Interview with Paul Genova
Interviewer: Andrew Zezas, SIOR
Following is the transcript of a CFO Studio interview between Andrew Zezas, host of CFO Studio and financial executive, Paul Genova, CEO and CFO of Wireless Telecom Group.
Visit www.CFOstudio.com to read about this interview and to watch the entire on-camera interview.
The CFO Who Became CEO and How Technology Played an Important Role in His Success
Zezas: You’re watching CFO Studio. I’m your host, Andrew Zezas. In the studio with us today is Mr. Paul Genova, CEO of Wireless Telecom Group.
Mr. Genova has served as Wireless Telecom Group’s CEO and a member of the Board of Directors since November 2009. He served as the company’s CFO from September 2003 to 2010. From 1994 to February 2002, Mr. Genova served as CFO of Wilson Logistics, Inc., a supply chain management and industrial services provider. From ’85 to ’94, Mr. Genova worked with Deloitte & Touché LLP as a Senior Audit Manager, working with various global manufacturing companies. Mr. Genova is a CPA in New Jersey and New York, and has a Bachelor of Science degree at Accounting from Manhattan College.
Wireless Telecom Group, a New York Stock Exchange market company, ticker symbol WTT, is a New Jersey corporation with annual revenue in excess of $31 million. Wireless Telecom Group designs and manufactures radiofrequency and microwave-based products for wireless and advanced communications industries and currently markets its products and services worldwide under the Boonton, Microlab, and Noisecom brands.
Mr. Genova is here today to talk to us about the CFO who became CEO and how technology played an important role in his success. Paul, it’s so nice to have you here on CFO Studio.
Genova: Andrew, thank you for having me.
Zezas: Paul, the world has changed in the last couple of decades. CFOs were once thought of as bookkeepers and controllers. They were perceived as rearview mirror types. Those are the guys that did the books and closed the books and did all the compliance. That’s an important part of a CFO’s role these days. The role of CFOs changed. CFOs become much more sophisticated. Most CFOs are COOs on a de facto basis, if not an actuality. Many, such as yourself, aspire to and become CEO.
Share with me, if you will, what criteria specifically did Wireless Telecom Group seek to satisfy when it decided that they should put a CFO in the role of CEO?
Genova: Andrew, Wireless Telecom, as you know, I was the CFO for almost seven years prior to getting the nod for the CEO.
Zezas: There was an overlap where you were both, right?
Genova: Yes, for one year I actually performed both roles. The primary driver here was the fact that the company needed to perform a turnaround. We were underperforming from a shareholder value perspective. The company was languishing as far as strategic direction and we weren’t meeting our revenue and earnings target numbers.
My first approach was let me take a real good … I mean I knew the company, I knew the people, I knew the processes, I knew the Board, I understand the expectations of being a public company, and my first role was to really take a good assessment of where we were. At the time we had four divisions.
Genova: Four. I determined that we needed to sell one of them. We needed to focus on our core business. It did mean reducing our revenues. At that point in time we were close to 55, 60 million in revenue but the potential for that company and the growth perspective, just I didn’t see it. What good is having a revenue if the profits are not there? We weren’t creating shareholder value. We’re spending quite a bit of money on developing products in that particular area and it was a foreign company on top of that. It was based in Germany.
Zezas: Oh, wow.
Genova: Great learning experience, great exposure, just the wrong product for our company. I ended up selling that. With the remaining three entities, we looked hard at each one. We looked at our resources available both human resource capabilities, our ability to finance different activities. We came to the conclusions of we set different metrics, different targets. We got rid of some of our product lines that were under-performing. Really streamlined the business.
We did a 10% reduction in force, primarily on a performance level. We evaluated people and we also looked at overlap in activities. We really tightened things up. We set a plan. It was steady improvement both in revenue and earnings over a couple of years. We went from $0.59 when I first took over to $1.75 as of close on Friday.
Zezas: That’s tremendous. That’s tremendous. When the Board decided we want someone with financial expertise, they were looking for someone who could take both a short and a long-term view and they already had him.
Genova: Absolutely. Having the financial background enabled me to interact very closely with the production people, our engineers, our salespeople, make changes in the business, and know what those changes are going to do when it comes to financial results. That was in my back pocket. That’s the anchor that I operate the business with without letting people know it and flagrantly in their face. I deal with them as learning about them, what they do, how their needs of the business need to be met, and how that all intertwines with the financial picture.
