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The SME CFO

As Seen in CFO Studio Magazine Q3 2015 Issue

By William Craig Chief Executive and Financial Officer, Tarantin Industries

TO LEAD OR NOT TO LEAD!

Years ago, leadership was a military concept, but over time it has become part of mainstream business — though it is not always clear what leadership is, whether it can be taught, or whether it can be learned. The business world goes further than the military by making the distinction between leading, knowing what to do, and managing, or getting it done. For the Small/Middle Market Enterprise (“SME”) CFO, it may be a distinction without a difference.

Offline discussions at CFO Studio have raised the issue that a Fortune 1000 CFO’s job is not the same as an SME CFO’s. As organizations decrease in size, roles become less distinct, and nearly everyone, especially the CFO, wears more than one hat. Most CFOs are functionally jacks of all trades. The SME CFO, with fewer resources and the same deliverables, likely has more functions to handle on his or her own. Given the vagaries around what leadership in business means, and the many hats the SME CFO wears, what does it mean to discuss SME CFO leadership?

Many believe the best characteristics of a leader include intelligence, judgment, character, empathy, charisma, and the ability to inspire.

On the other hand, the most sought-after characteristics of a CFO include being a strategist, and —moving down the scale — a catalyst, a steward, and lastly, an administrator.

If we dig behind the words, we realize there exists a great deal of overlap between the characteristics of leader and CFO. While they align in many ways, the divergence is interesting, particularly in the administrator trait. An administrator manages the back-office and support functions. This is what many people think of when they describe a CFO, but it is actually the least important aspect of the position and is not at all part of the leadership profile. Administering is the same as managing, the art of getting things done. So in considering leadership and the SME CFO, being able to administer, or being able to manage, is the least important element of the role.

Understanding this perspective is crucial to the success of the SME CFO as a leader. The SME CFO needs to lead, and needs to grow as a leader, and needs to be a versatile leader, if his or her organization is going to succeed. The challenge is in not getting overwhelmed with administration and management such that the leadership opportunities are not utilized.

The SME CFO does not have the choice to lead or not to lead. All CFOs have the responsibility. They set an example, they focus on results, and they communicate in every direction. They need to know the difference between being efficient and effective, and when to manage and when to lead.

Premier Customer Care as a Competitive Edge

As Seen in CFO Studio Magazine Q3 2015 Issue

CFOs have an important role in improving the customer experience

Improving customer experience can add more than $1 billion in revenues for large businesses, according to data from Forrester Research. Happy customers make follow-on purchases, recommend your product or service to others, and limit churn. No wonder more and more CFOs are taking a closer look at customer satisfaction scores (measuring if an organization is reaching its own customer satisfaction goals); net promoter scores (measuring customer loyalty and customers’ likelihood of recommending a product or service), and customer effort scores (measuring the customer’s difficulty getting desired results from the company).

Customer care was the discussion topic at a recent CFO Studio Executive Dinner for CFOs of World-Class Companies. An intimate group of finance executives from some of the region’s largest, most successful, and highest-performing organizations gathered for dinner, wine, and conversation at the Blue Morel Restaurant and Wine Bar in Morristown, NJ. The evening was sponsored by Yorktel, a communications technology provider, and hosted by CFO Studio and Real Estate Strategies Corporation.

Harald Henn, vice president and CFO of Mercedes-Benz USA, served as the dinner discussion moderator. “People often think in terms of product, rather than service, or they think process instead of culture. But all of these things have to coexist to be successful,” said Mr. Henn.

“The CFO’s job is to create growth, and you can’t do that without customers,” said Richard Veldran, CFO of Dun & Bradstreet. “Regardless of your industry, customer service is essential.”

“No matter what your role is, we all have to focus on the customer experience every day,” said Ronald Gaboury, CEO of Yorktel. “All the executives are, in effect, partners in serving customers.”

“The level of customer care a company provides is a distinct competitive advantage or disadvantage,” said Andrew Zezas, publisher of CFO Studio magazine and CEO of Real Estate Strategies Corporation. “With today’s CFOs becoming more and more strategic, they are becoming more focused on how they can help support their companies in delivering the highest level of customer care.”

Gunther Mertens, vice president and CFO of Agfa Corporation, said he believes that C-level executives, regardless of the business function for which they have primary responsibility, have to be concerned with providing high-quality customer service to ensure that their company is serving the customers end-to-end. “Customer service is more than recruiting and managing order-takers,” said Mr. Mertens. “It is about managing the process from the sale to delivery to support. If you hire the right people throughout that process, your business becomes a trusted partner.”

“To really support business, I have to be in the know about the customers, said Burkhard Zoller, CFO of Evonik Corporation. Mr. Zoller is in the specialty chemicals industry and pointed out that while the Internet allows some consumer companies, such as Mercedes and Avis, to have access to immediate customer feedback, business-to-business organizations have to actively seek out feedback on the customer experience.

Maximo Nougues, CFO of Maquet Medical Systems USA, agreed. “Today, in the medical engineering industry, the customer experience has become much more important than it has ever been.”

Mr. Nougues went on to explain that sales is just the first step in winning and retaining business. “The moment you earn a customer’s business, you are at a disadvantage because now you have to earn their business every day. The competition then has the advantage of being unknown.”

“Even if customer service isn’t your direct responsibility, it is your responsibility as a leader in your company to demonstrate to the other employees that you are focused on customer service,” said David Wyshner, senior executive vice president and CFO of Avis Budget Group, Inc. Mr. Wyshner also said that among the typical numbers and descriptions contained in an annual report, Avis dedicates a few pages to the “voice of the customer,” because that sheds light on corporate performance.

