Kevin Appleby, COO of GrowCFO, asks potential CFO applicants a simple question.
Okay, I know you want to become a CFO.
But what sort of CFO do you want to become?
In fact, he explains, there are three types of CFO.
You need to know which one you will be.
- The “Financier”. Specialists in startups, they excel at tackling fundraising rounds, and M&A. They often move from company to company.
- The “Transformational CFO”. This CFO wants big improvements in processes and in the way that the internals of the company work together. This CFO often heads several departments including finance, procurement, HR, and IT.
- The “Strategist” – the clear right-hand man or woman of the CEO, constantly analyzing the strategic direction of the company.
Somebody from an FP&A background could be fitting into any of those roles depending on what they want and their strengths, argues Appleby.
But getting to know your strengths as CFO or in FP&A is crucial to achieve the most from your career. He says: “If you’re strong in something and you take time to develop it, you can become fantastically good. If you weak in something, you can spend a lot of time to become mediocre.”
This is just one of the insights that Kevin Appleby has gained as he mentors top CFOs in the UK and the US as part of the fast-growing mentorship service Grow CFO. In this episode of FP&A he maps his career from audit (“I never really wanted to be an auditor”) and FP&A (“back then FP&A as a term didn’t really exist”) at one-time great manufacturing company, Imperial Chemicals Chemical Industries (ICI) and as a management consultant at PwC turned mentor and consultant with Grow CFO.
This episode is essential for anyone seeking to move from finance or FP&A to the top finance position. Kevin Appleby explains to Paul.
- How GrowCFO was founded and how it is identify skills launching CFOs you into the next phase of their career
- The core competencies of highly successful CFOs
- The importance of budgeting and zero-based budgeting and the increasing power of FP&A for CFOs
- Why the value of your business is a multiplier of the bottom line (not the top line)
- Why every business (not just manufacturing) must engage with activity analysis
- His biggest FP&A Failure
- His best advice for FP&A professionals
Links from the show
Grow CFO – https://www.growcfo.net/
Grow CFO Competency Framework https://www.growcfo.net/growcfo-competency-framework/
Career routes to the CFO https://www.growcfo.net/research/career-routes-to-cfo-2022-report/
Watch the full show on YouTube
Read the full transcript below
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Paul Barnhurst:
Hello everyone. Welcome to FP& Today I am your host, Paul Barnhurst, aka the FP&A Guy. And you are listening to FP&A Today. FP&A Today is brought to you by Datarails, the Financial planning and analysis platform for Excel users. Every week we’ll welcome a leader from the world of financial planning and analysis and discuss some of the biggest stories and challenges in the world of FP&A. We’ll provide you with actual advice about financial planning and analysis today. This is going to be your go-to resource for everything FP&A. Before I introduce today’s guest, would just like to remind you that if you have not left a review for us, we would appreciate it. You can leave that wherever you listen to the show, Spotify, apple, Google, any other platform that you listen to it on. And also, as a reminder, if you go to the earmark app, you can download our recent episodes and receive CPE credit for listening to the episode and answering a few brief questions. With that, I’m thrilled to welcome today’s guest on the show. Kevin, welcome to the show.
Kevin Appleby:
Paul. Thank you hugely for having me. Paul. It’s not the first time we’ve done a podcast together cause I remember you appeared on my show, the Growth CFO show on your very first day as the FP&A Guy,
Paul Barnhurst:
Correct. Yes. I think it was my first full-time day or first day of the business was somewhere in March. Yes, I remember that Kevin. I can’t believe it’s been seven, eight months now of the business. That was a lot of fun. So I’m excited to now have you on the show I’m doing here, so it should be a lot of fun. So a couple things about Kevin before we get into the questions. He comes to us from the UK. He is currently the Chief Operating Officer for Grow CFO, and he is the CEO of Applebee Consulting and Coaching. He hosts the popular podcast, the Grow CFO Show, as well as The Next 100 Days podcast. Kevin started his career as an auditor, worked in accounting, and then moved on to some consulting roles before starting his own business and working with Grow CFO. So Kevin, could you start by just giving us a little bit about your background and how you ended up where you’re at?
Kevin Appleby:
Yeah, it’s a long and contrived story, Paul, and as you say, started off back in audit and I never really wanted to be an auditor. So the day my training contract finished with not a big 4 firm but a firm in the next tier down, I found a job as an accountant in industry. I moved into a financial controller role in a marine insurance company. But very, very quickly I was tempted away by an offer from a company that was number one in the FTSE 100 at the time company that doesn’t exist anymore, Imprecial Chemical Industries (ICI). I joined ICI’s agricultural division in the UK initially in their internal audit team. And I moved on from there after about 18 months to be business accountant for ICI’s European plastics business. And really that was my first exposure into FP&A. Now back then, FP&A as a term didn’t really exist, but we were the business accounting team.
We didn’t do any financial accounting. We pulled together the monthly business results for the business unit and that was pulling bits from ICI group companies across Europe. So we were taking bits of results from out about 10 or 12 ICI legal entities and pulling together into the result for the plastics business and its product groups. We were setting budgets, putting forecast together. Now the whole world revolved around data and analyzing the sales, the cost of sales understanding activity based costing, things like that. I really, really got into it and that sort of accounting ever since was really part of my career. But to move on, ICI got the business I was in, ICI, got sold to the German company, BASF merged their business with ours and they took control back to Germany. So on day one of the acquisition, 70% of my job ended up in Germany.