Zezas: Okay, so that makes a lot of sense to me. Let’s talk about decision making and actions. You were CFO. You’re now a CEO. How does decision making and the actions you take, how do they differ?
Genova: It’s interesting. As the CFO, I felt I know as much as the CEO and I was in line with the CEO very closely. Both here and my previous companies, I felt the CFO role is to compliment the CEO in strategic ventures, M&A, day-to-day operations, identifying risks, etcetera.
Zezas: Now, that only happens if the CEO understands that, right?
Genova: Absolutely. There’s a team. I mean the key is you could have … you need a team of people. There’s not one person that’s going to make the company successful.
Zezas: Decision making between CFO and CEO, how is it different?
Genova: Ultimately, responsibility falls on the CEO completely. As CFO, you’re one-half step removed from that. You’re still responsible. It’s your activity that you’re presenting your ideas, but the CEO is the person that ultimately has responsibility not only internally, but to the Board, to the shareholders, to our customers.
Zezas: Internally and externally.
Genova: Yes, absolutely.
Zezas: Okay, so now you’re CEO. How would you characterize your management style, your own personal management style?
Genova: I’m a very hands-on person in the sense that I like to learn how things operate. That’s my financial background, my audit background. However, I’ve been able to take that and project those skill sets on the bigger goal. What we need to do to achieve, to hit our targets for the year, quarter, what have you. It’s been important skill set, I think, being CFO because you understand the ramifications of every action that’s taken. Whether it’s a new contract you entered to, whether it’s building up your inventory supply, what that’s going to do for you for a new project, whether it’s spending R&D dollars. I mean you understand the impact.
The thing that I’ve tried to do well is to make the environment more of a current position where everyone knows where we stand at any point in time.
Zezas: Very transparent.
Genova: Exactly. It has to be transparent. I mean financial, as a public company, we have to be transparent. We need to be transparent as a management team too. We need to be accountable to each other. One of the things I tell people is we want to set out targets that are achievable, we want to be optimistic, but they had to be realistic.
Zezas: I know you’ve set some real performance metrics for the company too in terms of KPIs and …
Genova: Absolutely. Every person on the management team has their own set of KPIs which are directly related to the overall goals of the organization. They’re all cross-trained to some extent of what other parts of the business. Everyone knows everyone else’s KPIs.
Genova: We worked hard at them to try to get them where they’re, individually, if they achieve them, they’re achieving the goals of the company and they’re also supporting the KPIs of other people. It’s a hard balance to find, but …
Zezas: It sounds like you’re doing it.
Genova: It’s a lot of hard work but it’s worth it.
Zezas: It also sounds like you’re projecting your own hands-on approach on to the management team.
Genova: Absolutely. I would do it no other way. That’s the only way I know how to operate the business.
Zezas: That makes a lot of sense. So 2009, you’re appointed CEO. Since then, shareholder value has tripled. Paul, that’s tremendous.
Genova: Yeah, we’re very proud of that.
Zezas: What do you attribute it to?
Genova: It’s a lot of blocking and tackling. It’s a lot of hard work. There’s no miracles to it. We built a plan and we built a plan that enabled us to take steps to where we wanted to go. Getting the management by-end is critical to that. I had to build confidence within the staff. For a period of time, I don’t think the management team really understood how the business was operating in all facets. I’ve created an executive management team which we never had before.
It was less open as far as how things work. I feel that transparency is critical. Keeping people accountable is critical and managing in a very open way so that things can be measured at a regular basis.
Zezas: Okay, I’ll accept that. Now, let me ask you about risk too though because as a manager of publicly-held company, especially in technology field, risk becomes important. As a company continues to evolve, tell me about risk and how it’ll effect the company’s growth because I’ve heard you talk about risk in the context of three buckets.
Genova: Yes, I do. I look at risk in three areas. I look at financial risk to the business. I look at it from an operational risk as to how we run our business, decisions we make, ventures we enter into. Then I look at it from an external risk perspective, things that we really have no control over but the outside market dictates, whether it be the regulatory environment, what effects do the new healthcare law have on us, tax law, Sarbanes-Oxley.
Zezas: All the generic and general risks.
