Tag: performance analytics

The Frustrated CFO’sTalk on International Trade Turns into Gender Equality Q&A


Business_women1If you took my absence from these pages during the past few months as an indication of my giving up on the blog, you were wrong.  This activity is important to me.  If nothing else, it lets me "talk" without being interrupted.  It's just that the time slot in my overscheduled life, usually allotted to the writing of the blog posts, had to be temporarily relinquished to an extracurricular activity of preparing for a talk I was invited to give to a professional group called Women in International Trade.

Oh, no-no-no!  I'm not talking about OWIT (the Organization of Women in International Trade), the big non-profit with global reach headquartered in Washington, DC.  This group is much smaller - sponsored by a reputable New Jersey CPA firm, it is pretty much localized to the international-commerce entities and banks (like PNC) with offices and operations in that particular state.  It's not like they don't welcome sisters-in-trade from everywhere, it's just how their network happened to develop: commercial clients of the said CPA firm, trade finance clients of the said bank, the local government bureau that deals with exports – all of them work and live in New Jersey.   

And the reality is, there are a lot of big and small international businesses located in New Jersey.  That's where you can have large office buildings that cost a fraction of what they would in Manhattan; there is plenty of open space for manufacturing and storage; there are Hudson ports that can berth oceanic freighters, etc., etc.           

Truth be told, I would never know about these particular Women in International Trade if it weren't for one of the group's member who is also one of my former trade finance bankers and a friend.  She is the one who mentioned me to the sponsoring CPA firm's Chief Growth Strategist - a force behind a lot of women initiatives in the Garden State. 

They've been inviting me to participate in various women's and co-ed business events for some time.  But I have to admit that when you live and work in Manhattan, the hassle of getting to an 8 o'clock breakfast meeting in New Jersey's Essex County makes such invitation very unattractive.  I mean you need to drive or get a limo.  You'll do it for business, of course, but for a semi-social gathering… that's a bit too much. 

Of course, your attitude totally changes when the same professional group invites you to appear for them as a speaker.  Vanity is a terrible sin – it demands constant massaging of one's ego.  That's why some of us write books that bring meager royalty, give lectures without fees, etc.  Plus, unlike the vast majority of people, I actually enjoy sharing my knowledge.  And not for narcissistic, show-off reasons – I get a kick out of recognizing to myself, "I taught her that."  So, naturally, I agreed.

After the initial invitation, I kicked a list of possible topics at the talk's organizer and we settled on two that we both agreed would be the most interesting to international-trade professionals: the position of trade finance in the value chain and KPIs specific to international commerce.  I was advised of the reglament: 1.5 hours talk and 30 min Q&A.

"Well," I thought, "If you are going to talk shop with a group of working women for 90 minutes at 8 o'clock in the morning on a Wednesday, you'd better make it engaging and gratifying," and went to work.  The rule  of thumb is that 90 minutes of talking translates into about 15,000 words.  And that's actually is not very short.

Of course, if you are the one who proposed the topic in the first place, you most likely know the subject at hand through and through; you have already developed original ideas and time-proven recommendations; your thoughts and opinions are well formulated.  And that's great, but if you are not a professional lecturer who does this sort of things all the time, you still need to outline what you want to say; you have to construct your delivery in a coherent and logical way; you must prepare an exciting Power Point presentation that would prevent your audience from getting drowsy, and use cultural references to make your points memorable.  Yeah!  If you want to impress people, it's a lot of work.  As I said, vanity – it costs you.  

The third week of January came, and there I was, in New Jersey, shaking hands with the organizers and the attendees – by all appearances a group of successful and confident women, whose statuses make it okay to be out of the office in the morning hours for the sake of this event.

I proceeded with my presentation and it went well: they paid attention, they were interested, they nodded, they offered sensible and appropriate comments, they loved my visual tricks, and they sincerely laughed at my jokes.  The time ran out.  "Do you have any questions?" I asked.  I was convinced that I've had a pretty good idea about the points of the talk that could've prompted further inquiries.

