Forget “Founder Mode”. For those in FP&A your CFO expects Owner Mode. “In rugby, if you observe, a player often clings on to the ball, not letting it go out of his hands until the goal is scored. That’s how we need to handle things. Own it — cling onto it — achieve the goal,” says former IBM India CFO Ravikumar Ramanan, author of the brilliant book: The CFO Lens, how to Thrive in the Fast Changing World of Finance
He tells Glenn Hopper: “The expectation of a finance partner is not to stop at the sign off and say, okay, I have now committed $10m in company money. You then need to get involved in the execution of the strategy. I changed my role from just being the person who signed off and asked for periodic reports to actually going out into the field and starting to talk and feel like an owner.”
In this masterclass episode Ravikumar reveals
- The Bigger business context we are living through that finance cannot ignore
- The failures when strategy projects are not being tracked by finance
- How to feel really that the results are yours
- Storytelling and influencing secrets from the finance seat
- Good and bad costs
- Balancing short term and long term in your finance role
- My biggest advice for people to succeed in a finance role at any stage of their career
- My favorite Excel Function (even corporate legends get asked)
Further reading
Ravikumar Ramanan: The CFO Lens: How to Thrive in the Fast-Changing World of Finance
Made to Stick, Chip and Dan Heath:
Execution: The Discipline of Getting Things Done
Full transcript
Glenn Hopper:
Welcome to FP&A Today, I’m your host, Glenn Hopper. Today we have a truly exceptional guest joining us, Ravikumar Ramanan brings over three decades of global experience in finance, consulting, and sales, having held key roles at iconic companies like IBM, where he served as CFO of IBM India. He’s not only a seasoned finance leader, but also an accomplished author. His latest book, the CFO Lens, how to Thrive in the Fast Changing World of Finance, has been widely acclaimed for its practical insights and storytelling approach.
In this episode, we’ll dive into the strategies, stories and lessons that Kumar has gathered throughout his illustrious career offering invaluable guidance for finance professionals looking to accelerate their growth and impact. Let’s get started. But first, Ravi, I’ve gotta say, I’m so excited to have you on after our, our previous guest, Christian Wattig. He mentioned you and held up your book in the episode, and then our, our producer, Jonathan, saw that and he said, I’m gonna see if I can get, get him on the show. So, very excited to have you here. Thanks for coming on.
Ravikumar Ramanan:
Thank you so much for inviting me to this, uh, very popular and prestigious platform for the FP&A and the finance community.
Glenn Hopper:
Yeah, I’m really looking forward to diving into some of the insights that you found. We’ve talked previously about your book, and, um, and I want to just, I really want to focus on that and talk about kind of the lessons that you learned and what you’ve picked up in your career. So I guess let’s start with, so in the CFO lens, you talk about the role of CFO as accelerators of business growth. And I love this so much, having spent my career in finance, you so often get labeled with the, uh, you know, the cost center. And oh, finance is just, you know, we’re, we’re an expense category. We don’t add value. And I think you really drove in and, and talked about how finance can, in the office of the CFO can really accelerate business growth. So can you kind of share specific strategies or examples of how finance leaders can go beyond those traditional roles and sort of our reputation that we had in the past and how they can actively drive growth?
Ravikumar Ramanan:
You know, if we just take a step back, uh, before we get into the finance role and look at the larger business environment, which is obvious to everybody, is that there are two things that are happening, extraordinary speed of business and change. And that has accelerated, particularly in the last five years. But if you, even if you take the period of 10 to 15 years, the last 10 to 15 years, the speed with which businesses have to evolve and respond and take action has gone up quite dramatically. And investor expectations have gone up quite significantly too. Investor patients, investor expectations and returns everything around it. And the CFO is the center of the investor expectations. You know, people, the investors say, Hey, we gave you the money, you are the face, right? And, um, that’s, that’s one part. The second part is organizationally because of the speed of business and the speed of change, it’s no longer possible.
It became no longer possible many years back. And more so now for sales to be the primary engine of growth in the organization. There were sales and then there were 10 support functions around it, manufacturing, hr, you know, finance, et cetera. But when you have an expectation of running at the kind of speed that people have to run, you can’t have this hub and spoke model beyond the point. Everybody has to now contribute to growth in their own ways. You can’t say, Hey, you, you go, sales will still be the front end, but we have to start thinking like, we own the customer, we own the business, and we own the problems that arise out of, of the business problems that arise. We were analysts earlier, and then we became advisors and support functions, but we are like everything else. And it’s not true of the finance function.
It’s true of all the functions. We’re in a constant state of evolution. And the next stage of evolution is where you actively participate and contribute, uh, to the growth. Now, what does that require? One is a change of mindset saying, I’m not a support person anymore. Um, and if you’re talking about I need to play a part in the growth, then you have to own the results of the growth, right? You have to feel that the results are yours. The results are not of the business unit leaders, I gave them all the advice. I told them what to do or not, or her what to do or not, not to do. You know, it doesn’t work that way anymore. The CEOs and the investors and the CFO as far as his or her teams are concerned, are expecting you to partner with the business unit leaders to own the performance and the results.
And so it’s a, it’s a significant change in mindset. And I have noticed from experience and when it’s been my experience that I’ll share some of those experience later. I, I was in one instance where, uh, on a particular initiative in the organization, this was a big strategic in one of the top three strategic initiatives of the organization at the beginning of the year in IBM India. And, uh, I played the role of a typical CFO, you know, investment evaluation, go, no go, how do we do it, et cetera. And then we signed off. And sometime later I realized that that’s traditional finance. The expectation of a partner or a owner is to say, is to not stop at the sign off is to say, okay, I have now committed, you know, $10 million. I’m taking a number, $10 million of company money, $50 million of company money.