I did a few internal things in BASF. I looked at another acquisition that they’d taken from a former ICI company, Zeneca, and helped integrate that into the BASF family. But it was pretty clear there wasn’t a job.
So I moved on and jumped over into PwC as a management consultant. And I ended up being part of the PwC team that developed a balanced scorecard methodology that we rolled out to a number of clients. I implemented balanced scorecards across the British Army’s supply chain, which was a really fascinating assignment and ended up in a group in PwC called iAnalytics. And there we were going out and implementing planning and budgeting solutions for clients. Ended up doing a fascinating planning and budgeting project with a holiday company where they started trying instead of budgeting by financial year, they started trying to budget by holiday brochure and a holiday brochure typically last for 36 months from the very start of getting the properties, sending people away, paying for stuff and so on.
And it became a really interesting exercise working at profitability of things with a cycle that was way longer than the financial year. So that that’s the kind of things that I’ve been doing.
And as time went on I ended up getting more and more involved in building investment cases for new implementations of things and became a little bit an expert in that and ended up as an independent in my own company. And I was generally joining in giving people that sort of support with projects as they go on and roll the clock forward. A few years we got to COVID and around about the time COVID started, I was being plagued by a chap called Dan Wells. Dan is a founder and CEO at GrowCFO. And Dan and I realized that in lockdown I’d ended up in the classroom teaching lots of things I did with clients, many of them in the FP&A space, some of them in the business strategy space.
And I was gradually trying to take some of those things online. Dan had left Ernst & Young as an equity partner, was looking to build a network of finance leaders. And we realized that we are both trying to work with the same audience. So we thought rather than trying to compete against each other it would be a very good idea if we joined forces and Grow CFO in the form that it’s in today. Kind of was born around that sort of point. We ended up in lockdown. Dan’s vision wasn’t a purely online business, but because of the circumstance we got into, it became online. My ability to work in front of the clients face-to-face disappeared. So it gave us the impetus to really get on and do something.
Paul Barnhurst:
Yeah, it’s amazing how many people, businesses started and ideas came and things changed because of COVID, right? The online world is accelerated probably 20 years due to covid, right? Of things that yes, they were happening, but the level at which they’re happening now, training, remote meetings, so many things. So that’s a great story there and I appreciate you sharing the background in accounting and implementation, how it used to not be called FP&A, but you were doing that kind of work. So question I have for you, I know Grow CFO obviously one of the things you help do is develop CFOs, develop finance leaders. You have an assessment on your website called the CFO Competency Assessment. Could you maybe talk a little bit about what that is and who that’s for?
Kevin Appleby:
Yeah, I think it’s probably first answer, answer who’s Grow CFO for? And there are two primary groups of people in Grow CFO. There’s a group of folk who would aspire to be CFOs, and there’s a group of folk who are already CFOs and probably there are more folk that are around as our members that are in the early part of their CFO career than there are experienced folk. What we’re doing to the first group, the aspiring CFOs, were helping them get through the skills gap that they need to make the jump to a CFO role. What we’re doing to help the CFOs is they’re realizing that, suddenly I’m the external face of finance rather than the internal face. I’ve got a whole load of new challenges that I never knew about. Now that I’m a CFO, oh, please help me. So one of the things that we really help those new CFOs with is mentoring.
But we got a point that a lot of those CFOs said to us, great, you’re doing some fantastic things for my development. Now I need to develop my finance team. And this was after we’d probably been in COVID for about 12 months or so, training in the traditional ways it happened, more or less canceled. So we said to those finance leaders, well what sort of training do you want for your team? And we developed a finance team training program as well. So now we’re not at the level that we’re providing training to your account payable ledger clerk, but we certainly get things that are in there that would be relevant to anybody who’s relatively senior in FP&A, the head of FP&A, the immediate number two to that person for the financial control over the head of finance. So we cover all of that kind of thing.
But you asked Paul about the CFO competency framework. One of the things we found initially with our future CFOs was we needed a way of helping them understand the skills gap that they had. What skills have you got today? Where do you need to improve? Where do you need to look to develop to be ready to take on the CFO role? So the framework evolved and we defined nine competencies. We defined five skills in each of the nine countries, so that’s 45 skills altogether. And we then said, right, great. Initially the assessment started as two or three PowerPoint slides where you added notes to them. Then we developed this as a more expansive thing into a Google form. Now we’ve realized that actually we need to have a full app because you can go in and assess yourself in the competency framework against each of those 45 skills.
You can give yourself sort of a rating of one to four depending on how experienced you are. Fine, that probably doesn’t tell you much you didn’t already know. But after you’ve taken it, you then get a report coming back and the report, it’s about a 20 odd page report and it compares you with your peer group, first of all, overall across the nine competencies. But then in each competency it goes and compares you on the five skills to other members of your peer group. We had several hundred people take the framework. We know what the results look like for particular areas and we can give you a very good picture of how your skills compare against your peers. It’s a really, really powerful tool, completely free to do. And if you’re interested to see how you actually fare and just go across the Grow Cfo.com top menu, you’ll see competency framework in the menu by just click on it. It’ll take about 15 minutes to go through the questions. 45 questions, one per skill, and then there’s three or four at the end that help us just segment you into your particular peer group so you get the right benchmark in the report that we send out.
