost centers, basically. This also goes for finance folks who view the software development teams as just cost centers and not revenue generating. Like they view them as cost centers. This is very common is that the software development team is not like a product line is not ascribed revenue to the product line. They're just. seen as a negative. So when it comes time for cost cutting, they look to trim from those negatives because they're not generating revenue. We know that's not true at all, but this is pretty normal from a CFO. So the CFO remember we talked about being skeptical of ROI before, and they're already seen as cost centers I think that This is like a traditional accounting where they're not properly ascribing the revenue that a product brings in to the team that maintains that product in the first place. So this sort of could be a lie. I think this is a lot more real. Though then a lot of these other points, I think I'd agree with you on that. on the subject of CFOs thinking of agile coaches as call centers, I mean, if you think about it from a simplistic point of view of, investing In agile coaching. where's the return on that? It's hard to quantify. part of it is the nature of the beast, right? you're making the teams better. How do you make that visible in terms of ROI, whatever measure you're using? And the other is, on the Agile coaches, they're not able to show the value they bring, so, of course, the CFOs are going to think this is a cost. And when it's time to cut cost, that's why you find entire cadres of Agile coaches being laid off at a time, because it directly impacts the bottom line. So it's easy to say we're cutting cost and therefore, Upping our bottom line. So I think the fault here is divided, right? one is on the CFO side for not understanding what it is that they're paying for, but the other side of it is true also, which is they cannot express what the value is that they're bringing in terms that the CFO is going to understand. Yeah, I would like the fault I would ascribe on the CEO side is. looking at the product management and business agility coaching, looking at them as if they're just overhead and they're not directly driving revenue. That's a problem we need to really think about that one. Yeah. but on the other side is that we just need better ways to show that, better methods of leadership directly drive business outcomes and thereby profit and, that if we could solve that on the podcast, if we could come up with some kind of framework. It would be transformative to a lot of companies. The trouble is nobody's doing that. Nobody has that silver bullet. Nobody does. This is the same kind of thing. It's like, well, how can you tell if a good manager, a manager in the organization, like a middle level manager, how can you tell, or even like an SVP or executive, how can you tell that executive is good for the business? Or bad for the business. Well, they're not directly delivering value, right? They're delivering value as steps, you know Second and third level actions enablers, right? Yeah, they're enabling value So so if you don't have a way to show the enablers of value Have derived revenue. You don't have a way to do any of this. The nice thing about this category is You can lift everything we're talking about and, and say, well, executives can't do that either. Very true. That's very true. So product managers, they basically manage the product life cycle, which is long in, in nature, right? Azure coaches or business agility coaches manage transitions, transformation, whatever you want to call them. They're also long in terms of timeline. So it's hard to show quantifiable improvements or benefits in a shorter timeframe, right? But everybody's a cell on a spreadsheet somewhere. And CFOs are looking at those sheets every day. So when they're looking at those, you stick out as a cost, but there's not a corresponding. Value in the opposite column in the so it is hard. It is hard. I think collectively, yeah, this would be a good one to delve into because there's no silver bullets. The more people talk to the finance folks, the more you'll find a way to align to solve these problems. At least at your company. Maybe we can't give you a framework or whatever to solve all the problems. That's very difficult to give you something that's generic enough where it can be applied everywhere, but talking to people, having empathy, Working out where like, these these, these longer term issues. We need to be taking into consideration along with our trying to hit the quarterly numbers. Right. So that there's at least a balance as opposed to just doing everything short term like, again, short term like, yeah, we'll just fire literally everyone in the company, chain the doors, and then we'll be really profitable for a couple days. And then a couple, we're all outta work. Yeah. And then we're all outta work. Yeah, that's fine. Yeah. It was an interesting podcast to, to kind of just you know, mull over some of these CFO, you know pain points slash perspectives. Yeah. You know, maybe in the future we'll look for a CFO to kind of bounce some of these ideas off of some of the, their day-to-day frustrations. That might be an interesting project. That would be a really good one. Yeah. I agree. Yeah. Well, thank you everybody. I hope you found this useful and let us know your thoughts in the comments below Don't forget to like and subscribe and ring that bell. Is there a bell? I don't even know if there's a bell