I just signed off saying, okay, you can go spend it. But I then getting involved in the execution of the strategy. So what I did was I changed my hat from just being the person who signed off and then would ask for periodic reports of how it was going to actually go out and be in the field and start taking and feel like an owner. I used to go out, I used to meet customers, I used to meet, uh, employees. I used to meet the different stakeholders and started tracking the performance of that initiative. So what I did for myself was I changed my role from being a traditional CFO who does, brings in financial prudence, but also is now engaged in making the initiative successful. And that’s what is the role of an owner? I mean, partnership and ownership go together. You’re a partner and, and an owner.
When you’re an owner, you’re a partner, and you do things together. So, so one is, um, you know, the change from support to ownership, uh, which means you are not now just resolving finance issues. Not saying, I did my piece, I did my approval, I sent my mail. I’ve given my part of the input. Organizations are expecting they don’t have time for Glen to do his piece and me to do his piece. And the overall piece still remains undone for some reason. So can Glen and Ravi also find out what else needs to be done to get to the final result of the output, which you’ll do anyway as an owner? You do it in your personal life. You’ll never say, I’m, I’m, I’m only, I’m only the husband, I’m only the father. Right? You’ll say A family’s problem needs to be solved. Right? And that’s the approach that you, uh, you know, okay, let me, now I’m everybody <laugh>, right?
Everybody is, everybody. So, you know, so resolving issues is very, very important. Closure of issues, you know, these are some of the things that you do when you do these things. You become a direct contributor to growth. You start playing the acceleration. Part One is the funds, the raising of funds, making funds available, investor relations, all that is now taken as taken for granted as part of the key finance one, a very important finance role. The other part is on the day-to-day partnering part, people are probably observing you, and it’s not just about people observing you. What I noticed was that, uh, I know it’s a long answer, I’ve gotta draw to a close. What I noticed is when I took the approach of an owner my own, I felt more like a stakeholder rather than a CFO.
Glenn Hopper:
That makes sense. And I think that in recent years, FP&A has the term business partnering has been used a lot. And I think that it’s, that’s so important to me because it takes finance out of this sort of ivory tower where you’re not integrated with the business and it brings you, it says we’re partnering across the business to help the departments and to add value to the departments. And I think that goes along so well with another strategy that you talk about, um, in the book. And it, to me, it goes back kind of to, uh, like Andy Grove Management by walking around. Yeah. And I, uh, so my background <laugh> a million years ago before I went to business school, my first job was as a journalist. And I remember our editor, uh, telling the, the young journalists, you know, coming in some afternoon, we’re all sitting at our desks and he says, why are you sitting at your desk?
There’s no news stories happening here. Get out of here. <laugh>. So kicked us all out. And I think, but I, the, the, you know, that’s kind of stuck with me. And it sounds like you’ve had a similar approach because you advocate, and this is, this is gonna sound crazy to people, um, but you talk about spending more time in the market with the actual customers so that they’re not just numbers on a page. But tell me a little bit about, you know, how does this external focus improve your financial decision making? And, and what are the best ways to implement this in practice? ’cause that’s, that seems, you know, for someone who’s not doing this now, it seems like that’s a big ask. It’s, wait, I’m the finance guy and you want me to go interact with customers. How does that work?
Ravikumar Ramanan:
One of the complaints against businesses, you know, we always, um, uh, say that, you know, for all the work that we do, we don’t get respected sufficiently for the business. We don’t get enough credit. Uh, you know, we work so hard, which is all very true. But one of the grouse that can, complaints that business units have with finance people or support functions in general, is that the solutions that they provide are good, but are theoretical. I cannot go impose that on the ground. Our role is now no longer to provide just financial solutions. You know, there was a time when the finance would typically be about, uh, you know, what are the terms and conditions, and how can I get my money faster? And, uh, are there terms that are not going to be, uh, conducive to the company’s health? And, you know, all those kinds of things.
Businesses now are always on the fly, and they have problems constantly at them. And they want business solutions, which means that you have factored in not just the finance point of view, but the business point of view. You factored in the various stakeholders. What is the difference between how a business leader makes a decision versus a finance person makes a decision. The business leader is like the hub and spoke, you know, he gets inputs from hr, he gets inputs from legal, from market, from, uh, you know, the, uh, the industry, uh, networks that he has or she has, and then makes those decisions. Ours is only one, you know, spoke in that whole wheel. Uh, now we can’t be all of that. It’s, that’s not the design point, but can we be somewhere in between? Can we take a step forward behind, beyond being the finance spoke of the business wheel?
And we can do that. So, you know, the, um, I have the story that the CFO of a food delivery company, uh, and this was about seven, eight years back when food delivery was still at, at, at, at the initial phase and startup phase, not like today, where everybody’s ordering every day. And that was a startup company. And he joined as a CFO of that company. And he spent a month in the office and said, now that I’ve got some basic knowledge, I’m gonna spend the next two to three weeks only in the market, not wearing my finance hat. Literally packed his bags, went out to the market, met, met restaurants, who are the stakeholders. The stakeholders and food delivery are the restaurants, they are the delivery, uh, the, the delivery people, uh, you know, the food kitchens. Uh, and he went and met all of them.
And his explanation to me was, if I didn’t understand their perspective and somebody coming to me with a CapEx requirement to say, I need to spend $4 million on this initiative, what am I going to base my decision on if I don’t understand how it is gonna play out in the market? Right? And when you have those conversations, you have those soundbites and you build empathy, the way to do it is that you actually go out in the market and there’s tremendous opportunity today to go out in the market. So if you go out in the market, you will get a pulse of what’s happening out there. So next time you have a financial solution, you build, you use a little bit of a pulse. I agree. It’s never gonna be as much as the sales guy. And then factor those in. Or, you know, why the business leader will not accept your solution because of these other factors or those solution was, I used to make it earlier, but I know the market situation, this won’t work.