Paul Barnhurst:
Got it. I might have to try that myself. Not that I’m looking for any CFO roles, but it would be interesting to see how that plays out. So yeah, appreciate you sharing that.
Kevin Appleby:
I’ve done it myself. And I mean, I’m not looking for a CFO role these days. I’m doing something very, very different. And it was really interesting to see where my weaknesses were. And from a consulting career and doing things like developing balanced scorecard methodologies and the FP&A sort of skills were very strong. But no, have I been involved in a fundraise or a merger and acquisition at a detailed level? Nope. I scored probably the lowest score possible in that particular competency.
Paul Barnhurst:
Would’ve a few those audit. I was not an auditor. I’m not an accountant. I like to say I am, I’m FP&A because people, think you’re an accountant. No, I’m not. And they’re kind of surprised sometimes. But kind of talking to that and FP&A, obviously today the CFO role has changed a lot over the last 20, 30 years and continues to evolve as we see more data, other things involved. How important, in your mind, is it obviously doing this assessment for CFO to have FP&A experience today?
Kevin Appleby:
I think you probably need to be a fairly rounded individual. You don’t have to have huge experience in everything but you need to know at least the basics of every one of the nine competency areas. FP&A I think is something that is quite key because what does the CFO uniquely bring to the board? Bring to the top table, brings an understanding of the data, an understanding of the information that the CFO can interpret to help the rest of the business. And that’s the unique skill you bring across. Yeah, the framework shows your soft skills. It shows your leadership skills it shows you governance and control, but a lot of those you kind of take for granted. Or some of them you would get from any member of the C-Suite. But I think where the CFO has a unique playing space is understanding the numbers, understanding not necessarily just the numbers themselves, but what drives the numbers and being able to explain that to the business. I think FP&A from that point of view is hugely important.
Paul Barnhurst:
That makes sense to me. And I would agree, it’s hugely important to understand the numbers and I think here you talk about it, you don’t have to have direct FP&A experience, but you need to understand the numbers. You need to understand obviously the budgeting forecasting process, what the board’s looking for in that, how to present it, the economics behind it, all those things that are drivers to those inputs.
Kevin Appleby:
Oh yeah, absolutely. Absolutely. But I, I’d say sort of understanding the budgeting process is the basics, I actually think CFOs going beyond that and is starting to get much more into things like zero based budgeting. Being able to really challenge the rest of the business about whether a cost should be in the budget or not.
Paul Barnhurst:
I would agree. I think that’s a huge thing, especially in the current economic environment. As we’ve seen investors aren’t willing to pay for just growth anymore. They want some better idea that profitability’s coming, that you’re controlling expenses, that there’s discipline there. And CFOs are critical to driving that. If you know, don’t have financial discipline as I like how one of my guests put it, I think it was Ben Murray, he goes, one thing that never goes out of style is financial discipline. He goes, not everybody follows it, but as a CFO, it’s like you always have to have financial discipline.
Kevin Appleby:
Absolutely, yes. And you’ve got to remember that growth isn’t necessarily about growing the top line. The value of your business is a multiplier of the bottom line, not the top line. So it’s just as important to keep costs under control as it is to grow revenues.
Paul Barnhurst:
I’m going to go ahead and repeat what you said there cause I think that’s really well said is top line growth is nice, but it’s just as or more important to make sure you’re growing the bottom line. Cause at the end of the day, most companies are valued on what they return on the bottom, not how much they grow on the top.
Kevin Appleby:
And the CFO’s role as well is to understand that not everything that you are growing on the top line gives the same result to the bottom line and has to be the person who’s talking to the sales and marketing team and saying, fine, you think it’s lovely to have a yellow variant of that? But if you looked at the cost of producing a yellow variant of that. Now it’s a lovely sexy product to have in the catalog, but do we really want it? And one of the things I do teach in the classroom, Paul, is activity based costing. And I’ve got a lovely example. It’s a company, they simply have two products. They have the basic, very, very straightforward widget, and then they have the deluxe version. And the deluxe version is about twice the price of the basic one. And the sales team is encouraged to go out and build revenue and sell the deluxe version, sell the deluxe version.
And the starting point of the example shows that the sales team’s selling more and more, but the profit that the company’s producing is going down. And we go through the costings behind the product, the way they’re allocating costs, they’re using some fairly basic methods and they’ve allocated way too much cost to the simple widget, nowhere near enough to the deluxe product. And that is absolutely typical in my experience, that we always over cost the simple and under cost the complex. And one of our jobs in FP&A and for the CFO is to be explaining to the sales team, to the marketing team, is that the real cost of the stuff that they’re selling and make sure they’re focused on the right things.
