CFO Studio Magazine with Dominic Caruso, CFO, Johnson & Johnson

Q4 2016 WWW.CFOSTUDIO.COM 35 CFO’s more demanding job description: “Traditionally, the CFO has been seen as a very objective person who comes to the table from the rational side that deals with the numbers. Given that knowledge base and, typically, a very even-keeled temperament, there is much more of a push for the CFO to be the change agent for the organization, to kind of rally the troops and work with senior- level counterparts to make sure everyone is executing in the same direction.” Peter Derrick, who runs his own CFO consultancy, Peter Derrick, LLC, said that the conversation “struck a chord” with him. “I always considered my role as one of a key strategist and as a change agent and growth agent for a company.” But he added that not everyone sings his same tune. “I’ve certainly been around long enough to know that some stakeholders embrace that and others do not.” He admits it was quite difficult at times, over the years, to get people to understand where he was coming from, but “it’s become easier and more common now for the CFO to operate in the ways in which I have consistently done, because I think there is a greater recognition broadly with shareholders and Board members to that evolving and growing role.” The Malfeasance Theory Paul Kirincich, CFO for One Medical Group, said in an interview after the dinner: “The way I see it, there’s now a COO component to the current-day CFO role.” And he, too, had a theory: After Enron, a 2001 scandal in which top executives at the Texas energy company hid billions of dollars in debt from auditors and the Board of Directors, “there was such an excessive amount of attention on compliance and control and fraud prevention, which caused all of us to be more narrowly focused to avoid a similar scandal.” Mr. Kirincich pointed out that the business economy has been operating for some time now under the controls put in place by the U.S. Securities and Exchange Commission (SEC) following Enron, and “things are relatively stable, so CFOs can focus more broadly now than we did 10 years ago.” Mr. Shenkman said that CFOs today have more systems at the ready to address those necessary and critical operations like internal controls and processes, but cautioned attendees to “keep their eye on the ball,” pointing out that, “Compliance, risk, and accuracy of financial statements are the price of admission. These are your core responsibilities; they are foundational. And the more diverse and global your business is, the more complicated it gets.” He went on: “If you’re a great CFO who understands the strategy of your business, but your financials are wrong and you have a compliance issue, you’re probably not going to be a CFO for very long.” Pointing out that industry-wide acceptance and recognition of the CFO as a growth strategist within an organization doesn’t necessarily come with a free key to the boardroom, Mr. Shenkman said, “The onus is on us as CFOs to ensure our relevance and that we have a permanent seat at the table.”The first step, he said, is to develop and cultivate a strong relationship with upper management. “You need to be a valuedmember of the senior executive team in order to reach your full potential as a CFO,” which is to provide insights and assist in decisionmaking, he added. He advised CFOs to think creatively and resist hanging on to their old ways that offer a sense of security. “I find a lot of finance people revert back to what their comfort level is, which is often, ‘I want to get back into my spreadsheet and find the right answer.’ ” In an interview, Ms. Woo echoed this: “No longer is the day where you can just repeat what you learned from the past. Changes are everywhere, and companies rely on the CFO to step up the game and be anticipatory instead of just focusing on the past.” Mr. Shenkman advised new and veteran CFOs alike to keep their “crunched numbers” accurate, embrace good processes that can be modified to the changing needs of the business, but also to focus on spending a portion of their time with customers and vendors. “This will go a long way toward proving to upper management that you’re not myopic about the business, and that you really do have a larger view of the organization, you do deserve a seat at the table, and that you can help influence decisions which you’re very likely in a good position to influence.” Now, welcome to the new age. C Ken Caveney Vice President, Finance, Sharks Sports & Entertainment Renee Budig CFO, CBS Interactive Peter Derrick Consulting CFO, Peter Derrick, LLC Francois Delepine CFO, Venafi Paul Kirincich CFO, One Medical Group Lori Varlas CFO, Hitachi Data Systems Liyuan Woo Former CFO, Bebe Stores Jeff Bergmann Vice President, Corporate Finance and Interim CFO, NetApp Arlen Shenkman CFO, SAP North America Discussion Leader MEETING PARTICIPANTS