And the way is to go about, and this is not just somebody who’s at a senior level or something, you can do it at all levels of the organization. If you, even, even if, if you’re a 26, 20 7-year-old young FP&A professional, um, how, you know, you can, uh, and let me list out all of them. And then, you know, people at different levels can pick, you can go make visits to, uh, to the market if possible, to the customer, if not possible to the customer, at least to the dealer. Uh, or you can go to the stores if you’re in the retail business and see for yourself what stores are experiencing. Uh, you can get that a lot of businesses now done on Zoom calls or video calls, right? That your sales guy is interacting with a customer. You can go join and sit down in a sales call and just hear out the problems, right? You know, one CFO told me, Ravi, you need to interact with customers just to understand how unreasonable they can be, right? <laugh>, <laugh>. So, uh, when you go and sit down and hear that, then instead of saying, oh, my sales guy is useless, he can’t sell this to the customer, you have a different perspective saying, the customer was unreasonable. Let me help the sales guy.
Glenn Hopper:
Yeah. Didn’t we get into finance so that we didn’t have to talk to customers? It feels like <laugh>, that’s, you know, otherwise we’d have gone into sales, right? <laugh>.
Ravikumar Ramanan:
Yeah. So like, no, you just do like 5% of your job, 2% of your job. This is not 20% of your job.
Glenn Hopper:
Yeah. But
Ravikumar Ramanan:
It makes a difference. You know, you can, or you have call logs, you have complaint call logs, go through the call log to find out what customers are complaining about, and you don’t have to go through the entire call log. Marketing has call log summaries and analysis for business leaders, you know, go through marketing reports to understand the market and the customer. So, you know, these are things that people can do at all levels. And then building those learnings into your work, it makes, it’s more fun more than anything else. It’s, it’s more fun to your work.
Glenn Hopper:
Yeah. It’s because it, it, you move on from these are just numbers and looking at a spreadsheet and looking at these reports to know this is actually, this is the actual widget that we are selling. This is the customer who’s receiving it. And it goes with, um, you know, what I, I love about the CFO lens, it’s really a, like a 360 view of the finance operation, and it, it really gets into how you can be more valuable. And so, you know, you mentioned something in, in, in the first question too. So now I’m, I’m looking at, you know, if you’re the CFO, you’re not just signing off on a project and then throwing it over the wall and waiting for the results, and you’re not just treating customers like numbers. You’re, you’re looking at kind of the whole chain of, of service delivery to your clients and everything.
But then I, I want to go back and get a little more detail because, you know, for finance people, you, you may think, well, I approve this in the budget, we can kick off the project. They’re giving me periodic reports. Great. I’m, I’m making sure that we’re staying on budget. Isn’t my job done here? But you talk about, you know, the, the finance professionals being involved in the execution phase of different strategies, initiatives, projects. And I’m thinking that that seems like a change for people who may be used to just, you know, the kind of the old way of doing it. So how can CFOs ensure they’re effectively contributing to the execution side of these initiatives?
Ravikumar Ramanan:
You know, organizations, and this is probably well documented globally, CEOs and business leaders will tell you that many strategies are good. They fail in execution. Even the best of strategies fail in execution. Part, execution is the key. In fact, there’s a very good book on this by the ex, CEO of, uh, global CEO of honey Honeywell, uh, Larry Bossidy called Execution. It’s one of my favorite books. Talks about, you know, the importance of execution. But, you know, if you take a, a strategic initiative, we all want to get involved in strategy. You know, in in finance there are these couple of people who get involved in strategy, right? Maybe it’s the, the business unit CFOs and the CFOs, the controllers or the senior people or whatever, right? But that is only a, as is the nature of it strategy only a limited amount of people will always be involved in strategy making or in formulation.
But strategy execution is the entire organization, no matter which function you are in, is involved in some part of strategy execution. It could be manufacturing, it could be logistics, it could be, you know, the, the, an entire strategy could be about reaching customers much faster to beat competition, in which case logistics has a very big role to play. So, uh, so every part of the organization, every employee has some part to play in the execution part. And if you’re a finance person, if you’re a CFO, if you’re FP&A business finance, one of those things, one of the things, for example, I, uh, typically look at is we make a lot of assumptions when we build a strategy, when we convert a strategy into financial numbers, we make a lot of assumptions around revenue, cost, geopolitics, um, and, uh, you know, internal behavior, talent, all of the big variables, right?
And the key is in realizing those assumptions. So the first job in finance for finance is to make sure that all of the key assumptions that were made in any given strategy, and it need not involve a 10 million or a 50 million or a hundred million dollars CapEx. It could just be a strategy that says, okay, in the next six months, I’m going to focus on this particular area or build talent in this particular area, is to say, okay, what are the assumptions I made there? And have those assumptions been converted into operational metrics to track them? And are they being tracked? Because one of the problems is that the sponsor of the project, of any business unit or, or the sponsor of any project when large amounts of money is being spent, have a tendency to bring their own data to meetings and always declare that their initiatives are successful, doing very well.
It’s just that some other part of the organization is not, you know, I, um, uh, you know, the operation is successful, but the patient died kind of stuff. You know, we did everything right, but I’m sorry, I couldn’t the numbers. So finance has this, uh, role of bringing everybody on the same page through a very focused approach, saying, these are the metrics that we, we’ll look at. This is the frequency with which we, we’ll look at them, and we will keep changing the assumptions as we go along. We’ll change, keep changing course. We we’re not getting, uh, you know, stuck to something, but tracking those, highlighting the issues, making noise about things that are not getting closed and have become impediments. These are things can, finance can do in the, in the process of execution and in execution. Many times. Uh, uh, and, and this is again, a changed expectation from the CFO and once it from, from the CEO to the CFO is, uh, bring people together to solve problems.