Paul Barnhurst:
Well said. And I think that’s an area where finance, FP&A and CFO, you can drive huge value. When you understand those margins, you’re making sure that the commission plans align with them, that you’re incentivizing the right behavior, you’re not, you’re incentivizing them to sell the more expensive product that really is not giving you more profit because you’ve misallocated expenses. So the example I would often use is, I supported a call center and the way we allocated medical cost was it was the same across everybody. It was just done on the number of employees in the cost center. It’s like, well yes, but only about 30% of these employees are actually taking benefits. Most of them have it through a spouse. And so you’re you loading an extra 15% of cost onto this business and you need to consider that when we price it, what margins and what’s competitive. And that was always one of the examples I would give and I would often adjust it for management decisions. Even though the corporate number was X, I’d say, okay, when we’re really looking at pricing and understanding what’s really going on, we’re going to adjust this so that we know the real cost.
Kevin Appleby:
Absolutely. And I’d say the one skill that is invaluable if you’re in that kind of role is to understand how to do activity analysis. People think of activity-based costing as something that’s really key to a manufacturing process. Well actually I disagree with them. Totally. It’s really key to a service. It’s really key to just about anything you do. And if you can look at your processes, you can divide the processes up into sensible chunks, look at who’s doing them, and then measure the time that those people are taking. People drive so much cost in a business, people will drive your office cost, people will drive your IT cost, people will drive your travel cost, all sorts of things. So if you can understand what people are spending their time doing. Now typically customer service team, which customers are they spending the time dealing with? Which products are they spending the time dealing with? And this is one of the thing you may find simple product, well hang on a minute, we’re not making apparently that much margin on it. It’s simple. It never fails. You never get a customer complaint. It never breaks down. So no, the customer service team spending all their time looking after the more complex product, it has a big margin. But you know what? It creates all sorts of problems. It always has customers ringing us up. I’s understanding those sorts of things because they’ll drive cost.
Paul Barnhurst:
That is a really good example you gave there with the products and understanding those costs. Even if you’re, you’re not doing allocations at a corporate level or you’re not doing official activity base, which I haven’t done. It’s mostly a manufacturing activity based costing. You have to understand how to properly allocate costs. Think about drivers and be able to make those adjustments even if it’s not something that’s done on a monthly basis and the company maybe it should be. But as a finance person, you have to be able to understand how to do that analysis and how to adjust to get to the true picture if that’s not something you’re doing. Because so many companies don’t do a great job of truly understanding the cost behind things and how it impacts different products.
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Kevin Appleby:
Okay, the first piece of advice, and I’ve talked about the competency framework across the Grow CFO site and go do that. But actually within our insights page, there’s a very interesting report that we published a couple of months ago called Routes to CFO and we did a large amount of research, looked at 500 CFOs, how they got there and what the route was that they progressed through. Now I think it’s very interesting to get that, see where CFOs came from, see the sort of experience they had. Did they start off in audit? Did they start off in industry rather than the accounting profession? If they started off in the accounting profession, what level were they at when they stepped across into industry? How many roles in industry did they have before they took that CFO, took that jump to CFO, did they stay with the same company?
Did they move across employers? We spotted a big trend actually in the first CFO role, typically being a step down into a smaller company to the one that they built experience up in. So you can get a very good feel for the root that a lot of people have taken. And we’ve also put in there some of the insights we’ve got out of the competency framework and we show typical profiles of somebody with an audit background, typical profiles of somebody with a financial control background, typical profile of somebody who’s been big time involved in mergers and acquisition acquisitions, possibly from more of a finance house background. And you can start seeing the differences in skills from each of those. So I think great place to look and start understanding what you need to move on to become A CFO is grab a copy of that report. It’s not your standard marketing type giveaway. Yes, you’ve got to put an email address in to get it, but it’s not marketing. It’s 30 or 40 pages of fairly solid content.
Paul Barnhurst:
Got it. No, that sounds like a really helpful tool and I’ve heard of others doing things like that of kind of trying to look at and understand that path. I think AFP had done a few people where they talk about different, that path can be for many different people and how it’s kind of winding in and out of FP&A in different places. Yes. So definitely that’ll be interesting. I’ll have to take a look at that.
Kevin Appleby:
There’s another side to that question as well, Paul. I’d say to anybody that wants to become a CFO, what sort of CFO do you want to become? We typically see three different profiles, kind of the financier CFO who specializes in startup companies going through fundraising rounds, mergers and acquisitions are moving between company to company and doing typically that sort of thing. Then there’s the transformational CFO who’s much more based looking to make big improvements in processes in the way that the internals of the company work together. Often head of more than one department might be head of finance, might be head of procurement, might even be head of HR , might be running the IT function. Then this is the strategist CFO who is really is up there in the boardroom, right hand man or right hand woman to the CEO looking all the time at the strategic direction of the company, implementing the strategic plans, things like that. Somebody from an FP&A background could be fitting into any of those roles depending on what they want and some of the skills you might have. I’d always say to people, you work on your strengths and you find a darn good number two to cover your weaknesses.
Paul Barnhurst:
That is really good advice I was taught. We had somebody on recently who just became a C F O and he mentioned he didn’t have an accounting background and his first thing he was going to do is make sure he had a really good controller as his right hand man, right? He’s like, I’m going to cover my weaknesses, my experiences here. That’s what they’ve hired me for. I’ll focus on my strengths and find someone else to compliment me versus me trying to learn all that.
Kevin Appleby:
And I had a CFO on my show who similarly didn’t have a finance background actually has actually come out of sales marketing background. We had a fantastic conversation about return on investment, on marketing spend. We looked at all sorts of things in the sales pipeline. There were the really good analytics that you should be following and they had a completely different approach to perhaps a financial controller would come through that was very much focused on the P&L account.