Genova: Competition from China, things like that. Those are risks that you have to factor in as well.
Zezas: Do you have a lot of competition from China on your business?
Genova: It’s interesting. China is in a position where they’re growing like crazy. They’re investing heavily. They try to copy some of our products, no doubt. In some respects for our lower end-products, they’ve been somewhat successful, but we have such high-quality, high-performance, and very rigorous specifications for some of our products, they haven’t quite gotten there yet.
All technology companies are faced with the same issue. We need to stay ahead of the curve. I’d like to see in the U.S. where there’s much more investment in manufacturing for high-tech type firms. I think the U.S. is poised for that. I think the work force is capable. I think the educational background is sufficient to manage that.
Zezas: It sure is. It sure is. Paul, let’s talk about the role of the CFO. How can a CFO, so I’m asking you actually go back in time. How can a CFO play a more important role in board decisions, shareholder interactions, external communications, and just overall leadership?
Genova: As you said Andrew earlier, a CFO is more than just a bean counter.
Zezas: It sure is.
Genova: That’s been dead for a while. It’s still, with the regulatory environment, keeping up with Sarbanes-Oxley, keeping up with all the SEC requirements. It’s a full-time job. That’s an expectation. Beyond that, the CFO has to be broad-minded, thinking about the business on a current basis, not just the historical basis. Being able to work with the Board of Directors, being able to offer their opinions, acquisitions, due diligence, contract analysis, things like that, and really be a support factor to driving the business in the current … for the future benefit as opposed to just historical bookkeeping.
Zezas: I’ll buy that, but you’re a CEO who started off as a CFO. You work at a technology company. Do you have an engineering background?
Genova: Absolutely not.
Zezas: You don’t.
Genova: I don’t, not even close. No doubt, that was a concern I had when I got the nod for this job. What I ended up doing was I went back to school and I took some engineering courses.
Zezas: You went back to school?
Zezas: As a CFO or a CEO?
Genova: As a CEO.
Zezas: The CEO went back to school.
Genova: Just to take some basic microwave and RF theory courses, understand some of the principles that our engineers deal with. By no means am I going to design a product that our customers are going to buy and I would advice them not to buy it if I designed it.
Genova: I will say that I’ve learned to speak much more effectively with our engineers. If nothing else, they know I’m trying to reach into their world. I’m trying ton understand what they deal with. The one thing I will say, it’s a discipline; just like accounting is a discipline. It’s rigorous. It’s step-by-step. It’s even more rigorous, I think, than an accounting, but the physics of it are very interesting to me. I mean if I had the time I would not mind going back and getting a full degree, but that may be someday.
Zezas: No kidding. Someday. Paul, that says a lot about you, when the CEO goes back to school to learn things about his business so that they could be more effective. As a leader, I can tell you how impressed I am and it says a lot about you and it certainly says a lot about your company as well. You’ve been CFO and CEO. What do you enjoy most about being a CFO?
Genova: As the CFO, I felt I was the gatekeeper. I was the catcher on the field. I saw the whole playing field. I saw things unfold in front of me and I had a very good handle on what effects that would have on our business, what direction we want to go in. I understood are strategic direction and I was a very good support person to the CEO. We work well as a team. I try to do that wherever I’ve been. That’s the role of the CFO.
Zezas: What do you enjoy most about being a CEO?
Genova: I have to say that I always believe the CFO and CEO role are very close together. In many ways, they still are. In internally the way we think, definitely. However, externally, there’s much more responsibility on the CEO but every day is a new day. Every day is a new challenge. Every day is a new problem. One day, I’m spending time with the engineers and I’m understanding a design and how long it’s going to take. Another day I’m working on the sales presentation for our new customer. Another day I’m looking at financial results for the quarter.
I really love it and I get to tie in the financial discipline into the operational side of the business, because that’s my forte.
Zezas: That kind of diversity and the words you just used, your love for this, I’m sure had a lot to do with tripling the shareholder value of the company. Paul, this has been a wonderful interview. I thank you so much for joining us here on CFO Studio. Would you come back and see us again?
Genova: Absolutely. Thank you very much, Andrew.
Zezas: It’s been a pleasure. This is Andrew Zezas, your host at CFO Studio with Paul Genova, CEO of Wireless Telecom Group, saying thank you very much for watching us here at CFO Studio. We’ll see you again.