It may not be a finance problem, it may be some other problem, but something is not getting done. And you are the only one finance who has a 360 view, 360 degree view of the entire organization you work with all the leaders in my team, nobody else does that, right? So sometimes bringing people together, cross-functional collaboration to solve issues is, and that’s for how execution happens.
Execution fails when problems come. There is no collaboration, and it fails and it stops, right? So this ability to bring in people together, bringing in people together doesn’t mean you take all the action items. It’s just that you being the anchor of bringing people together to solve a problem. And that can be done even if you are in a small problem, not at a CFO level. That can be done if you’re a mid-level manager in the areas that you work in.
That can be done if you’re a 30-year-old young FP&A, uh, person in your particular area, something is not working. It may not be go get, you know, the, say, head of sales. It could be bring manufacturing, logistics and finance together, something like that, which is not happening. So, uh, this is where, uh, uh, execution we have, we have an opportunity to step beyond traditional roles. Now, all these things that I’m saying, I just want to be very clear to, uh, to the listeners, is I’m saying you can do this. That, that this, it’s not necessary for you to do this in every single problem. It’s not possible. Pick one area, pick one area a quarter, pick one initiative a quarter, meet two dealers a quarter, right? Do take two for cross-functional collaborative assignments. In six months, in nine months, you can’t get into everything. I mean, you’ll be all over the place. But I’m saying there’s an opportunity to do those little steps to help execute better.
Glenn Hopper:
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Everything you’re saying in, in what you talk about in the book really brings me back to this, is giving CFOs and really anyone in finance an idea of being well-rounded. And I think in understanding, and, and you mentioned empathy before, understanding who you know as the CFO or as someone in finance, who your customers are. Yes, there’s the business customers, but who the internal customers are. And I’m thinking about, you know, really understanding the business outside of just, this is my forecast, these are my models, these are the budget variances. And just looking at everything in that black and white. And I, I think this feeds into something else you talk a lot about and is actually getting traction in, in the finance world right now, is storytelling. And I, you know, I think storytelling is a major theme in, in your book. And I, I wanna, I think some of the stuff you’ve covered, when you have empathy, when you understand these other groups, when you’re interacting with these other groups on more than just the person who’s delivering the reports, then you also understand more how to speak their language and things that aren’t just ebitda, net income, gross profit, you know, the stuff that is finance language.
I think it makes you a better storyteller so you can interact with them. But you know, from your perspective, how can CFOs leverage storytelling in their communications with the other stakeholders and, you know, kind of use that to enhance decision making and influence business outcomes. And I know that you talk about,
Ravikumar Ramanan:
Yeah, this entire topic of, uh, storytelling is becoming more and more important, has been more, uh, spoken about now. No, it’s very interesting. This is one of the ways of looking at it. Um, whenever we have any conversation, whether it’s in our personal lives, whether it’s talking to people who are influencers, whether it’s business leaders, your people who work for you, we are always trying to influence their thought. We are in the thick of election. We always have these conversations around who to vote for in an election in the family of friends. And through your view, you are always trying to influence the other person’s view, saying, this is why you should do it or not do it. Or if you are in a business meeting, you are telling a business leader, this is why you should spend the money or not spend the money you’re trying to influence them to do or not do a certain thing.
And even in personal conversations at home, we do that. Now, it’s important to understand how we influence. For very long, we believe that data influences decisions, and there are enough studies, not recent, but even some years back, that show. In fact, I, there’s a Stanford University, uh, uh, study, uh, by a professor who said that at the end of any presentation, uh, in any audience, the audience remembers 63% of the stories told and 5% of the data. Now, is there a more compelling case that we need to tell stories instead of data? Uh, right. If something is 12 times more powerful, you better do it. <laugh>, <laugh>. But we have been for a long time, and this, and nothing wrong, we, this, this aligned with our role of being analysts. So we focused on the data, but with the shift from not being analysts, not even being an advisor to being a partner, whatever language you want to use, you are trying to, and you want to influence.
Whenever I go with a presentation, I’m coming to you with a presentation. You are, you are the business leader. I wanna influence you to do or not do a certain thing with my presentation, right? To think in a certain way. And therefore, I think it is time to shift our focus from what we say to how we say, uh, for very long we’ve been focusing on what we see, the data, the, the trends, the analysis, it, it shows versus, uh, how we see it. And, uh, there is enough psychological studies and other things to show that data when combined with stories is what makes an impact on the listener. And you want to create an impact on the listener, right? You’re in a business meeting you prepared maybe till 11 o’clock last night, nine o’clock meeting next morning. You want to influence the listener. And combining it with stories is really what people make decisions based on emotions, less on data and more on emotions.
And story is appeal to emotions, right? Uh, so there is a very, very strong case. And, uh, because stories build the context in which something happened or did not happen, right? That then becomes, uh, becomes very critical. And we need to build that ability. Now, not many, uh, in not many countries, or not many institutions in the finance profession, in, in in finance does a storytelling part of a strong academic curriculum. It’s getting into their, now so many people come out of, uh, with strong financial qualifications, but communication and storytelling is evolving in the finance head, and we just need to pay a lot more attention to it. Just repeat this one line, focus on how you say as much as on what you say.
Glenn Hopper:
Uh, that’s, that’s a great point. And I think, um, you know, as it’s, as data people, we think, well, certainly you’re, you’re influenced by data, but you see it every day. I mean, you know, in an election year, if, um, somebody believes that we are in a recession, they may, they, they don’t care what the economic indicator say on whatever’s being reported by the Federal Reserve. They’re going on how they feel. And so you can give them all the data you want, but if they, if that’s what they feel, it’s hard to convince ’em. And I also think about, um, is that Maya Angelou quote where, uh, you know, people don’t remember what you said or, or what you did. They remember how you make ’em feel. And us being number guys, that feels like such a stretch to think, wait a minute. So I, I came into to finance because I love the numbers. I love building these models. I love doing the cool things. Now you’re telling me I’ve gotta also sell <laugh>, uh, sell to people. So it’s, you know, it’s, it expands the challenges. But if you’re gonna move beyond just being the bean counter and the report person, you’ve gotta be able to add that value and show where you’re adding the value and convince people of the, of you know what the, what you’ve learned from the data, what you’re taking with your expertise.