Paul Barnhurst:
Yeah, I could see that come from a marketing background. Definitely a different way to look at it and I assure there was some benefit coming from that.
I’m curious, within your community, what are the most common, maybe questions you get from CFOs in the community? What do you see as their kind of biggest challenges and opportunities right now?
Kevin Appleby:
Well, we’ve got a Slack group that’s anybody that joins and Grow CFO is both a free community and you can go and join today for free or to get access to all the training material you’ve got to be a premium member, but free community gets you in Slack group. So what am I seeing in the Slack group? There are lots of questions around IT systems. Lots of questions from people who are perhaps expanding into a new territory for the first time, wanting some simple advice. Like do you know a good accountant that looks after small businesses. One this morning that was in the United States from a company in the uk. There was another one a few days ago froma company , I think it was a UK company again, was looking for similar services in Spain. Now those sorts of practical questions come up in the community all the time, but those are always a huge amount of interest in finance function automation, getting right at the front of where the finance function should be.
And actually we run once or twice a month, we run a zoom session that’s called the future of finance functions. And well Paul, you’ve been a guest on there yourself. You are on the talking about FP&A systems. Yes, we’ve talked about blockchain, we’ve talked about cryptocurrency, we’ve talked about simple things like automating your expenses. I think the amount of interest you get from head of finance CFO about how do I make sure my finance function is fit for the 21st century using all of these modern FinTech tools that are available. How do I integrate those? Am I using the right accounting system? It gives me the opportunity going to go and integrate with this stuff. And then out of that, how do I take my people on a change journey?
Paul Barnhurst:
That doesn’t surprise me at all. Listening to you say that. Somebody told me the other day, they did a survey of CFOs and the biggest thing they were looking at was basically FP&A platforms for the next year. Automation is huge right now and figuring out what is the right technology stack to ensure we’re able to focus our team on value add activities versus data cleansing and data preparing. Is that ever going to go away? No. There’s always going to be some level of data cleansing, some preparing, but it shouldn’t be the majority of the job like it is in so many departments today. I mean I can remember at a director level spending 60% of my time cleaning data. Unfortunately I think I worked two jobs because I spent so much time cleaning the data and I still had to do the managing side of the job.
Kevin Appleby:
And now if I reflect back, Paul, on the last 20 odd years sort of being in PwC in 2000, 2001, where we were building that balance scorecard methodology, you’d go into a client, you’d put a scorecard together or you’d work with the client to say what should be on this scorecard? The problem then was great I can understand what drives the business. We can understand what we need to measure, where’s the data? And then the next thing would’ve been, okay, so we need to implement some new systems so we can get this data, we can collect it, we can process it. Flip forward 20 years and we’ve got exactly the opposite problem. We’ve got way, way too much data. Every system seems to have its dashboard, its ability to report something and finding out what it is you actually need to know versus what the systems will tell you is a huge thing because all of those systems have so much rich data.
As the accountant, and I’ll say accountant here because I think a skill of an accountant is reconciling stuff. Now you end up across the business with multiple versions of the truth. The system A has one number, system B has a different number, both purporting to be the same thing. What’s right? How do I pull ’em into a common data repository that’s got the right value in it? Probably a COO of Grow CFO at the moment. My biggest problem is pulling together a dashboard of information. It’s not necessarily financial information,. Online business. I want to know how many people have been on various pages on the website, how many people have downloaded various brochures. I want to know all sorts of things about how engaged my membership base is and that all that information is actually there, but it’s all over the place. And another one, like you podcaster, how many people have downloaded the podcast, which is my most listened to episode. Getting the insight into what people want to hear versus what they don’t want to hear. Information is all over the place and you can spend forever just collating it in one place. And that to me is the challenge of FP&A and data analytics going forward.
Paul Barnhurst:
I would agree with you, data is, in many ways it’s the biggest challenge and the biggest opportunity. It’s kind of a both sides of that coin. It’s so hard because we have so much data. One of the latest study I saw right at the current pace that we’re creating data, we’re doubling all the data that was created in the history of the world every two years. I mean that’s a rate that is just amazing.
Kevin Appleby:
But I don’t want data, Paul, I want usable information that I can make decisions with and there’s a big, big difference.
Paul Barnhurst:
Agree. And that’s the job. You got to be able to cut through that noise and get to what’s really important. That’s why I like to emphasize when people are like, well we got all these me metrics to track. I’m like, well, let’s start with key metrics and key means what are your drivers? What’s really making a difference to your business? Yes. What do you need to know? Not what do you want to know, what’s not? What’s nice to know? What’s fundamental that if you don’t know is going to have a material impact on your business? And let’s start there and we can build from there if we need to. But let’s start with the 80 (vs the 20). What’s really important. So often we start by trying to boil the ocean and come up with these dashboards that there’s so much on them that it’s just information overload.
Kevin Appleby:
Yeah, yeah. No and no, I’ve spent hour upon hour looking at data in say, Google Analytics. Oh, we got six views on the website from Southwest China last week. Oh, isn’t that interesting? I know. Three hours later having looked at all of this fantastic stuff, you start thinking that was an interesting three hours. Do I actually know anything different that I can make a decision with? Nah, I don’t think so.
