CFO Thought Leader: ASK ETHAN Podcasts

ASK ETHAN: The CFO as Storyteller

Aug 11, 2015 8:20:33 AM / by Dave Phillips


When it comes to finance leadership what role does storytelling play in effective communication?  Ethan Carlson, co-host of the CFO Thought Leader Podcast, tackles our questions concerning strategies and the best practices organizations are adopting to advance their performance goals.

Join us as Ethan Carlson, CEO of Carlson Management Consulting, once more answers our questions to supply you with answers and a new mindset designed to help empower your finance organization to look ahead.

Financial information, metrics analysis, is not something that on face value is common for everyone to understand. If you’re a financial executive accountant, a CPA, financial metrics numbers, balance sheets, income statements, we look at them and we immediately know what everything means. Outside of this close-knit group, it becomes less obvious to people.—Ethan Carlson

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The following is an edited abstract from CFO Thought Leader’s “Ask Ethan” podcast featuring Ethan Carlson, CEO, Carlson Management Consulting, and Jack Sweeney, co-host of CFO Thought Leader.

CFOTL Hello. We’re pleased to have Ethan Carlson of Carlson Management Consulting joining us once again. Last time, we explored the area of corporate performance management with Ethan. And near the end of our discussion we sort of bumped up against another topic—about communication—that we called “the CFO as storyteller.” Ethan, first of all: Welcome, good to have you back.

Ethan Oh, thanks, CFOTL. It’s great to be back with you here.

CFOTL It was interesting last time that when you were sharing with us some insights into effective corporate performance management, more than once we came back to communication as a primary driver. Can you help give this subject area some context? Effective communication has always been important, so why is this such a worthy topic today?

Ethan I think that it’s a really important topic for financial executives and one that’s becoming increasingly so. As a function, we’re being asked to be ever broader leaders throughout the organization. Financial information, metrics analysis, is not something that on face value is common for everyone to understand. If you’re a financial executive accountant, a CPA, financial metrics numbers, balance sheets, income statements, we look at them and we immediately know what everything means. Outside of this close-knit group, it becomes less obvious to people.

I think that as financial executives are looking to engage a broader group inside and outside of their company, their ability to translate these metrics and performance elements of the company and what it all means to everyone else becomes increasingly important. I also think that it’s important, as well, to demonstrate that as a financial executive you’re more than just a numbers person. Yes, you understand the integrity of the financials, but you also can translate them into what it means for the business. This sort of demonstrates to people in other functions, as well, that you are a fully well-rounded business leader.

This has both a communication component and a credibility one. I think that as financial executives are looking to broaden their role—broaden their participation throughout their organizations—communication, storytelling, and engagement, and how they can do this, is really very important.

CFOTL Permit me to be the devil’s advocate here, but CFOs are not known for being widely connected across their organizations. By this I mean that too often the lens has remained narrow. If a finance leader were to meet Bob, who heads up sales for the Northeast, on an elevator, say, the finance leader of yore had less reason to find common ground and discussion points that would allow them to engage Bob than they would today …

Ethan I think that’s exactly right. The first thing that a financial leader can do in improving how they present themselves, how they project, how they communicate is to try to shift the discussion that they have around their organization and externally from being solely about financials. One perspective that we’ve talked about in other sessions is making sure that when you’re presenting your financial results, you’re also presenting key operational, employee, and other nonfinancial metrics. This continues into communication, as well.

If you’re in a finance role, as you’re presenting and interacting with others, make sure that you’re looking to insert those other nonfinancial elements into the discussion. It sort of demonstrates that you know what they’re all about and that you care. As a finance group, we sometimes go out, at least periodically, and invite business leaders who don’t traditionally do finance to participate in financial exercises and expect them to understand acronyms and metrics and things of that nature that is not part of their job.

It’s a great idea to go out and engage and to demonstrate that you can understand these elements of other areas. Spend a little bit of time learning some of the industry jargon for your R&D team, what’s key to their area right now, what your HR department is focused on, what is going on in another area. Getting out in front of this and showing that you have a broader dialogue that you can have is the first step, in my opinion, in engagement and shows that you can talk about something other than finance.

CFOTL When you first suggested this as a topic, one of the companies that came quickly to mind for me was Southwest Airlines. Maybe 10 years ago, they initiated an internal program through finance designed to make not just management but every employee in the company aware of certain metrics. It was dubbed “knowing the score.” They would refer to these numbers throughout the organization as the “magic numbers.” From what I recall, there were really just four of these metrics, but this was a way of getting everybody in the organization to grasp and understand the significance of these numbers.

Ethan That’s a great example of keeping your focus on your financials very concise, which we think is tremendously important. Our rule of thumb is that you as an organization should never have more than six to eight key metrics, and I think the example that you’ve just given of Southwest with four is even better. If you think about it, how many things can a person actually really remember and care about at any given time? The number is very limited. That’s a great example, and the idea of making it accessible and creating a branding around it that everyone can relate to is also a great step.

You also have to help translate what this means to people outside of finance and in various roles. You need to explain how these four metrics are then related to every employee and how they can sort of drive toward them and how their actions impact them, even if it’s not in a direct or dramatic fashion. Everyone likes to know that they’re tied to these results and to see them in a simple narrative. This is exactly what we’re talking about when it relates to developing a clear message and communication and telling a story.

CFOTL What are some initial steps that could be taken, some of the steps that any finance executive can take to get that clarity, to help them tell the story?

Ethan I think you’ve got to go back. Everyone wants to be driving engagement right now. This is front-and-center in what we talk about as an evolved finance leader. You’re reaching out across your organization, you’re building consensus and getting input from all functions. In doing this, you have to first establish the foundation for understanding whether your budget owners or the people participating in your financial exercises speak the same language that you do. Too often, in finance, we just assume that people do.