Imagine my surprise when the first comment/question I've received was, "You are obviously a strong woman.  In your professional capacity, how do you handle male resistance to your authority or any other sorts of gender difficulties?" (Notice how the question was formulated: The woman had no doubt that I've encountered such obstacles ans she wanted to know how I dealt with them.)  

Slightly taken aback by the sharp shift of gears I skipped a bit, but really – just a bit.  I don't need to prepare for a gender equality discussion; I was born ready for it.  So, I briefly described my experience: the unfair treatment; the skewed perception; the idiotic remarks; the preferences given to nitwits because "they have to support their families" (many of us have to do the same); which battles I pick; what I say and how I say it; when I bite my tongue and walk away; how I lie in wait and then find a way to teach them a lesson, etc., etc.

Oh my God!  It was as if that question and my answer triggered a flood.  Apparently these women found my interpretation of the international-trade topics quite clear.  What they were confused about was why in 2015 we are still treated like second-class citizens.

At this point (the time was, obviously, running out), everyone talked fast.  Many things were mentioned: "honeys" and "sweeties," unequal raises, unreasonable promotions, difficulty of holding back the tears, female professional "ceilings," the insulting male disbelief at a good-looking woman who is also smart.  Amazingly, there were not a single person who didn't have something to add.   Nobody said, "I have no idea what you all are talking about."  You know why?  Because there were no men in the room.

One woman in her 30s who was just recently appointed to a Marketing Director position (her warpath has just began), asked me whether I was born "this tough."  Actually, I've thought about it before.  What I told her was that we (i.e. the women who want to succeed) are not born tough.  What we are born with is the ambition, the desire to be rewarded in accordance with our merits, the need to be treated as human beings regardless of our gender.  But, while we claw our ways towards whatever peaks we want to achieve, we have to acquire toughness.  We have to harden or they will eat us alive.

It is possible that I will never see most of the members of this group again, but when we were saying our goodbyes we felt like sisters.  I taught these women a thing or two about trade finance and performance analytics, and, in return, I've learned a lesson of my own:  There are no happy and satisfied women in international trade (and, I dare to extrapolate, in other business activities as well), because their ambitions and efforts are constantly curtailed on account of their gender, which is silly, irrelevant, anti-merit, and (call me an idealist) anti-American. 

CFO Folklore: Segmental Performance Analysis


SegRep #1 Regardless of whether your company is large or small, rich in cash or eke out its survival on a tight cash flow, operate with the most sophisticated custom-designed ERP fitted with Cognos or makes do with QuickBooks/Excel combo, if I ask you to pinpoint the exact segments where you lose or make money, most likely the answer is too broad, or intuitive, or incorrect.

Based on my experience, segmental performance is one of the most deficient areas of business analysis.  Ok, the larger are probably doing better than the small ones.  The latter, unfortunately, are clueless 99% of the time.

Then again, what is your segment?  Do we need the Large Hadron Collider to break the business matter into invisible particles?  Of course not, but a sensible breakdown can give an invaluable insight and bring about organizational changes.  And let me clarify that when I talk about "performance," I don't mean revenues, which are easy to track, I am talking about EBITDA – my favorite indicator.     

Familiar to everyone example – CBS Corporation.  Its portfolio consists of 23 separate brands (subsidiaries), including CBS Television, CBS News, CW, Showtime, Simon & Schuster, etc.  Of course, there are separate P&L's for each of these sub-entities. I am positive, Showtime Networks knows who does better Showtime or The Movie Channel.  I am pretty sure they are aware of how much "Dexter," or "Nurse Jackie" contribute to the bottom line.  Moreover, thanks to digital counting of viewers tuned in, they know for a fact how much Gross Revenue each episode generates.  As I said, that's easy – they know how much they get paid for each subscriber.  (Side Note: it's just as easy for the network television, where the revenue is calculated based on the commercial time).

But do they know how much profit (or loss) they make from each episode?  ALL costs allocated, including CBS Corporation CEO's salary?  What, it is not required by financial statements?  We are not talking about  them.  We are talking about magerial understanding of the business.  Is it important?  It's fundamentally important.  Each episode is written by different writers, directed by different directors, some use more effects and extras than others, etc., etc.  This is BUSINESS INTELLIGENCE and those are factors impacting this particular business.   