Mr. Henn shared the fact that Mercedes benchmarks customer service not just against companies within the auto industry, but against outside industries as well — from hospitality to e-commerce — to find customer care best practices.

Robert Costantini, executive vice president and CFO of ORBCOMM, Inc., summarized: “Nothing [in business] happens unless you have customers, so you better have happy customers. A CFO will always deal with customer service at some point. Proactive CFOs get on it on the front end.”

In The Top Spot

As Seen in CFO Studio Magazine Q3 2015 Issue

A STRONG FINANCIAL BACKGROUND AND EXECUTIVE LEADERSHIP SKILLS WERE THE IDEAL COMBINATON FOR STEPPING UP TO CEO

-BY MARTIN DAKS-

Keith Kendall held a number of leadership positions with large companies like AT&T Capital and Hewlett-Packard Financial Services, but he had never been a CFO before joining Warren, NJ–based MonoSol Rx in 2006.The then-startup specialty pharmaceutical company developed a dissolving film the size of a postage stamp that makes it easier to deliver prescription drugs.

From the start, Kendall took on management responsibilities that went beyond the traditional financial aspects —he worked closely with then-CEO Mark Schobel to chart a course of development for the company. Over eight years, the two worked in tandem to raise more than $100 million of capital, and they spun the company off from its original parent, Monosol, LLC.

Kendall quickly came up to speed on the ins and outs of the pharmaceutical industry, and was soon asked to expand his role to lead several key functions in the business, helping to further spur Monosol Rx’s growth by expanding the customer base and shepherding new product development.

Kendall’s relationship with his CEO, and the knowledge and experience he built in the pharmaceutical industry as CFO, helped him develop the skills needed to run MonoSol Rx. In December 2014, Schobel shifted into the role of Chief Technology and Innovation Officer, and the board appointed Kendall as the company’s new CEO.

The 200-employee, privately held company doesn’t disclose revenue numbers, but it sells and licenses its products around the world, delivering more than 2 billion doses since 2008 and over 250 million doses in 2014 alone.

Background a Springboard

“As CFO at MonoSol Rx, I was a business executive who happened to lead the finance function,” Kendall explains.

Prior to joining MonoSol Rx, Kendall worked with Irv Rothman at both AT&T Capital and at HP Financial Services. (As profiled in CFO Studio Q1 2013, Rothman also rose from being a CFO— at AT&T Credit Corporation, becoming president and CEO of HP Financial Services). During his tenure at these companies, Kendall appraised the value of potential business acquisitions, completing the due diligence necessary before acquiring new assets.

Underpinning Kendall’s practical business experience is a powerful knowledge base: an undergraduate degree in accounting and economics from Saint John’s University, and an MBA from Pace University.

“I had the opportunity to form and run joint venture businesses and I ultimately had the opportunity to run large business units or segments,” he says. “The financial role affords a vantage point and influence platform, with access to investors, boards, and the rest of the C-suite that is ideal for those aspiring to business leadership roles.

“The real opportunity for CFOs seeking the chief executive role lies in the things you choose to be a part of and the experiences you build while in the financial role,” Kendall adds. “The financial role gives you a great perspective of the overall business and the performance levers in the business. You can choose to focus on keeping score and issuing backward-looking financial statements, or you can strive to understand the market dynamics that shape the company, and be part of developing and setting the strategy of the company, and be an important part of leading and managing the execution of that strategy.”

Open to New Experiences

Kendall honed his financial leadership, but more importantly, he developed broader executive leadership skills. A position with the burgeoning MonoSol Rx presented himwith the chance to lead a company, financially and strategically, from the outset.

“I was attracted to the opportunity that a startup like Monosol Rx presented, especially since I had been with startups and turnarounds before,” he recalls. “I knew the market, and I knew the operational and other business processes that would help the company to grow.”

He also saw, in then-CEO Schobel, a partner and collaborator in creating growth and success for MonoSol Rx.

“I had a seamless relationship with Mark,” he says. “It was a partnership that capitalized on complementary skills that was successful from our first days together in 2006.”

The way they collaborated drove MonoSol Rx’s culture, Kendall says, characterizing the working relationship as fluid. “We transitioned roles seamlessly as needed. From the start, we knew that as MonoSol Rx moved from a purely R&D company proving its technology to a more commercial stage with production schedules and customers to delight, the CEO’s role would be less technical and more broad business-focused.”

Healthy Tension

Working closely with Schobel gave Kendall some valuable insights about the signs of a good CFO-CEO relationship.

“In a best-case scenario, the two leaders share a view and take steps together to move the company ahead,” says Kendall. “A CFO and CEO should be collaborative and inclusive and there should be a ‘healthy tension’ between their views. This relationship is a duet where each leader has strengths and weaknesses, but the two in collaboration are able to have vision, create and set a strategy, and ensure execution. The boundaries between executive roles do not have to be bright lines.”

Because of his or her wide-ranging responsibilities, a CFO is in an ideal position to understand and influence a company, he adds.

In his new role as CEO, Kendall expects his CFO to have a broad and informed internal perspective of the company, as well as a nuanced view of the larger specialty pharmaceutical and drug-development landscape. If a CFO is spending his or her time overly focused on producing financials and score keeping without keeping sight of the business overall, that’s a mistake, Kendall believes.

“Growing companies and dealing effectively with the complex issues in the markets require attention and focus at the top, and no one person can be everywhere all the time or right all the time,” he says. “The CEO and CFO have to work together and speak as one.”

A Formula for Success

“MonoSol Rx leadership faces the same challenges presented to every pharmaceutical company, from the economy to regulatory hurdles,” Kendall says. “But our company is profitable, and we anticipate that we’ll continue to successfully move forward, propelled in part by a seamless CFO-and-CEO working relationship.”