Jack Alexander was our second ever guest on FP&A Today and it remains one of our most downloaded episodes. Here he returns to exclusively launch his new book (published January 2024): Financial Management: Partner in Driving Performance and Value (Wiley Finance)
His new book is a post-pandemic and typically practical take on performance management, planning, forecasting, business valuation, mergers, acquisitions, and capital investment.
He says: “I wrote (my original book) Financial Planning & Analysis and Performance Management. Then the pandemic occurred, the Great accelerator, the great disruptor. And I was getting a different set of phone calls and requests.
“Most people hadn’t really been through some of these experiences before. Scenario analysis and planning, business transformations and restructuring liquidity management and scenario planning through various liquidity scenarios. There was a need for FP&A and finance to look outside the organization at major external forces and events that are happening around the world as the greatest threats and opportunities emerged from outside such as hyperinflation and geopolitical events.”
In this episode Jack talks:
- Why my first budget was a disaster
- From financial accounting manager to CFO at EG&G
Mentoring as a path to CFO and CEO - Financial Leadership in the 21st century inspired by the pandemic and post pandemic environment.
- The essentials of value creation for a finance team
- Return to the Principles of a “Top Gun” CFO
- What’s changed – and what hasn’t in 45 years of FP&A
- How audit and transaction experience got me first promoted to CFO
- Health and finance
Follow Jack Alexander at https://www.linkedin.com/in/john-jack-alexander-4b987b7/ or contact him with questions at JFAlexander2@gmail.com
Full transcript
Paul Barnhurst:
Hello everyone. Welcome to FP&A Today, I am your host, Paul Barnhurst, aka the FP&A Guy. FP&A Today is brought to you by Datarails, the financial planning and analysis platform for Excel users. Every week we welcome a leader from the world of financial planning and analysis. Today we are delighted to have Jack Alexander back on the show. Jack, welcome to the show.
Jack Alexander:
Good to be with you, Paul.
Paul Barnhurst:
We’re really excited to chat with you for a few minutes here. So, just a little bit about Jack. He comes to us from North Carolina. He earned his bachelor’s in accounting and finance from Indiana University of Pennsylvania, an MBA from Ryder. He’s written multiple books, and he is also worked as a CFO and an advisor to CFOs for over 45 years. So, Jack, where we’re gonna start before we have this, tell us a little bit more about your background is, this is kind of a fun question we like to ask everybody, see what kind of answers we get. Tell me about the most challenging or worst, however you wanna define it, budgeting experience you’ve had during your career.
Jack Alexander:
Fun question. It was in 1984, and it was my very first experience with budgeting. So this goes back quite a while, fresh from public accounting. I went with a technology company, a division of a large Fortune 500 company. And the budget cycle took five months and seven iterations. The first two iterations were a disaster. They were non-starters. Things were not internally consistent. The numbers made absolutely no sense. We turned a division that had 20% operating profit to a $10 million loss. Capital expenditures were more than we had spent in the last five years. All of those common things. So it took us a lot of time to, to work that backwards. And of course, myself and a couple of other people said, this is silly. This is absolutely no way to do this. And saw two or three things that we could do immediately to fix it in in successive years.
And one of the things that’s really been helpful to me is to always do a postmortem as soon as you’re done with a project. Otherwise it tends to get lost in the memory and you repeat those same mistakes. But we did three things. We changed the name from the budget to an operating plan, and that shifted the emphasis to the operating people to tell us what is it we’re trying to accomplish in the next year, and what resources do we need? And by the way, we’ve got these constraints of sort of a preliminary P&L to do. And then we developed a game plan right up front with that guardrail, identifying investments, all that good stuff, major objectives so that nobody went off on their own with wishlists. They actually were preparing their individual budgets in the context of an overall plan for the organization. And then within a year, our corporate headquarters forced us to use a rolling forecast. And that was a game changer. So again, this is 1984, and in 1985, we implemented rolling forecasts. And then that was a game changer because we had a preliminary version of the next year’s plan in hand before we sat down to do, to do the budget. So preliminary issues were already identified. We knew what major trends were were occurring. And so it it made that and subsequent planning processes much, much easier.
Paul Barnhurst:
So I’m curious, how, how much quicker was the next one? You said five months with those changes, how long did it take? The next year?
Jack Alexander:
I would say it was something like two and a half months. And that is broadly defined from call for the plan to presentation to group and corporate headquarters. And I think it got down to maybe really two or three iterations. You know, a final adjustment after corporate review. But sure. A a much better process. And I still, I wince when I hear people struggling with some of those same issues still almost 40 years later.
Paul Barnhurst:
It, it’s amazing how often the budgeting process takes months and is a challenging process. And so I hear you. I’ve definitely been part of those, those horror stories you mentioned. I mean, I’ve had situations where we haven’t agreed to the budget till, you know, we’re four months into the year. I still remember this. We were four months into the year when we finally agreed to it. And we were so far ahead of plan at six months, corporate decided to change the plan for the back half of the year and redo everybody’s numbers. But they didn’t ask us to submit it. Then they asked us to explain against the plan, and I couldn’t even explain it ’cause I didn’t understand what they did. So there were times I literally just put in the commentary, I can’t tell you what the variance is ’cause I can’t even figure out what the plan number is.