Quite often, a person is not going to come right out and say, “I don’t understand what you’re talking about, please explain,” because they’re embarrassed or they think that they should know. Instead, they’re going to try to find a way to complete the task with the information that they know.

Kind of an interesting analogy: I was visiting a client of ours in Tokyo last year. I had never been to Japan before, I don’t speak the language, and I found that what had been simple tasks at home—say, riding the subway—became a lot more challenging. Everything from just paying for a ticket to getting in the right line, going in the right direction, knowing which destination was yours when you can’t read the signs or understand what they necessarily mean becomes much more challenging.

I’m a somewhat experienced traveler, but I am, like anyone, embarrassed sometimes to ask for help when I don’t think that I need it. I found a way to get a ticket and get in a line. I could tell by the map from what I thought was my point A to B that there were many more direct ways to get there, but this roundabout train would get me there. I did this day in and day out, and it got me from my hotel to the office and to and from the airport.

I was able to repeat a series of steps that may or may not have been efficient—I have no idea. I’m sure I missed many interesting stops along the way, and maybe the whole point. But I got from point A to point B, and I think that a parallel can be drawn in financial exercises. As you’re bringing people into your process, they are probably going from point A to point B by using steps that they’ve used before. These steps may or may not be good ones; the people may not be getting value out of the exercise. If you don’t assume that they don’t understand, they’re not going to necessarily come to you.

For me, step one is, Okay, let’s educate everyone and make sure that there’s a common foundation. We tell people that if you want to engage, hold informational sessions, make it educational, make it interesting. The example that you used with Southwest Airlines is a great one, where they took financial metrics, they made them very accessible, they educated people on why they were important, and they made them interesting. So do that, expand that. Stay away from jargon and acronyms that are important only in finance. Spell out what you mean; this is really important.

Make sure that you’re engaging, that you speak their language, too. Spend a little bit of time; after all, you’re asking people to invest time in your process. Invest some time in them and in what they do and understand what’s important to their area, what their metrics are, and really keep this front and center. As we demonstrate the ability to speak someone else’s language, it helps them to be willing to engage with us.

Then, keep it easy. One of the things that we’ve seen financial leaders do in increasing collaboration and in making financials easier for everyone to contribute to is provide visualization. Pictures. “A picture is worth a thousand words” is the old saying, and this holds true very much in charts and graphs. Everyone can relate to a bar chart that is growing. That’s a good thing, right? Compare that with a set of numbers on a page that may or may not be easy for someone to interpret.

It’s finding those ways to engage and not expecting that everyone is interested in being a financial whiz. Make it accessible to them and take these steps. You can really have a really big impact on how you engage with your organization.

CFOTL We always open up our podcasts by asking the question, “How did you become a finance leader?” We ask for three career milestones that helped shape them into a finance leader. It often seems to me that the finance leaders get focused on their technical knowledge. Obtaining this knowledge may have been, without a doubt, the cornerstone of their careers, but I’d argue that it should be only one of the three storytelling milestones. And again, I’ve inserted the word “storytelling” here.

We have what is known as a narrative podcast format, and this means people sharing their stories. What finance people need to think about is that, as finance leaders and aspiring finance leaders, they should be casting a wide net with their story, not a narrow one. They should open that story up with career milestones that speak to more than the CPA community, that speak to a much broader business community—the types of people you want to connect with going forward.

Ethan That’s great. The thing to bring it back is that CFOs need to focus on being a storyteller, like you said. How you present yourself is part of it. What you touched on is that focusing solely on technical accomplishments and financial information is not how you want to necessarily present yourself if the goal is to tell a story of being an engaging business leader, being a complete leader, being someone who can be accessible to a broader audience.

As a storyteller, you need to really know your core story, nail it, and really have it down. You know the financials—everyone expects these sorts of things. Then tailor your message: Know your audience, know with whom you’re interacting. To your point, we interact, and we are often in front of leadership from, say, a software company, and sometimes we’re in front of leadership from a not-for-profit. We are all over the country and the world sometimes. Different cultures come into play, and we have to know with whom we’re interacting and how to relate.

Being relatable is a key part of being a storyteller and being a great leader. Everyone likes to work and interact with people to whom they can relate—that’s just how we all are. If you are presenting yourself, maybe it’s internally, in front of the executive team, you present detailed metrics and things of this nature that may be more relevant to this team. As you’re interacting as you go through the organization and perhaps down the ladder a bit, make sure that you tailor this message and that it’s relevant to whom you’re interacting with.

This idea of presenting yourself through story and through what you choose to talk about and showing that it’s not just about financials for you is key to being accessible. This is the foundation for being a better communicator.

CFOTL By becoming more accessible leaders, finance can finally more fully evolve as a function, right? It seems to be stepping away from this role of the gatekeeper of information into more of this champion of information-sharing role. Right now, many organizations are probably in between.

Ethan That’s a great point. In organizations that are driving increased visibility, the CFO and finance leader are out engaging with their organizations, telling a compelling story about their business, translating it into what finance means to the organization and its strategy. In doing so, they are transferring so much valuable knowledge and how to interpret financial results, and what the metrics mean and how the individuals impact it. Organizations that are able to effectively create this visibility, create this transfer of knowledge, they really make their financials and their ability to analyze them and their function of finance a real competitive advantage.

I see this as a huge step forward. An organization that is getting this right will be more profitable, will be more nimble, will make better decisions than an organization that is not sharing information. It is just fundamental to company growth. We could really dive into this creating visibility and transparency and how you can use finance as a competitive advantage. What metrics are organizations using, how are they linking these to individual performance, and how are they getting this visibility and transparency right? This could be a whole other topic to discuss.

CFOTL Great. Let’s put it down for next time, then.

Ethan That sounds great.


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