Paul Barnhurst:
I’m totally laughing cause I’ve done the exact same thing looking at the analytics on my website and oh, there was these two people from Pakistan. Does that really matter? Or looking at the podcast? Oh, we we’ve, we’ve had people from 110 countries.
Kevin Appleby:
Notice on our podcast distribution dashboard, there’s a lovely global map and every time you get a download in a country, it turns the country from white to blue. So of course my ambition is to get every country on the globe turn to blue.
Paul Barnhurst:
I can relate, I look at mine as well and go every state in the US or I’ve got this or that. I’m kind of funny about, not that I do anything to necessarily control it, but it still is interesting to look at.
Kevin Appleby:
Yeah. There’s one country in South America that’s bugging me at the moment. It’s the only one left in the whole continent that hasn’t downloaded an episode of the Grow CFO show.
Paul Barnhurst:
That’s funny. All right, well I’m going to shift gears just a little bit here. So obviously having worked with a lot of CFOs and done a lot of work over your career, do you have maybe one or two CFOs that you really admire or that you’ve learned from that you maybe could tell our audience about?
Kevin Appleby:
Yeah. And funny you sent me the questions in advance and I suppose I looked down the list, no doubt. Yeah. Paul’s asking me a lot of standard stuff about Grow CFO and so on. I came to that question, I thought, no, I’ve got to sit and think about this one for a minute or two. And I thought about, and actually I went way back to my days in ICI before I became a consultant. So we’re back in the 1990s and we were a whole group of businesses in ICI chemicals and polymers limited. We had a group finance director, the chemicals polymers group. Nobody had CFOs back then. We were all finance directors, same thing. Chap called Jim Micki. Now Jim was absolutely brilliant. And I think the thing about Jim was he had some really, really strong people skills, every person in his, and he had a finance team under him that probably could have been up to 500 people, huge. But from the most junior to the most senior person in that team, you were made to feel that you mattered. If you had a problem, his door was always open and he had this uncanny knack as well if you had a proposal for him and you’d spent ages putting together the business case for whatever it was you wanted to do.
And that business case was 99% watertight. Jim had this uncanny knack of being able to spot the 1% that wasn’t watertight. And I’ve a darn good challenge in the conversation. And that to me is just a unique skill. So that’s one. And I bring that forward to today. And there’s a couple of people. They both work with us in Grow CFO and they’re two people on our mentoring team. And again, it’s the soft skills, it’s the people skills that they bring and that they mentor lots of other CFOs in Catherine Clark who’s our head of mentoring and Susanna SerranoD avy is the other one. And coincidentally, as we record this, Susanna is publishing a book today. Fascinating book I wish I had known. And she’s looking back to herself as a young accountant and all of the things that she wished she’d known in that early part of her career. And she was qualifying as she was going through her first job, whatever. And she’s written a book about it. And believe it or not, it’s not just for accountants, it’s for everybody. Quick plug for Susanna there.
Paul Barnhurst:
Sure. She’ll appreciate that. And it sounds like it’ll be a good book. I really liked how you talked about the first example there. He had both those people skills and the technical skills. You mentioned how he could boil something down and I think that’s so true. So speaking to that, what are maybe those one or two skills that you think make CFO most impactful today? What is it they really need to have at the end of the day to truly be impactful in their role?
Kevin Appleby:
Well, the CFO has got to be the business partner to the CEO. And what’s important about business partnering I think it’s understanding what the other person wants, what the other person needs. Partnering definitely isn’t about, here’s the results of the business this month. Here’s the profit, here’s all the variances, blah, blah, blah. It’s about understanding what actually matters, understanding the drivers behind the numbers and being able to articulate those and being able to say, hey, we’ve potentially got a problem here and they’re not giving a recommendation, but bringing forward a number of options that can be discussed and being able to show the pros and cons of all the options. To me, that’s what makes a great business partner. It’s also what makes a great CFO.
Paul Barnhurst:
Well said. And that leads right into the next question I wanted to ask you a little bit about, I know you guys offer a training course called the Business Partnering Bootcamp. Can you maybe talk a little bit about that?
Kevin Appleby:
Yeah we’ve actually just run that for the first time as a public bootcamp. It takes place over two two or three months. It’s a series of seven two hour workshops going through the process. When I’m saying we’ve run it for the first time as a public course, it’s because we’ve run the bootcamp several times for individual companies who want to take their business partnering team and put them through the course. So you’d run it for half a dozen to a dozen people depending on the size of the organization. Sure. This time we’ve given publicly the ability for smaller organizations who might only want to one or two through program and essentially it’s a sales and marketing course for accountants.
Paul Barnhurst:
That that’s a really good way to put it. One of the best books I read was called Spin Selling, and it was really about the sales process and that helped me be a better business partner. It helped me be a better finance person. It’s a lot of truth to that. Good marketing and selling behavior can really help with business partnering. It can help with influencing and storytelling, driving decision making. So that’s an interesting way to put it. I’d never quite thought of it exactly in those words, but I like that.