Ravikumar Ramanan:
Yeah. Can I just add one more point to that? We don’t, uh, we often think we don’t have enough stories. Life is full of stories. Um, everything, you know, every time, uh, we have a coffee, uh, we, we grab a colleague and say, come, let’s go for a cup of coffee. There are some five different stories that come that a customer who yelled at a, at a, at one of your sales guys an invoice that we’re, that could never be collected but was collected that morning, or, uh, you know, some funny behavior that happened. You’re always discussing stories. Now, some of it is too informal, but many of it is formal. And when you have those stories, all that you have to learn is now to fit that into your conversation. The stories are there. You don’t have to think about, oh my God, what are the stories I have to create?
And, you know, the stories are all there. Um, but we need to build that. We need to narrate that story along with the data. Then the data becomes more powerful. I think we, you know, we’re in a very, very unique situation today. One of the big asks of us is insights, right? And to provide business insights, you need data and information and data. Information is available in abundance. And data is numbers. And your skill is numbers. You’re very good at numbers. So ask of insights is very well matched by the resources that are available, which is abundance of data and your own personal skill. I can play with numbers. You give me a spreadsheet with thousand rows in it, and I can play with it. So the end ask of insights is very well matched by the resources you available to you and your own skill. So why not bring that together and, you know, build more insights into it.
Glenn Hopper:
It’s the old quote, Lies, Damned, lies and statistics. <laugh>, you know, if you’re a skilled statistician, you can make the numbers say pretty much whatever you want. You know, you can not, without even changing the numbers, changing what you’re, you’re reporting on. And that’s a big, big thing in business intelligence too. And obviously you don’t wanna, uh, you know, misrepresent numbers in any case, but you know, if there’s, if you’re informed by the, the data, um, and then, you know, you’re trying to convince people of it, you can, it’s sort of the editorial move in newspapers where this is where we’re gonna focus that <laugh> that lens, and this is what we’re gonna highlight to drive the business value. These are my insights. So my expertise is not just building models, entering data, it is in interpreting the numbers, giving feedback and input, and being able to communi communicate that and, and get people bought into it, right? Yep.
You know, the other thing with storytelling, it’s, it’s, I love talking to finance people who also are authors, because I think it just, it maybe at first blush, it doesn’t seem like that that makes sense. You know, being, it seems like right brain, left brain, but going from numbers to, uh, to writing. But to your point, we are, you know, we’re not just reporting numbers, we’re telling stories around it. And I think in, in your book, I love that you didn’t just rely on your own experience. You reached out to, I think it was what, eight different, uh, CFOs and got their inputs
Ravikumar Ramanan:
Yeah.
Glenn Hopper:
As well. And I think that that’s so important. ’cause obviously you have a lot of experience doing what you do, but actually reaching out to others and getting their insights. Tell me a little bit about, uh, you know, some, some stuff that as long as you have worked in finance, maybe something that was surprising or insightful that you were surprised to hear, or maybe even that challenged some of the stuff that you thought before talking to these other CFOs.
Ravikumar Ramanan:
Yeah, I mean, uh, these are CFOs. The, uh, in India of some of the largest companies, in fact, all the eight companies that, uh, CFOs I spoke to are like household names. Everybody knows those companies, uh, very successful, uh, companies. And I also wanted a cross industry flavor because people think finance is finance, but when you manage finance of a retail store, it’s different from a petroleum company, right? Uh, the kind of decisions that you would make. So I got different perspectives of that. But what I wanted, and, and the interesting part was, you know, the, the storytelling part, they gave me a lot of stories to talk about. But there are two or three things that I kind of, that stuck with me. One was one of the, uh, CFOs of a very large retail company. And, uh, he spoke to me about when, when we were talking about cost cutting and managing costs.
And he says, you know, we, we’ve all in recent years become familiar with this terminology of good costs, right? Uh, and there are some costs. Not all costs are bad, some are good. You need to spend them, you need to spend more of them, like, you know, training, talent, acquisition, you know, that kind of stuff. Those are good costs. But he, uh, started with one example, which took me to a broader thing, which is he says, when I cut advertising expense, he gave me a very tactical example. And when I cut advertising expense, I always segregate brand advertising from product advertising. He says, because brand advertising, people buy brands. People don’t buy products. You go, when you go to the shop, the first thing you look at is who made it? What brand is it? Right? You know, where is it coming from? And that brand is very powerful.
And he says, I cut it if, unless it’s really necessary, I don’t cut that. I ask people to go slow if my results are not good. If the numbers are not good, I wanna do cost cutting on product advertising, you know, by this product, by this date. And, you know, that kind of stuff. But the brand has to keep, has to sustain. And that took me to a much broader point, which is the importance for the CFO and finance to understand the intangibles of a business. You know, we all look at numbers, they’re tangible, they’re the result, right? How many of us would intuitively have linked the power of the brand to the number of the revenue growth or decline to gross margin, which we analyze in depth, right? If your brand takes a hit, your gross margins will take a hit, right? And several of the other intangibles in the organization.