Jack Alexander:
Wow.
Paul Barnhurst:
<Laugh>, I, I’m sure they didn’t appreciate that much, but yeah, so I’ve, I’ve definitely seen some nightmares myself. So a little bit about yourself and your background.
Jack Alexander:
Sure. I started out in public accounting with then Coopers & Lybrand now PWC, and spent a few years there auditing great clients. It was the Philadelphia office and we had a lot of large New York Stock Exchange listed clients. What quite a range too. Everything from mutual funds to retail to manufacturing international was great experience. And at that time, I came out in 1978, something called the Foreign Corrupt Practices Act had been enacted into law a year or two earlier. And that required, and this is important because we had to document and evaluate the system of internal controls. It was like a predecessor to Sarbanes Oxley. And so we were sitting there manually with flowcharts and audit work papers, documenting every major process, procurement manpower revenue process, all those things. And one of the key takeaways for me was that you really need to focus on business processes and getting a deep understanding of business processes, which served me well over the years. I was fascinated by the role of FP&A and controllers and CFOs, and I got to meet some really great people. One of them gave me some great advice. He said, you know what you should do? You should go out and get a, a role in an operating unit of a business. Don’t, don’t get stuck in corporate headquarters and get out of public accounting,
Paul Barnhurst:
And <laugh>.
Jack Alexander:
And I did. I joinedEG&G at a division at that time, a $2 billion tech and services company. And I spent the bulk of my career there, 17 years. So I started off as financial accounting manager and then eventually became CFO of the entire corporation. Some years later later I transitioned to teaching and consulting, taught the MBA program at Babson College and did some teaching at Coastal Carolina University. And of course, began to write some books on performance management, FP&A finance.
Paul Barnhurst:
Great. And I, I, I chuckled a little bit when you said, you know, stay away from kind of corporate and go into the business unit, the operations. Because that’s where I’ve spent all my career. That’s where I enjoy fp and a. I’ve never really enjoyed the corporate roll it up and help with the board deck. And your customers are finance. I love being with the general manager, the people, the business, and getting involved in the operations of the business from a finance perspective. So I really appreciate when you shared that. And I know we’ve talked a little bit about your teaching before. So, you know, obviously you are on the show. And for anyone who doesn’t know, Jack was our second episode. So, geez, I think it was March of last year, 2022, about almost 19 months ago now or so. We did our, we did our interview. And so, you know, it’s been a year and a half since you were on the show. So why don’t you talk a little bit about what you’ve been up to over the last year and a half. What have you been doing?
Jack Alexander:
Well, I’ve been transitioning away a bit from, from the large scale projects and focusing more on mentorship and advisory roles. So working one-on-one with either specific finance teams or members of the finance team. And also devoted substantial time in writing a third book over the last 18 months or so, which is which will be published here shortly.
Paul Barnhurst:
Great. So you’ve been doing a little bit more of the one-on-one mentoring. So I’m, I’m curious in doing that, is there maybe a favorite experience or something you’ve learned that’s kind of really stood out to you in doing that more?
Jack Alexander:
Well, I, I find it very rewarding, especially when you look back and see people that you’ve worked with or mentored or helped along the way that have really succeeded and become CFOs, or have even got a couple CEOs. And you know, at my stage in the career, that’s, that’s the most rewarding aspect, I think, is to look back and see all those people. So I help out on a range of things. Sometimes people are looking for advice, you know, at the CFO level, it becomes tricky with the relationship with the CEO and the board and differences of opinion and that type of thing. And, and those are things that almost every CFO has to navigate through a lot of work in terms of advising folks on implementing new processes, for example, scenario planning and strategic planning have been very big over the, the last several years since the pandemic, in fact.
Paul Barnhurst:
Yeah, I was gonna say, I was just thinking that since the pandemic, I know we’ve seen a lot around scenario planning, cashflow planning, which often you also strategic gets in there because it turned everybody’s world upside down.
Jack Alexander:
Indeed.
Paul Barnhurst:
You know what, it is, like 13 different spreadsheets emailed out to 23 different budget holders, multiple iterations, version control errors, back and forth updates. You never really fill in control of the consolidation and collection process. Yep. I’ve been there. Stop. Breathe.
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So as you mentioned, you’ve been working on a book, so you’re preparing to publish a new book and see if I get this title right, financial management partner in driving Performance and Value. So, could you tell our audience what was the impetus, you know, for this book? Why did you decide to write it?