Kevin Appleby:
This is it. So we’re probably the great target for this course. It would be people with an FP&A background, but what we’re not telling you how to do, Paul, is to do FP&A. Yep. We’re telling you how to take data, turn it into usable information. We’re telling you how to present information to the business and we spend one class, we spend a load of time on the rule of three. And effectively, we really, really reinforce that. If you tell more than three things to the business, you’ve told them too much. They will never remember more than three things. So you might have a pile of stuff about the analytics you’ve got a hold of this month, but now are the three most important. There’s also a load of stuff that I’ve touched on it already, about giving people options rather than recommendations.
Paul Barnhurst:
It’s a lot of great information. And as you were saying that, it made me think of this morning I posted on LinkedIn, I post out there daily, but I was preparing it. I talked about the art of influencing, being able to persuade people and shared some of my favorite books and how there’s a science to it. And I think influencing people is a huge part of business partnering because rarely outside a CFO but even as a CFO rarely do we have ownership over the people we’re trying to influence. They rarely report into us. It’s usually people often that are a senior or that have more authority in the company and we’re trying to help guide sometimes their decision making, guide them to see the things we need to see. And so being able to influence them is critical in our role and influencing without direct power.
Kevin Appleby:
Another thing we teach in there is the power of asking the question why?
Paul Barnhurst:
That’s a huge one.
Kevin Appleby:
And we argue that unless you’ve asked why six times, you haven’t got to the real cause of whatever’s going on.
Paul Barnhurst:
Interesting. I’ve usually heard five when you said that. I was immediately thinking five, six. Yeah, I got it. I remember that. One more drill down.
Kevin Appleby:
Sales are down by 20% this month. Why? Oh, because we didn’t sell as much. Why? Oh, because the sales force were doing this. Oh, why were they doing that? And you going to keep questioning all the way down to realize what’s actually going on with the numbers compared to your classic piece of commentary against the accounts sales are down by 20% because against budget, because of the con conditions. Well, we sold a little bit more than we are planning to but the price was a bit less end of story. Now you’ve talked your classic price and quantity variance. Has it actually told you anything about the real problem? Has it actually told you anything about when sales, again, back on track to meet budget? No.
Paul Barnhurst:
Nope. And there’s no recommendation in there. There’s no advice, there’s no real, there’s no actionable insight in that analysis.
Kevin Appleby:
Actionable insight is what business partnering is all about. Now is anybody listening is keen on the idea of that business partnering bootcamp? Well, no, don’t think because we’re just a UK organization that is not for you. Well, we’re not actually a UK organization. We’ve probably now got as me as many members in the US as we have in the UK.
Paul Barnhurst:
Definitely. That sounds like a great course for those who may be interested in, we’ll make sure in the show notes we link to your website so people can take a look at that and see a little bit of what’s out there. So now we’re going to come, we have a few standard questions we like to ask everybody. I know we’re coming toward the end of our time. So there’s a couple fun ones in here where we get to know you a little bit better and a few different questions here. So the first one, this is, I wouldn’t call this a fun question, but this is one that we always like to see what people will say because it really gets back to learning and learning experiences. So can you describe a time you have experienced a failure at work and what did you learn from the failure? What was the takeaway from things not going as your plan, so to speak?
Kevin Appleby:
Oh, I can remember one particular one goes actually way back to, I mentioned I was in ICI, were taken over the German company. Well, part of the business was a really, really specialist plastic polymer business that compounded different plastics together and the business had been struggling. And I did a load of work to put in new product costing mechanisms and I started using them and they were then part of putting together the result of the business and suddenly for a couple of months the business started making a profit instead of a loss. Then one day I spotted an error in the costing model and I had to break the news to the business team that sorry, we’ve reported a profit for the last two months. Well actually we didn’t make one. Now that is incredibly embarrassing. A lot of red faces. There were some reasonably big repercussions at the time and what’s the lesson? Flaming well check your spreadsheet before you do anything with it.
Paul Barnhurst:
Oh, I can relate. I’ve had more than a few errors that I’ve made over the years and it is the worst to go in front of people and be like, there’s a wrong number. Sorry, what you thought was going on is not what’s actually happening. Yeah, double and triple checking your work is really important. Even having a second set of eyes because we’re all human and it’s so easy to get a number wrong and not realize it till it’s too late.
Kevin Appleby:
And going into PwC I discovered that we had a financial modeling specialist team. They were called Business dynamics, a bunch of guys with brains the size of a planet. They competed against each other to see who could produce the best piece of visual basic in a spreadsheet. But they also produced a book called Spreadsheet Modeling Best Practice. And the principles that were set down in there about document what the requirement is, then build the model against the documentation, get somebody else to test the model for you, compare it to the documentation, particularly if you are going to use this model with a client. Say you make a mistake on a model you put together for a client, you’ll be in court.
Paul Barnhurst:
Yeah, no, very, very easy for M&A or something like that. Evaluations, you know, can be in trouble in a hurry, no question. End up in a courtroom. I agree. All right, so the next question we’d like to ask people is a personal question just to get to know you a little better. So we ask everybody, what’s something unique about you that you could share with our audience? Something they wouldn’t find online or something that wouldn’t be easy for people to know if they Googled you?