Here is promised CFO Folklore.  At some point in my career, I accepted a position in a company with national exposure – 14 operational facilities in different states.  They needed me because they couldn't understand why they experienced cash flow shoratges.  The first thing I did was the profitability analysis for each of the locations.  I uncovered that 9 out of 14, have been consistently loosing money for the past 18 months.  

There are, however, inherent difficulties that prevent most financial executives with limited human resources from undertaking this exercise.  First of all, it is not easy to properly define your segments.  It is pretty much a game of optimization between the level of details you would like to have and the resouces you need to achieve it.  The most intense part of the analysis, however, is the selection of proper principles of allocation for all shared costs and the allocation process itself.     

The spreadsheet image is courtersy of E&D CC, Inc.  If you are looking for help with segmental analysis, I recommend  contacting E&D CC – they specialize in assessing reporting needs and designing specific analytical tools related to profitability and costs, as well as budgetary, treasury, viability, forecasting and planning instruments: mzosya.edcc@gmai.com  

The Dashboards Obsession


It is easy to understand how executive dashboards have become so chic.  Most products come to mass market by way of technological advancements.  The 3-D movies fascinated audiences in select theaters for decades.  Now, we have 3-D TVs in our homes.  By the same token, specialized and complicated business intelligence software (like Cognos) existed since the 70s.  However, the 21st century brought forward adaptable, customizable, open-architecture systems and integratable reporting tools. 

Business intelligence and financial performance management are not new ideas.  Data warehousing may sound like a novelty, but collecting and organizing records in a particular order for easier access existed for centuries. The concept of information as a key to business success is millennia old.  How many spearheads you are going to make, if you don’t know all the warriors in your tribe? 

Of course, nowadays data flows are more complex.   The CFO’s and CEO’s need information integrated from different sources and they need it fast.   So, the developers caught up with the demand and offered executive information systems aka dashboards.  They advertise, give distribution licenses to specialized vendors, hold conferences, etc. As usual, standardization is mandatory in order to capture larger market shares, and that’s where the fallacy forms. 

Don’t get me wrong, they are beautiful visual arrangements – much more vivid than dry columns of numbers, far more impressive and memorable.  On top of that, more expensive ones allow you to drill down into the data behind them.  That’s incredibly cool!

Here are some of mine own:

Yet, in far too many instances the form obscures the substance.  Now, the users think they need something looking exactly like that, instead of thinking what info is fed into it.  And it is very sad, because CEOs and CFOs in need of sensible information, frequently end up just looking at a pretty picture.

I’ve seen a lot of dashboards – most of the time I find them absolutely irrelevant.   You are looking at your 12-month revenue curve and it displays expected cyclical pattern.  What are you learning here after spending a tidy sum for ability to generate this graph with a push of a button?  Nothing new – your last year curve had exactly the same shape.  How do you know whether you are doing better or worth now than a year ago?

And the gauges!!!  They look awesome and they justify the name “dashboard,” but they are the most difficult charts to read.  Moreover, they are kind of useless for static information.  Unless a constantly changing (and most importantly, crucial) information is fed into this device in real time, you have no reason to stare at a red circle with green border and unmoving black arrow.    

Here is my advice: don’t fall for colorful pictures.  Start from the beginning.  You know which information is most important for you and your CEO, which parameters affect your business’s ability to survive.  Figure out what combination of data would make the real impact on your decision-making, how frequently you want see it, whether it needs to be dynamic or static, etc, etc.  Only after that you can think about the format. 

Let’s say your product’s price is in direct correlation with crude oil market.   In this case, may be the two sets of data should be presented together, or maybe it’s most important to look at the units, not the sales dollar value?  Those are the important decisions, not the shapes and colors.

It is very possible that you need bar charts, graphs, even gauges.  Hey, if you are a jewelry manufacturer and make raw material procurement decisions all day long, there is nothing wrong with having a gold price meter installed right in the center of your screen.  At the end of the day, it is all about common sense.