Jack Alexander:
You know, I had written FP&A and performance Management, and that was published in 2018 by Wiley. AndI found that that was, that was helpful to people. Got a lot of good feedback on that. And then the, the pandemic occurred, the Great accelerator, the great disruptor. And so I was getting a different set of phone calls at that time and request for help. As you pointed out, it pushed finance teams, many of them sort of just emerging, you know, maybe 15 years in the profession becoming controllers andCFOs hadn’t really been through some of these experiences before. Scenario analysis and planning, business transformations and restructuring liquidity management and, and scenario planning through various liquidity scenarios. Strategic evaluation, hyperinflation then comes and also trying to expand the view of FP&A and finance to look outside the organization at major external forces and events that are happening around the world because they really, you know, the greatest threats and opportunities emerged from outside the organization and a lot of things that we might have been concerned about or dwarfed in comparison to a recession. Hyperinflation, geopolitical events, all of that kind of stuff. Which finance is typically not put on the screen of projections and, and analysis.
Paul Barnhurst:
All the things we’ve dealt with over the last few years.
Jack Alexander:
Exactly.
Paul Barnhurst:
Hyperinflation, political interest rates, pandemic, the list goes on.
Jack Alexander:
Yeah. And I changed the title from FP&A for a couple reasons. One of it is that it’s become clear to me working across many organizations, but also just watching the traffic on LinkedIn, that there are very different definitions of what the scope of FP&A a is. And so what I hear, frankly, I’ll call it an echo chamber on LinkedIn, is kind of a pretty narrow slice of what FP&A is. So you know, and of course there’s a lot of posts, I laugh defining EBITDA and arguing about whether we, we need to understand three financial statements or, or it’s not of use in FP&A or focused on software and solutions and Excel hacks. So I, I, I realized that a lot of the content of FP&A and a lot of the new content would be relevant to people that are outside of FP&A Mm-Hmm. <Affirmative>. So working in control and treasury organizations and other specialty functions reporting into the CFO. So, you know, I didn’t hear in discussions things like cap, specifically capital investment decisions, M&A, a focus on value creation, the big picture, and a business orientation, right? Strategic planning, human capital management, another huge subject that finance people in general and a lot of the activity on LinkedIn doesn’t really deal with how you build a high performance management team, which is probably the most critical building block to success. Right?
Paul Barnhurst:
Yeah. You know, kind of speaking to that, I was asked today, someone put, you know, eight top priorities for CFOs and FP&A and I’ve boiled it down to me. There’s kind of three things I talk about. I go, first, it’s most important to get the right people, starts with the people, and I go, and it starts with their attitude, not necessarily their technical knowledge. Those can be taught, but do you have curiosity? You know, are they hard? Are they hardworking? Do they have those right values? And then I say, you need people that also have that mindset of always wanting to optimize processes. So next you gotta be thinking about processes, streamlining and automating so that they can free up their time to be the business partner. And said, then, and only then, really, technology enables them to be more effective. It doesn’t solve your problem.
And I kind of said, you know, if a CFO starts with hiring the right FP&A person, getting the right people in the seat, but I see all these big lists and do all the, and I’m like, you know, really when you boil it down, there’s a few key things you have to do. Like you kind of, you know, mention it really does come back to that team to where, where it all starts. Because if you don’t have the right team, yes, great technology is wonderful, great processes are wonderful, but they’re gonna be less effective for sure without the right team, without them performing well and having that leadership to guide them forward.
Jack Alexander:
Yeah, I agree, Paul. And you know, one of the things that really concerns me is I’ll see positions for an FP&A manager that lists 12 different software applications that they want the applicant to have experience in. And, and I think that’s backwards as you suggested, you know, hire the right person. Those technology pro processes and packages are changing annually anyway, and being replaced by others. So what’s really important is somebody that can learn, somebody that can deal with those things and really can, can dive in and understand the business, as you say, has the right motivation and can work as part of a team. That’s, that’s a huge part of it too.
Paul Barnhurst:
I totally agree with you. So you, you highlighted some of the areas of the book, but just to make sure audience understands now, what is the key differences between this and the last fp and a book you wrote? If you were to summarize that, how is it really different?
Jack Alexander:
Yeah, so I’ve updated and expanded the content from FP&A, and then we’ve wrapped around it several new sections and I can tick through them pretty quickly. So there’s, the section is called financial Leadership in the 21st century, really inspired by the pandemic and post pandemic environment that we find ourselves in. And really, it preceded that, right? We’ve had black swan events every three or four years since 2001. So there’s a couple of things that I, I felt needed emphasizing. The first one is what are the essentials in value creation? And again, I don’t hear finance people talking enough about that. That’s really what the CEO, the board, the CFO care about. So if you get on board with that, that’s a huge help. And we can boil that down to some key drivers of value creation. And two key measures are growth in ROIC.
So I put a chapter in there to really focus on those two primary measures. How fast are we growing and what’s the return on invested capital? Because ROIC as you know, pulls in both profitability, but also asset utilization and the assets that are utilized. And so it takes into account cash requirements and that type of thing. Another really important chapter is, is what we talked about before, managing human capital and building a high performance finance team. So finance for as long as I can remember, has been one of the lagging functions in terms of people development and performance evaluation and development plans and all that kinda stuff. So I actually had human resources reporting to me as, as CFO and we, we put in place a new people and organization process where we looked at needs of the organization quite thorough, really starting with the strategic plan, look at the needs of the organization, and then look at the folks that are on board, look at the required competencies and skills and experiences, identify gaps, do successor planning, put together real honest to goodness development plans for people and for the organization in total.
