Why CFOs Need to Ask “Why?” More

One thing I’ve always loved about working in finance is that we solve problems, spot trends, and uncover possible new directions.

Because that is what finance is, or at least should be, about! I’ve always enjoyed puzzles and every company offers opportunities to solve them. Some are right there on the surface, begging for an answer. Some are hidden deep in the fabric of the business, meaning you have some work to do even to realize that they are there.

The table stakes of the job is to report how much money was made and spent, but the real part of the job is about trying to pull the hidden into the light. It’s about looking at things with fresh eyes, spotting the unexpected or surprising, and asking: “Why does this work this way?”. All of this in service of helping companies achieve their stated objectives.

It’s all about pattern-matching

Think of it as pattern matching. The more you can see and understand about the business, the better you can identify and act on patterns of threat or opportunity. You can see a story emerge from the data and the facts and use it to see something that hasn’t happened yet.

I try to learn as much as I can about every part of the business and various business models. The more insight you have about the pieces, the more you can see how they can or should fit together. It’s possible to filter the patterns that you see through past experiences and find something non-obvious that can make a difference.

You never know what might turn out to be important. Years ago, while leading deals at eBay, we looked at a lot of startup companies that were building verticalized businesses that remove pain points by inserting humans into the process. As an example, for one company, customers could drop a bag full of clothes off in the mail and the startup would photograph and create listings for each of the items in the package. Looking at various flavors of these businesses, it became obvious that any time humans are added into processes, it has a dramatic impact on costs and unit economics. As a result, the fee for the service had to be increased significantly to justify all the costs.

Just recently, we were discussing various implementation options for our customers and reviewed a proposal to add additional support to hand hold customers through their onboarding (as opposed to having them go through a flow and self onboard). While Ironclad is a B2B SaaS business and the context appears so different, the lesson still applied. Because we knew that any time humans were added into the process we would have to review the unit economics of each customer, we were better able to consider factors like NPS and the lifetime value of the customer.

Chances are, there are lots of places that you can spot these patterns across seemingly disparate situations if you start looking.

The power of curiosity

It helps so much to have intellectual curiosity. If you find it interesting to understand why a team is structured in a certain way or why the leader prioritizes one business metric over another, then ask about it! The answers could help you spot hidden opportunities and the very act of inquiry will help your relationship and connection with your stakeholders.

I’ve found that virtually without exception, people respond well when I ask them questions about their business. When the questions are clearly coming from a desire to learn, it disarms them and helps them open up. And it gives you vital insight into the people and dynamics that drive their function.

Insight makes CFOs better connectors

Asking more questions also helps you accomplish one of the greatest responsibilities of Finance. I have always believed that CFOs play a vital and often hidden role as “connectors-in-chief” across the organization. We aren’t in charge of any of the pieces, but we are ideally positioned to help them align. After all, we have a unique seat in the organization. We see the business end to end and we see the numbers in depth.

The more we can understand what’s beneath the surface, the better we can help operational leaders achieve their objectives and align to the larger goals of the company and the actions and strategies of other parts of the company.

That alignment, or “interlock” as I call it with my team, is vital. Say the company has a goal to reach a new, higher-end customer segment that has intense product requirements. Well, the product team needs to have the product roadmap to deliver on that objective. In the meantime, Sales needs to be adjusting its training and hiring and approach to reach that new segment. Concurrently, Marketing should be adjusting its investments and strategy to reach this new customer.

That alignment can be more elusive than most people realize, but Finance has a unique ability to tie each of the pieces together. The Finance team might be working with the Product team to request additional headcount to build ahead to deliver the roadmap while working with Sales to understand the ramification of certain discounting choices on our ability to recognize revenue, and partnering with Marketing to evaluate which channels this new product might have the best conversion. Each of the actions of the different operating arms of the company have impacts to the P&L and Finance has a unique opportunity to help ensure these pieces critical to delivering the strategy are connected.

Stay curious and stay positive

Remember: How you ask things is just as important as what you ask. No one wants to feel like they are being audited or grilled by the CFO. An engaged, curious CFO shows that they are interested in, and committed to understanding, the people and dynamics that make up the business. They show they are willing to be vulnerable by asking “basic” questions. And they can uncover potentially vital links or gaps that might otherwise be missed. In short, they can add an entire new level of value to the company.

And It all starts with being able to ask “Why?” So the next time you get a chance to question and dive deep, do it!