So what are in your respective industry? It took me to the point of thinking where saying, okay, the advertising is one intangible brand is one intangible, not, not advertising brand, but there are other intangibles in the organization. Some intangibles, um, could be, uh, the USP of your organization, speed of delivery, right? That’s, that’s the core. That’s what Amazon is, uh, reliability. That’s what it’s known for, right? So making sure that those, that’s what cust the customer recall about your company is, is this company, not just Amazon, but many companies, is this company is reliable. And you make sure that those reliability metrics you track as a finance person, whether they’re relevant directly to your job on a day-to-day analysis, or no, because if the reliability goes away, as is happening now with one of the companies, I just read an article yesterday, is that if some of those intangibles go away, it immediately hurts business performance. But we don’t see it. So taught me to think of that perspective when I look at numbers, when I look at the root cause of why something happened or did not happen. Because ultimately you want to find out when something did not happen, saying, Hey, what’s the real reason? You know, we all want to say, oh, that guy, the head of sales, he’s not good. Just change him. You know? That’s the easiest answer. The finance guy. He, he is not providing me analysis. Change him <laugh>. That’s not the root cause. <laugh>.
Glenn Hopper:
It’s funny, while you were saying that, I was picturing like sort of the, uh, the old school CFO approach of we have value for the brand. Look on the balance sheet, it’s right here. It’s goodwill. That’s the value of the brand. <laugh>. It doesn’t go over to, uh, you know, to the income statement. It’s all, it’s all right there. But I point well taken, and that is, is something to think about. And again, goes back to that sort of well-rounded, holistic view of, of the company.
Ravikumar Ramanan:
I, Glen, I just got, I don’t know, I, I, I’m maybe, uh, guilty of running over on time. Just want to, there’s one, one interesting observation, which an HR coach told me in the process of writing the book, which is that I was talking to her about, you know, your perception of a finance people versus other people. And she told me that the world of today is one of ambiguity. Lots of decisions are made in a state of ambiguity because there’s just so much of uncertainty around us, and we need to learn to be more comfortable with ambiguity in making decisions. Whereas finance people are typically trained for everything to tie up. My books need to tie up, my percentages need to align, my graphs need to show the right things. You know, we are more about procession our, our mindset, you know, financial integrity of numbers, they need to be accurate.
I’m responsible to the investors for that. Nothing wrong with that, but that’s one hat. But when you are in the decision making hat, when you switch over from financial integrity to decision making, you need to remember that everything may not ideally tie up and add up on day one for you don’t look for that. If it is there, fine. But if it’s not, then don’t dismiss it and say, come after one week, you know, go along with the ambiguity. And I thought that was a very simple way of, you know, classifying finance people. And I used to think like that. I mean, I, I I’m as guilty as, uh, what she called, uh, finance people about, but that, that I thought was quite interesting.
Glenn Hopper:
Well, it’s funny, you can’t almost close the books every month. You have to close the books. You can’t <laugh>, you know, uh, so I, I get it. And there is sort of that satisfaction of the ticking and tying and the, the trial balance all matches up and all the <laugh>, you know, everything is like, okay, this is done. It all matches, move on. There’s no am ambiguity. So it is, it’s an ask now. We have to be able to tell stories. We have to be able to thrive in a world of ambiguity and not have all of our answers in black and white. It’s a, you know, it’s a challenge, but it’s, as we evolve to add more value to the business, this is the world that we’ve gotta live in, right? Yep. You talked about good costs, and that’s an interesting thing because it’s, you know, I think of the, uh, old school CFO, the CFNO, as we used to call ’em, where, you know, just everything is about, uh, you know, the, the dollars and cents and what’s budgeted and, and meeting budget and all that.
Um, and when you talk about good costs, the other side of that is, um, good revenue. And I think that for a long time, especially through covid and, and for, uh, for a number of years, it was just grow the top line. All revenue is good revenue, and you make the point that it’s not just growth, it’s the quality of growth. So I want to talk about that a little bit because if you, if you’re looking in your top line’s growing and, you know, all else remains the same, it sounds great. So it’s easy to just fall into, Hey, we’re growing the top line, this is good. But talk to me a little bit about like, what indicators should finance leaders monitor? Like, how can we measure whether something is, is good growth or that there’s issues around it?
Ravikumar Ramanan:
I read an interesting story, um, about, you know, how the idea of forming Netflix, uh, came to its founders, what triggered it? And one of the things that triggered from what I read is that the existing companies in that space were making revenue from what could be perceived as unsustainable. So a lot of the revenue would come from, you know, delays in returning videos, uh, delays in taking a certain action on the part of the customer. And, uh, similarly, you have several examples of customers whose revenue came due to excessive borrowings. Uh, they grew very well, but they were borrowing so frantically. And, um, now your numbers may not match on a quarter to quarter basis within a quarter or on a quarter to quarter basis, but on a 6, 12, 18 month basis, your balance sheet has to align with your p and l. Uh, and I’ve asked a question as a test of, um, the quality of revenue, uh, which is a very important aspect of the quality of growth.
So, you know, we all do things to meet current targets of, uh, you know, know, putting through a c uh, uh, some things that are maybe quick and dirty or whatever is the right word to use for that. Uh, maybe it’s okay for the short term. It’s not that there’s something illegal being done, maybe some, this is okay to do something for the short term, but is that the question that the salespeople will do that and move on? The finance people? And this is the, the, uh, CEO explained it to me saying, Ravi, the sales people worry about today, they worry about today’s target, this week’s target, this month’s target, the role of finance and their, they’re worried about this year’s budget, the, and their commissions associated with that. The role of finance is to look for day after tomorrow. What does day after tomorrow look like?
Right? Not what today looks like. And I think you summed it up very well, saying short term, yes, we need short term without short term, there’s no long term, but it can’t be all short term. And finance is the only one who can step back from the noise of the quarterly numbers and the results and everything and say, look at some of the major parameters. So you asked me, what are the major parameters to look at in terms of quality of growth? Where is growth coming from? You start with the basic role of accounting, which is the role of finance in revenue recognition. And often, I used to tell the team as a CFO saying, it’s not about a 90 2K decision that came to you for approval. And you said, I’m not gonna support this. It is the tone that you set for the rest of the business as a finance person.