And then develop an execution plan and monitor that. And of course you can do that for the organization, its entirety, but you can also and should do it for the finance organization. And so I think that’s a, a really important chapter. Also strategic analysis and planning. And I found a lot of mid-market companies and smaller companies don’t have formal strategic planning processes. Mm-Hmm. <affirmative>, I grew up in an organization that had a wonderful one that was featured in a Harvard business article, you know, again in the eighties. And, and we changed it quite a bit over the years. But, you know, there are, as you know, there are key elements and best practices that really help you understand the environment. And that’s a big part of it that I’ve emphasized in this chapter is focus for finance people, focus on the strategic analysis.
You don’t have to be a great strategic mind to contribute that you might have that or might come later, but finance can make a huge contribution by analyzing the environment and slicing and dicing the performance to identify issues and opportunities. And then a big question that I’ve gotten over the last five years is how does finance get a seat at the table? We’re, we’re not there, we’re not invited to strategy conversations. And so we’ve identified things that you can specifically do, including offering up, even if it’s not requested. Here’s a package I put together that you might find interesting and helpful as you guys go about working on the strategic plan. So that’s important. Another area that finance needs to play a bigger role in is to support the organization in growing revenue. And again, you know, it comes back to finance being focused mostly on the internals and cost structure, but there’s a lot of things we can do around supporting growth, including not being an impediment, right?
Starting with that and then focusing on the processes that really support growth, whether they be approving new programs and projects to evaluating customers and profitability right through m and a. Another area is taking a look outside the organization. So I’m encouraging finance to not look within the four walls, but to look at the economic environment, to look at their customers and competitors and focus time and attention. A great opportunity to benchmark and study competitors, particularly if customers, competitors, and suppliers are public entities. It’s a little more challenging if they’re not. There is so much information that somebody can pull together with a financial background and share with the management team that are useful and insightful. And so we, we cover that as well. I talked about course corrections, business restructuring and transformation. What’s the analysis that you can do that will create a better chance of getting it right?
You know, so many times people default especially their first couple times to across the board cuts. But what are some of the analysis that we can do to really identify opportunities to change or transform the business? And then leveraging and promoting technology investments. I added, so it’s both finance utilizing technology, not necessarily being enamored with it or thinking it’s a silver bullet, but utilizing it effectively, but also promoting technology investments across the organization. And again, I continue to see a lot of enterprises that have not invested in some of the core technologies, the enterprise systems and that type of thing that are really limiting all of the analytical tools and other tools that are out there available. . So scenario analysis and planning is another chapter in that section. So as we’ve talked, the pace of change and the level of uncertainty really precludes you from relying on a single forecast or projection and set of numbers, right? And you really gotta understand and paint what is possible and what are the possible outcomes and what are our likely responses and things we can do to mitigate them. And then finally, because scenario planning is, is useful you still can’t predict the future. So what really is required is to develop an organization that has really robust business processes and agile talent that we can react and call for those inevitable surprises that are gonna come down the road.
Paul Barnhurst:
Great. I appreciate the summary. It sounds like a lot of, you know, focus on the value creation, the strategic, how can finance, you know, make a difference and get a seat at the table. So, you know, when this episode comes out, the book should be just ready to go or just publish. So if people wanna get ahold of the book, what’s the best way for them to do that?
Jack Alexander:
It is available now on pre-order on Amazon and other book sites, and we expect it to ship late January.
Paul Barnhurst:
Great. So that should be right around the time probably people will listen to this episode, so that will be exciting for them. So when we did our first episode, one of the things I really enjoyed when we chatted is you shared an article about a top gun CFO that I think you read it, if I remember right. I think you said you read it in 1978. And I’ve shared that article with a number of people when we do training, because I think there’s a lot of overlap between what CEOs look for in a CFO and you know, what FP&A should be doing what A CFO wants, an fp and a. So maybe can you share a little bit about that article and how it’s guided you during your career? Tell our audience a little bit about that.
Jack Alexander:
Yeah, Paul, your memory’s good. And I think it was 78, 79, I was still in public accounting, but I was, as I mentioned, I was intrigued by what CFOs and controllers did, right? And, and how they were managing the businesses, the kinds of meetings that we were involved with for example, around M&A. So I’ve always been a reader and tried as part of my continual learning process. And it was either in business week at the time, or the Wall Street Journal, all likelihood. And I didn’t keep the article, I think it was the controller of, of a client’s newspaper. So I didn’t cut it out, but I made notes from it. And that’s what I’ve shared in the past, right? Yep. And I think the article was titled Top Gun CFOs, what CEOs Look For in CFOs. And I believe, I don’t remember where it was published, who the author was, or who the CEOs that wereinterviewed, but I do remember four key points.