Kevin Appleby:
Well, Paul, it’s at this point in, we’re obviously opposite sides of the Atlantic. So it’s Friday, it’s 5.15, and then a certain age of the UK audience will yell, it’s crackerjack, but we’ll not go into that one. What would I normally be doing at 5.15 on Friday? Well, I’d have definitely stopped work. I been upstairs in the attic space in the house playing trains.
Paul Barnhurst:
Oh, got it. Model trains. Cool. My brother is a huge, he has a big model train and he absolutely loves playing them. Any favorite thing you’ve built or done as far as your train hobby there?
Kevin Appleby:
This is where I come back to being a little bit of the systems geek at the moment the major attraction for me is playing about with raspberry pi and coding and automating the thing.
Paul Barnhurst:
Yes, that I will agree with you. That’s where the engineering, the systems geek side comes out. All of us have doing that fun. There’s a lot of us that like to be able to do that. So that That’s really cool. Yeah. Thank you for sharing. Well, kind of speaking about a geeky type of thing, that leads right into our next question. Obviously Excel is a tool that we all use. You can’t get away from it and audit and finance and accounting. Do you have a favorite Excel? It could be a function feature formula. What’s your favorite thing about Excel?
Kevin Appleby:
Yeah, these days, and I used to build in the past big financial models. More recently I have been doing consulting work. I’ve had a financial modeler do it for me. So what do I use Excel for these days? Quite often it’s manipulating big tables of information like, oh, I’ve got this huge pile of contact, I’ve got to put them into our CRM system. So I’m using Excel to sort the data, to format the data, and quite often just to make sure that, oh, that field, the value that’s going to that field it, it should be lowercase. Otherwise I’ve got too many bits of data that’ll mismatch once it gets into the crm. So I’m using Excel for that sort of thing at the moment, spotting, duplicates, things like that. So not really doing any modeling as such. And probably the useful formulas that come in as some of the text strings. So you can combine together into a string. You can break a string up into separate fields, things like that. They tend to be the things I do now.
Paul Barnhurst:
Got it. Are you aware, so you you’ll see my geek side, but Microsoft just released three new text formulas called text after, text before and text split where you can assign different delimiters and split it after certain points and do multiple splits without having to use left mid or right.
Kevin Appleby:
Oh, I didn’t know about that. The geek in me may now wanted to find out more.
Paul Barnhurst:
Yeah, no, they’re new now. Depending on when you update some people, if their companies do a semi-annual update to 365, but if you’re part of a monthly channel, it’s already been released into general release. They’re called text before, text after, and text split. So if you’re doing a lot with your text type formulas, I recommend going out to YouTube and looking up a good video on them because they’re really handy.
Kevin Appleby:
Yeah, well I’ve got Office 365 installed, even though it’s on a Mac and it’s got real time updates on it. So if it’s been released, it’s probably there already and I just haven’t realized.
Paul Barnhurst:
Yeah, you should have it then.
Kevin Appleby:
Yeah.
Paul Barnhurst:
Yeah. So there you go. There’s your Excel tip.
Kevin Appleby:
Most thanks Paul as well about working for yourself as opposed to working for big corporate. I always vowed as soon as I went into working for myself, I’d have the IT that I wanted, not the IT that the company wanted. If I fancy buying something, I’d just buy it. I didn’t have to put a business case together or prove that the old one was broken or anything like that.
Paul Barnhurst:
I’m learning that as well. There are definitely some advantages that way. So we have just two questions left for you. So the last kind of interview question is, what advice would you offer to someone starting a career today in FP&A? What would be, if you could offer ’em one piece of advice, what would you give them?
Kevin Appleby:
That’s a tough one. One piece of advice I’d say go get a book called Strengths Finder 2.0 by the Gallup organization. Go take the online test that’s in that book, it’ll tell you what your five biggest strengths are and it’ll give you strategies to maximize them. And in whatever workplace you are in, try to move into places that you can maximize your five strengths as you’re trying to move forward in your career. Understand what your strengths are and try to move into roles and positions that allow you to leverage those. Because you know what? You can, if you’re strong in something and you take time to develop it, you can become fantastically good. If you weak in something, well, hey, you can spend a lot of time to become mediocre. So what? Focus on what you’re good at, what you enjoy doing would be the advice.
Paul Barnhurst:
Very good advice. And I agree you generally will get a lot more benefit by focusing on your strengths than your weaknesses. Sometimes there’s a weakness that it’s so big, you have to get it to a certain level to maybe accomplish what you want, but after that, double down on your strengths because becoming out being outstanding at something versus being mediocre, there’s a big difference for sure. Yeah. Yeah. So last question. If people want to learn more about you or follow you, what’s the best way to do that?
Kevin Appleby:
Oh, definitely LinkedIn.
Paul Barnhurst:
All right. So you can find Kevin on LinkedIn there and we’ll have that in show notes, your LinkedIn along with the Grow CFO website. Now Kevin, I just want to take a moment and thank you for being on the show today. Really enjoyed getting to chat with you. I look forward to being on your podcast again in the future and hopefully we’ll have you on another time. But thank you for carving out an hour on a Friday evening basically for us. Really appreciate it.
Kevin Appleby:
Thank you very much, Paul. And it’s very definitely beer o’clock here in the uk.
Paul Barnhurst:
Yeah, well you enjoy your evening and have a good weekend.
Kevin Appleby:
And yourself. You take care.