It’s not 92. I can say I’m not 90 2K is not gonna, if, if there’s a little bit of black and white, um, uh, I, if I approve small deal, it’s not going to, uh, you know, kill my numbers in terms of integrity. But as an accountant, you need to worry about what message am I sending to the sales teams for the future of what is acceptable and not acceptable. And believe me, they, I’ve seen this over a long period of time, they watch it. They know what will work at the top and what, what is acceptable, not, and then go to business accordingly. So accounting and revenue recognition, look at the quality of receivables. I know this world is moving to more towards B2C with advanced payments and all that, but in the B2B business, quality of revenue is quality of business. Sorry, quality of receivables is quality of business, right?
Why are customers not paying you? Third one is, um, I told you the balance between short term and long term, right? We spoke about it. Don’t just worry about today, worry about is this sustainable in the long run? And, uh, then the basic balance sheet ratio. So one test that I’ve given in the book is to ask the question saying, is your balance sheet growing faster than your P&L? Now, that balance sheet can grow faster than a p and l on a six or a 12 month basis. You may have had to make in a lot of investments to make something happen for the next two, three years, or you had had to do a couple of things. But if you take the global financial crisis problem in the 2008-9, the balance sheets kept growing much faster than the p and l.
The receivables kept growing much faster than revenue. And that led to uncollectible receivables. The uncollectible receivables kept, kept growing much faster than the revenue. Initially. The revenue was growing, the receivables was growing, everything looked okay. Some months later, all the quality of receivables came into question, and suddenly the balance sheet looked four times bigger, and you had to write off all of that, right? So here’s your balance sheet growing faster than your p and l on a eight 12 quarter basis, right? That’s another indication of quality of revenue. So, um, you know, and, and in, in the modern world. One last point is customer retention. Uh, look at customer retention numbers. How are you just adding new customers by discounting and throwing freebies at them? Or are your customers who came in 2, 4, 8 quarters back buying more from you? Uh, that’s a quality of revenue test.
Glenn Hopper:
So, you know, hearing the, the stories and your experiences, I think when we have people on with the, the experience and sort of the, the breadth and the depth of your knowledge, I think it’s really, we talked before the show. We have a, a wide range of listeners here from, from CFOs to mid-career, uh, folks to people who are just starting out in, in FP&A and trying to map out their career and figure out where things are going. And, and just from your experiences in the corporate world and in writing the book and in what you learned in sort of this, the approach that you have to the finance function, what, what would be your, your top advice for people, whether early career or mid-career, if they’re looking to expand and they want to, you know, they aspire to be in the, in the CFO seat, or even for people who are in the CFO seat, something to think about in, in the way that they’re, they’re performing. What sort of takeaways have you pulled from your experience and, and from and working on the book as well?
Ravikumar Ramanan:
I would probably add a couple of things, and they’re kind of pretty random. Uh, there’s just couple of points that are, one is to understand if you are a young professional, if you’re a FP&A guy who’s, uh, you know, a couple of years experience, or even if you’re a bit manager or whatever, is spend time understanding the bigger picture of your work. So if you are an accountant who’s giving data to an FP&A guy, don’t just give the data. Understand what happens with the data. What does the fp and a guy do with the data? How does that get translated into a presentation, into an analysis, into decisions? Uh, do you have to do it, uh, every other day? No. Do it a few days in a year. Try and understand the bigger picture of your customers, your internal customers, or something like that.
This is the same thing that we spoke about earlier, uh, where we say, go understand the market by understanding the market. You’re trying to understand the context in which numbers are happening. So building that continuous ability, that thought process of understanding the context and the bigger picture. So if you’re a middle level manager, if you’re a business unit, CFO, or, uh, you know, go talk to your CFO about what are the investors telling you? You meet the investors often, I don’t meet them. What are the investors telling you about the company, right? Because that will translate into strategies and business decisions or into communication, internal and external. So understanding that context, what are, because the analysts know what competitors are doing, they know how, what trends are there in the market, all that information will be useful to you. So that’s one. Second one is, I think very generically speaking, uh, future.
If I give, if I think of myself, and if I think of all of us in the finance community, uh, because of the extent of change that is happening, whether you’re 28 or 48 or whatever, because the extent of change and the desired response time, our ability to manage change and our ability to adapt to change is going to be a very critical factor in our success. You know, people used to talk about iq, then it became eq. Now it’s about adaptability, quotient, adaptability in terms of, uh, digital quotient, adaptability in terms of, you know, thinking, uh, differently from what you were doing yesterday. So, and that’s not easy because change is constantly happening. So if I were to, so when I go talk to CFOs and organizations, I tell them, uh, saying, get your people training in change management, right? Whether they are at the, they’re creating change, implementing change, or at the receiving end of change, it doesn’t matter. They’re all part of change. You’re in some psych, some part of that cycle that will be very important in terms of both success as a professional and mental health.
Glenn Hopper:
Yeah. And I, you know, I think it goes along with what you were saying earlier about ambiguity. It’s just, it’s, the world is not all black and white. We want to, we wanna match it up as well as we can. We have to close our books and have them tie at the end of the month, but we, you know, there’s the model of the world that we’re <laugh> that we’re representing, and then there’s the world itself. And so being able, especially with, with tech and AI and everything advancing so much right now, you can’t just say, you know, you can’t be rigid in your approach to how you do things and to what technologies you’re gonna use and to how you interact with the rest of the company and what you’re gonna present what you believe. So I think that is very good advice, probably not just for finance, but for anyone in this, in the working world right now. Right? <laugh>,
Ravikumar Ramanan:
Since we are talking about finance professionals across the board, uh, and many of this is equally was equally applicable to me when I was the CFO is, um, I’ve often had people come and tell me, uh, that, oh, you can do it at your level, but I can’t do it at mine. You’re asking me to do this, but I can’t do it at my level. And, uh, that is true. There is some truth in it. So if I said, you know, they’re saying, okay, you were, you, you can go as a CFO and go meet a customer or go meet a large dealer, they’re not gonna go, they’re not gonna meet us, right? So the answer that is partly true. Yes, that’s true, but is there somebody else at your level, relevant to your level that you can still engage in? Don’t just say, I’m not going to engage because I’m not senior enough to do that.