The first one, credibility of forecast. Now remember, this is 1978-79, right? Always important. You gotta, you gotta be able to understand where you’re headed lay those out and help the organization achieve those. And then one of my favorite ones is dispassionate hardheaded analysis. I just love that phrase. And what does that mean? You know, it means you gotta be objective and you gotta tell the emperor when they don’t have any new clothes, <laugh> and, and or any clothes, and you gotta tell them when you know, it is highly unlikely we’re gonna achieve these numbers, or you’ve got this emerging issue at the earliest possible time. And sometimes it does requirenot being confrontational, but swimming against the tide, you know, and really communicating a perspective that perhaps is not shared across the organization. Another one I like is balance between the cost model and growth.
And hence the chapter on growth, right? Again, this goes back 45 years, right? That CEOs don’t want us just to focus in on the cost model. They want us to contribute to growth. And then the last one’s perfect too. Kinship and teamwork, what we might call business partner today. And they want you to be a part of the team. They don’t want you to be the corporate cops. Sometimes you have to say no, but they want you to be in the boat rowing, coming up with solutions, not just saying, we can’t do that. We can do it if, you know, we make certain changes or, or other provisions. So I have kept that little sheet of paper that I shared with you with those four lines on it in my planner when we had them in a digital paper folder not too far for me at any time. And they have served me well, and I have seen nothing consistent or inconsistent with that over the last 45 years.
Paul Barnhurst:
Yeah, I, I really love that list. And like I said, I’ve shared it in many FP&A trainings. I’ll mention it came, you know, that you shared it with us that from Jack Alexander and article you found, and yeah, I think people relate to it. And I like you, I love the dispassionate, hardheaded analysis because it’s like, give me the facts. Don’t give me the emotion. Don’t give me your opinion. Let’s talk about the facts, what the data’s telling us, and then we can go from there. ’cause Sometimes I think we, we come in with that preconceived notion and then we try to force the data to fit it. And that can always be really dangerous. Yes, you might be right sometimes, but that’s not a good place to start from, for
Jack Alexander:
Sure. Not at all. No. I’ve seen a lot of finance people that come in with a bias, generally negative and critical. You know, never say anything positive. You know, I like to start balanced. Here’s what’s going well, here’s what an improvement opportunity is. Yeah. I used to love humor’s good too. And in some of these difficult situations where I really fundamentally disagreed with what was being said or or presented say, can we confuse the discussion with some facts for a moment.
Paul Barnhurst:
<Laugh>,
Jack Alexander:
Just a way to disarm telling somebody that they, they’re a bit illusionary in terms of their perspective on things, but but sometimes you have to do that and
Paul Barnhurst:
Do, I’ll, I’ll have to remember that one. I like that confused conversation with some facts. I’ll, I’ll use that, I’m sure at some point in the future. So you’ve had a 45 year career over those years. What has changed and what is the same when you look at, you know, kind of finance at FP&A
Jack Alexander:
Know, I think about that a lot, Paul, because I hear finance managers and FP&A directors and CFOs say, so much has changed and the job has changed and everything. But I see it a little bit differently. I see things that have changed. The technology more broadly speaking, the tools have changed significantly. Sure. I mean, when I started, it was a calculator, a 10 key calculator, and literally green spreadsheets and being able to operate that 10 key and being able to foot and cross foot a spreadsheet was important to be able to do. You then took the results of your analysis, which would be done manually, and you might have to give them to a secretary to type up, and then she’d make a foil and we’d present it on, on an overhead. And so of course, all of that’s changed.
Right now it’s with PowerPoint and Excel and it’s very easy to share and distribute information. So community and access to information has, has changed a lot. I think the pace of change and level of uncertainty has increased a lot, particularly in the last 10 or 12 years. But as soon as I say that, I remember in the seventies we had an oil crisis. We had huge wars. We had a competitor from Asia, Japan who was knocking US manufacturers offer locks, particularly the auto industry and steel industry. And so all those things have al always been around. I think perhaps they’re occurring at a more rapid pace. What hasn’t changed, you know, we just looked at the, at the list of what CEOs are looking for a partner in driving performance and value, right? They’re looking for somebody to help execute their business goals, to improve financial performance and to to build value.
And that’s one critical aspect that I see. Finance people sometimes are too interested in reporting things and, and analyzing things, and they fall short of trying to contribute to the improvement. So, okay, we can explain gross margins away. How can we improve them 2 percentage points, you know, what opportunities do we have there? Not constantly focused on just reconciliations and analysis and waterfall charts. Good CFOs at, well-managed enterprises have always had a broad set of functions reporting into them, strategy, operations reviews, investor relations, all those critical areas. And I think that hasn’t changed, although there’s a perception that that has changed. So I think it’s really sort of the tools and the environment, but what people are still looking for and what our important contribution is, is the same look at the business, what’s going well, what’s not going well, how can we improve it? How can we play defense where necessary, you know, against potential threats and issues.
Paul Barnhurst:
Thank you. I think, I think that’s a good summary. And if I’m hearing it right, it feels like, I mean, many of the biggest changes around technology and things like that, that continues to change, but that core idea of what we, we need to be doing, which is helping create value for the business, you know, has been there all along.
Jack Alexander:
Exactly.
Paul Barnhurst:
Great. So, you know, we talked a little bit earlier about this. Obviously you’ve spent many years in this profession. You reached the highest levels as a CEO. So maybe can you talk a little bit about your experiences and skills that helped you reach the highest level of the profession, and what are those things that you felt were most important in helping you become a CFO?
Jack Alexander:
Yeah, Paul another good question. And when I look back over that time, and, and you’ll see it, it’s very interesting to me how one experience that seemed almost a one off or random led to the ability to succeed in a subsequent position. So I started off at Coopers and Lybrand Good foundation and financial reporting and GAAP, which is important, you know, and I think around the discussions of what’s the best career track, I think you have to try and get exposed to several, because if you’re a CFO, there is always a desire from the board and the CEO to be able to check that box, right? Understand financial reporting and GAAP at some level, or you better hire very competent people to to do that for you. Internal controls are very important and having a base understanding of all that, as well as the process view that we mentioned.
One of the things I still remember from the performance review on public accounting was a phrase called executive presence. And I don’t even need to explain what that is, right? But it, it’s very important when you enter the corporate world as well, right? How you carry yourself, how you communicate do you in order respect from people are you credible? All those things are, are importanta focus on transactions and business processes, as I mentioned. So I find a lot of people who are in FP&A a or come from investment banking, they’re not grounded by all those processes and activities. And so, you know, it’s harmful when it’s very easy to change a projection from 1% growth to 3% growth without thinking about all the customers and invoices and products that have to underpin that, right? In order for that to occur, I got some great advice.
As I mentioned before at a client, he was a controller that I respected a lot at a Fortune 500 company. And this was probably eight o’clock one night during the year end audit. And he said, go work at an operating division because you, you will be limited at the corporate level if you don’t have that foundation. So I did. I went and joined EG&G at a division, became financial accounting manager. Basically was responsible then for everything from transaction processing, financial management, management reporting, budgeting forecasting. It was a publicly traded company and they had great management processes. So it was perfect for me to fit in there. I then was promoted to assistant controller and controller within a couple years, and then my boss got fired, and this is really a critical point. So the president of the division got fired and the group CEO called me and said, we would like you to be the interim CFO.
And I said, okay, I think I was 30 years old. And he said, it’s gonna be for a couple of months. It turned out to be 10 months. But that forever changed my perspective of business, of finance and also I think the way I was viewed within the organization. So had to lead and review all of the product development, the sales present the operating plan, the strategic plan to corporate headquarters, just a complete shift and expansion of my perspective on on the world. And shortly thereafter, I got promoted to a group CFO role looking after seven operating units. And this is significant because that group had audit, internal control, financial reporting issues. They had a bloated balance sheet, receivables and inventory through the roof kept falling short of, of hitting plans and forecast, which is death in a public company.
So I was hired and within 18 months I led a team to a significant turnaround on all those fronts. And this is one of those examples where I look back and say, if I hadn’t had that audit and transaction experience and process experience I wouldn’t have been as successful here. You know, so it was, be able to incorporate those things. If it was just analytical or if I only had an FP&A background, I think there would’ve been a much more limited contribution. There, I then got promoted sort of on that strength through corporate controller organization, had 40 operating divisions, served on the operating and planning committees, and then my boss got fired again, there’s a pattern. And they made me acting CFO, because again, I was too young to be CFO of a publicly traded company, but within two years I got the job on a permanent basis. And that was a huge position control, treasury, strategic planning it, human capital management, investor relations, pension, trustee, board member of our venture fund. Very broad set of responsibilities. So I almost should have paid them for the learning that could occurred during that time period.
Paul Barnhurst:
I’m sure they would’ve appreciated that.
Jack Alexander:
I take away a couple key themes, Paul, from that if yeah, go ahead. If that would be helpful. One was to listen to respected advisors. You might not think of them as formal mentors or whatever, but I think about that guy, John Catona, that controller that told me the best thing you can do is get out of public accounting. Don’t go to a corporate headquarters, get into operations. ’cause Here’s what you need to learn. You had specific examples. The second was continual learning, staying current, and also broadening knowledge and and perspective. And it started out, it was easy with the C-P-A-C-P-E requirements to get 40 hours per year. And I continued that long after I left public accounting because I found it valuable. Third thing is to seize opportunities. Those two interim positions, all of my peers at those times said, you’re crazy for taking that on.
You’re not gonna gain anything. You know, they’re not gonna pay you more, which turned out not to be true. And, you know, there’s a lot of risk. Well, it turns out none of that was true, and it was two of the best things that that occurred to me. Now, everyone not, might not have those kind of opportunities, but you do have opportunities to participate in cross-functional review teams, special projects, rotational assignments. So all of those things can can achieve part of that look beyond the finances to really have a business perspective. And again, be a teammate, not, not just a a corporate cop or a finance cop.
Paul Barnhurst:
Got it. So I wanna get your thoughts on something. A while back we had Jack McCullough, you may know him, A CFO Leadership Council on the show. And he mentioned he made a prediction a few years back that he said most CFOs in the future are gonna come from FP&A a versus a controller background. He said he thinks by about 2026 that will be the case. I would love your thoughts on that and kind of how you think about FP&A and, you know, reaching that role of CFO.