Well, I’m not senior enough to solve the problem, but at your level, can you bring people together to solve the problem? You may not have the solution, you may not be powerful enough to write a policy, but can you bring people together to write the policy? So find out what is at your level that you can do to make something happen or to go beyond, uh, what you’re doing, rather than saying that’s that’s only for senior people. And you know, many of us are guilty of that, of saying that in life, but, uh, I found that, uh, sometimes you hear it from the team more often than you’d like to. So <laugh>
Glenn Hopper:
Yeah. And I think, you know, that’s true leadership rather than feeling like, or, or, or coming across as the victim where everything rolls down to you. It’s like, well, I may not be able to create a policy, but this is something that’s happening. I know it’s wrong. I can actually affect change at this level, so I’m gonna do that If you are a problem solver, that is a big part of leadership in general. So I think that’s, that’s great. No,
Ravikumar Ramanan:
That’s, that’s that, that, that particular problem, that particular point, problem solver is problem probably, and I missed it and glad you brought it up, is probably the key word that people must remember throughout their careers. Organizations want problem solvers. Period. End of discussion. We can keep everything away if you are the problem solver. So I often give this example saying you are living in a, in a community of 500 houses in an complex there’s, or with some traffic situation or something. Somebody in the apartment complex takes leadership. He may not be the, the chairman of the building, but that person has decided saying, Hey, I’m gonna own this and get, get it done. And we all love him, right? Because he’s a problem solver. We never went by the title. We never, never went by the saying he’s the chairman of the building association. Right. He was just a guy who solved a problem.
Glenn Hopper:
I’d love to hear, you know, what’s something that maybe not many people know about you, something they couldn’t find from just Googling you or some hobby or, or interest you have outside of your, obviously very busy, uh, writing career and all that <laugh>.
Ravikumar Ramanan:
Yeah, so I do the usual things of hobbies in terms of, that everybody does in terms of travel, music, uh, and all that. And if you want a little, uh, fun fact, uh, I can hum and sing a bit. Uh, it gets even better if you gave me a soap and a towel, uh, <laugh> <laugh>. So, uh, uh, so I can do a little bit of that. Uh, but I’m into the usual things that, uh, people do. I read a lot of books. They have very different subjects, uh, right from, you know, philosophy to, uh, politics, to uh, to a lot of, uh, lot of things management and, uh, just helps, uh, build a wider perspective. Uh, and I love, I love, uh, music. That’s, those are the two things that I do. And my becoming an author is completely out of, if it’s of any interest to people. I never even dreamt that I’d become an author. I quit and I thought I’d take a break and then suddenly I said, how about if I write a book? And the longer story than that. But, uh, you can write a, anyone can write a book now. I believe anyone can write a book, <laugh>.
Glenn Hopper:
That’s great. Alright, so when we talked about this before the show too, I have to ask everyone, you may not have it, it may be, may have been a little bit since you’ve been in Excel, but, but we always are curious, what is your favorite Excel function and why?
Ravikumar Ramanan:
<laugh>? Yeah, so, um, uh, so I I have not been actively using Excel in, uh, at least the last couple of years, uh, because I don’t have regular, uh, CFO or kind of a job. But, uh, we all still are at it. It’s, it’s still a tool that, uh, you know, so, so much part of our life, uh, spreadsheets among the Excel functions. If you say, what, what are the ones that I like the most? You’ll almost get a very predictable answer, which is the functions that are into scenario planning and financial modeling. So the very simple ones like, uh, What If or What If combined with a width and an Or a what if combined with a Choose, um, you know, and choose which of these best options will work for the company or, uh, from all the parameters that I’ve set. Um, so these are some of the things that I, that, uh, you know, very often or even when you’re sitting in office and you come up of all the chatter in the meeting, meeting rooms and you come back to your room and you’re sitting in front of your computer, the one that you want to play around with is there are two or three ideas that were thrown around in the meeting.
What if that happens and what does that do to your base, to your base plan? Right? The scenario, what scenario does it throw up? So I used to just quickly have a, a kind of a template and, you know, do this and see, you know, literally, uh, you don’t have to make a decision at that point in time, but you’ll see ideas, some, some ideas you would, you would, in the meeting you would’ve thought were useless, some ideas you would’ve thought were great. But the moment you do this little playing around with scenario plannings and what ifs, you get a quantified a number which finance guys understand is good or bad. So yeah, I used to like to play around with that in office.
Glenn Hopper:
Excellent. Excellent. So I, I guess last question and we’ll we’ll put this in the show notes too, but where, where can people find, uh, your books CFO lens and, uh, if anybody wanted to get in touch with you to, to hear more, what’s the best, uh, way for people to reach out to you?
Ravikumar Ramanan:
Yeah, so people can reach out to me on LinkedIn, um, and uh, I go by the name Ravi Kumar Raman. That’s my full name. And, um, uh, my book, uh, the CFO lens is available on Amazon platforms across the world. You can be in any part and you can buy them. Uh, so just search for the title CFO lens and Ravi Kumar, uh, and you should be able to get it. And if you have a problem, message me on LinkedIn and I’ll try and find a way out.
Glenn Hopper:
Alright, Ravi, thank you so much for coming on the show.
Ravikumar Ramanan:
Thank you so much. Thanks for having me on here on such a respected platform and great talking to you Glen.