Jack Alexander:
Yeah, and I guess it depends on whether somebody’s gonna be promoted from director or vice president of FP&A to CFO or, or whether it’d be somebody that had fp and a experience. And again, you have to be very careful with organizational definitions, right? So there’s a lot of value added contributions that occur in the controller organization and in the treasury organizationand also in some other specialty functions. Sure. I personally think I would not have been a key candidate for the CFO position of this publicly traded company if I didn’t have control and or public accounting experience, because it is just such an important part of that job. And we had a very sophisticated board and audit committee, and it enabled me to rise head and shoulders above the other candidates for that corporate controller position, starting with, and then CFO because they only had operating experience within the business.
They did not have that corporate control and public accounting. So I actually think that getting some diversity and it’s easier to get early in your career and spending some time in control. And again, a lot of good reporting and analysis functions within control. A lot of M&A activity and focus understands processes, gets involved in investor relations, which is very important. M&A you know, boards look for CFOs, a lot of times they want too many things and, but they often include M&A experience and they want experience in investor relations and they want board exposure, previous board exposure, by the way. They also wanna be able to sleep at night that the internal controls are intact and the reporting is adequate. So the only way you can really do that is to rotate through or progress through a couple different functions. And I would definitely try and pass through the controller shop and the FP&A shop on my way to the CFO position.
Paul Barnhurst:
So, makes sense. I mean, you definitely have to have some well-rounded skills, so I, I appreciate that, and I appreciate your answer there. So one thing I wanna ask you about, because I know you’ve talked a lot a about this, is how can FP&A help ensure there is a link between value and value drivers to business processes and activities? How do we make sure that links links there and we’re really driving that value or helping the business drive the value? As finance and FP&A professionals,
Jack Alexander:
This is a huge opportunity for finance. I think Paul and a light bulb went off at me when I was, for me, when I was CFO at EG&G, and one day I’m dealing with all of the group vice presidents. The next day I’m dealing with the board of directors. The next day I’m dealing with analysts and investors, and I’m saying the operating people don’t get what drives value and understand what investors are looking for. And of course, that end of it doesn’t fully understand all of the challenges within the operations. So I began to develop a framework that I called value performance framework, where we would start off with what drives shareholder value and or financial performance, top level financial performance, and then look at what the key drivers of performance and valuation are that people could relate to easily. So I stayed away from things like EBITDA and, and other things.
I said, there’s six I can think of. One is revenue growth, one is operating efficiency, one is capital efficiency, one is the cost of capital. And then you have the intangibles in there as well. And then if you look at that, and we’ll take revenue growth as an example, I can break that down into six revenue growth drivers, right? Acquiring new customers, retaining and growing existing customers, new product introductions, expansion, whether it be geographically or to new markets, whatever. And then underneath that, I can identify critical business processes and activities and KPIs that managers and people out on the shop floor can relate to, so they can see how they’re connected to the ultimate performance. And then we can see, are we on track to achieve the projected revenue growth? We can see that if we can monitor how are we doing on customer retention?
How are we doing a new customer acquisition in real time? How are those new product developments coming along? Are they performing at a level that’s consistent with the numbers that are in the plan and the budget? Right? And then everybody sort of understood, we created dashboards and people understood what drives shareholder value. Many of them had stock options, even down to reasonable levels in the company. And so it just made an incredible difference, you know, in the way people looked at finance, at the stock price, at their jobs relative to corporate. I’ll give you one example. I as CFOI was presenting to a, a group, which was a leadership development group, 40 or 50 people from across the 40 organization. And one of the slides I had was the outlook for next year and how business was going. Everything. And one of the slides as part of the outlook for next year was, here are 10 most critical projects in let’s say 2024.
I saw one individual from our largest new development division. His face went white. He was a, a senior program development person. He came up to me after the meeting and he had no idea that his project was the number one most important project to the overall corporation, the $2 billion corporation. And so he got back to me several times later on that just changed the way he looked at his job and recognition of the importance of that, you know, to the overall corporation and how much of an impact that was gonna have in the corporation. So I think it’s very important to have that link. And it’s relatively easy to do. It helps with projections and performance management and linkage and getting people all on the same boat. So it was a game changer for me.
Paul Barnhurst:
Appreciate you sharing that, and I agree it’s a really important link to have. And you know, there’s a lot of ways that can be done, but you really need to break it down in such a way that you can link it back. Like the example you shared to the person that came away going, oh, my project is the number one most important to the success of the company. Right? In an ideal world, he would’ve known that from the beginning. But it made a difference as soon as he knew that and he took it more serious. So it’s really important to help people realize how their, their job drives value, how their processes and activities help the company be successful. I I really, I like the example you shared there. So this next section is our kind of get to know you section. And you got 30 seconds here for each question. We’ve got two we’re gonna go through. The first is, I believe we asked this last time and we’ll see if my memory’s right, but it was around what is something interesting about you? Not many people know. And if I remember right, I believe you said you’re a big gardener. Yep. So you can give us that answer again, or you can go with something else interesting this time.
Jack Alexander:
I have many hobbies, gardening woodworking and all of those things I, I find wind up turning lights on for me relative to business and finance. But what I’d like to talk about today, Paul, is is, is more of a public service announcement, if you’ll allow me.
Paul Barnhurst:
Go ahead. I’ve been
Jack Alexander:
A lifelong health and fitness enthusiast. And in spite of this in the last two years, I had two major health events that I was blessed to dodge serious artillery, incoming artillery. One was major coronary artery blockages, the two major coronary arteries. The only reason I averted a, a heart attack was I knew my family history and I listened to my body and I felt small changes and sought medical attention and got ’em fixed, four stents, and I’m off and running at about the same time I was diagnosed with aggressive prostate cancer. Fortunately, early detection and surgery led to a good prognosis, but again I was blessed but also benefited by regular medical checkups early detection, early treatment, avoided non early seriously life-threatening conditions. So just two things I’d like to offer to people, not business related. Take care of yourself, mind, body, and spirit, and get regular checkups. Know your family history, stay informed, and you gotta be a, a self-advocate you know, in these matters. For sure.
Paul Barnhurst:
Great advice. I really appreciate you sharing that, and I’m glad you were able to dodge some, you know, major bullets there. Anything with the heart is always scary. You know, I have some history in my family as well, and I’ve been trying to do a lot better this year. Getting back to that regular exercise. I can always do better on the eating, but it’s really so important. Because you know, as I’ve heard, we’ve heard it said so many times, if you don’t have your health, yeah. You almost, you don’t have anything. It’s the, it’s the one thing that if you, you lose is just you, you know, you always want it back. Yeah. You can lose a job, you can lose some money, you can, you know, material things, but those can be replaced. Your health can’t be replaced just like your family and friends can’t. So I really, I appreciate and can relate to that advice, especially as I get older and I feel the impact of not having the young body. I once did <laugh>, so
Jack Alexander:
Wait a while
Paul Barnhurst:
Oh, I know. My dad tells, you know, my dad’s in his eighties now and a couple years ago, one day he said to me, I walked in the house and he looked at me, he goes, Paul, growing old sucks. Don’t grow old. Because he was dealing, you know, with all the health problems. And I go, thanks dad. ’cause The alternative is real attractive, you know, <laugh>, like,
Jack Alexander:
So, you know, one, one other plug I’ll make, there’s a Netflix series called living to 100 Years The Blue Zones.
Paul Barnhurst:
Yes, I’ve
Jack Alexander:
Heard about it. There’s also an updated book, second edition of, of a book called The Blue Zones. There is phenomenal stuff in there based on studying several areas of the world where, where people live in good health frequently past a hundred. And the important point is there, it’s in good health, right? It’s being physically active, lower rates of heart disease, dementia, whatever you name it. And so you know, that’s a that’s another thing that i I would recommend folks think about in addition to all of the finance and FP&A subjects we can study.
Paul Barnhurst:
Well, great. I great. I appreciate that. Obviously, you know, I love when people can bring it back to what’s important. We love talking finance and FP&A, but there’s so much more to life than just that. So I appreciate you sharing that. And as we, as we wrap up here, you know, we’re gonna go back to FP&A for a second here. Obviously that’s the show. But I would love to know, what do you think is the most critical skill, if you had to list one, what would be that top skill for FP&Aa professionals today that they maybe should really focus on or have?
Jack Alexander:
You know, I think it comes down to attitude. You mentioned that earlier, but I’ve used the expression go-to players. And I had people really, in every position I’ve been in that I would turn to out of maybe 50 people, you know, on a Friday afternoon or sometime when there was a significant project underway and they had the attitude would get it done. It was not excuses, it was not, they’re too busy with other things. What do we need? And as a result, they got so much more exposure and knowledge and development opportunities over other people. So that’s the number one thing I think in my book.
Paul Barnhurst:
I, I, I love that. I mean, attitude can overcome so much. You know, like Callen’s great, a lot of other things, but attitude, hard work, and you know, being a positive team player, just, it’s amazing what you can get done regardless of, you know, what other challenges you may face if you just focus on those things. So I appreciate that one. So, last question here. If someone wanted to get ahold of you or learn more about you, what’s the best way for them to do that?
Jack Alexander:
Of course, they could start with LinkedIn and if anybody wants to get in contact with me, my they can shoot me an email. The address is JFAlexander2@gmail.com. And I enjoy interacting with people too, so always happy to get questions and cross some feedback. S
Paul Barnhurst:
Well, great. Really appreciate you sharing that for our audience and coming back to the show for a, a repeat performance, we loved having you on the first time and I’ve really enjoyed chatting with you and excited for your book to come out. And I’ll just put a plug in that will be out sometime in late January. You can pre-order it now. So yeah, check that book out. It’s the third one, Jack’s written and really excited for that to come out. So thanks for joining us today, Jack. Thank
Jack Alexander:
You, Paul.
