Failing upwards

Exec politics can be nasty.

The worst example I’ve seen was as part of a business unit exec team. The team I came into had a ton of turnover. Finance leaders, sales leads, technical leads, and even BU presidents had come and gone at an astonishing rate.

All except one. The VP of Operations (Rachel) had been in her role for many years after decades with the business.

How had she survived with so much upheaval around her?

I would soon find out.

A new VP of sales (Tammy) started at the same time I did. But within two months she was gone.

It shocked me. Tammy seemed very capable, and I was excited about working with her. What had I missed?

I soon found out it was the work of Rachel. It turns out Rachel had known one of the shareholders (and board members) well. They went back years. And Rachel had his ear. She was his ‘spy on the ground.’

She was cutting across all lines. Not just Tammy, but the BU president and even the corporate team, including the CEO.

Rachel had clearly taken a disliking to Tammy, for reasons I still don’t really understand. And she had the relationships to decapitate anyone who she felt threatened by.

I also soon learned that Rachel wasn’t particularly competent or intelligent. Her history with the owners made her untouchable. She was grossly over-promoted and got on offense whenever she came across a peer, or even a direct boss, who might expose that.

Over time, I was able to tame Rachel a little, by helping her in her role and giving her better tools to do her job. By making her look better at her job and building her trust (rather than fighting her) I achieved two things: 1) I avoided her wrath 2) She started to listen to me.

And as she started to listen. I was able to save her from her worst instincts: hatcheting anyone who dared challenge her.

It was my first experience of dysfunctional exec politics, but wouldn’t be my last.

Reflecting on the experience, I made three commitments to myself:

1. I should always watch my back

2. I should never act like Rachel. If I ever felt I had to stick any knives in, it would be in the front, not in the back.

3. When I eventually got the C-Suite, I would do everything I could to neutralize this sort of behavior

The viper’s nest

This is the second in a three-part series on C-Suite politics. Last week we covered the CEO-CFO relationship.

As you start to climb the ladder, you learn how to manage a team.

Then as you get more senior, you develop skills in managing your boss, and their boss. 

But I’ve always found managing ‘upwards’ and ‘downwards’ easy. The harder bit is managing sideways.

No one ever talks about managing your peer group as a skill. But it is one. And it’s harder than you think.

There is no formal hierarchy in the way there is in a boss-subordinate conversation. And the lack of a natural boundaries makes sideways management a minefield.

Unfortunately managing your peer group gets exponentially more difficult as you get to the C Suite. There are a few reasons for this, but the most important one is that your peer group is not other finance VPs, controllers, or accountants. They are leaders of other functions. From different backgrounds, with agendas that could be very different.

And as you get more senior, you are dealing with more sophisticated corporate politicians. The stakes are higher.

Without careful collaboration, CXOs can fall into a pattern of just managing their own ‘X’. That’s how you end up with 5-7 siloed functions. That is not good for the business.

This is why it’s so important to begin dealing with non-finance stakeholders early in your career. You need reps in talking to people who are not fellow spreadsheet disciples.

Here are my 9 tips for managing CXO politics.

Tip 1: Meet without the CEO

One thing I have always encouraged in the C-Suite is - in addition to normal exec meetings - that the CXOs meet without the CEO. This creates a forum to resolve issues that are too trivial for the CEO, but do need collective agreement.

It’s a good way to forge relationships with your peers and as a unit, without the change in dynamic that comes with having the boss in the room. An hour once a month + a dinner as a group has done the trick for me in the past.

I normally offer to organize this and chair it if necessary (although rotating the chair each meeting works better).

Tip 2: Be nice

Call me a naive idiot but… I still like to believe that if you throw positive vibes into the world, the world will throw them back at you.

Too many finance leaders enjoy being the miserable ‘no’-guy. Saying ‘no’ a lot is inevitably a part of the job. You need to set guardrails. But it doesn’t have to be a part of your personality.

If you start by being generous, kind, and transparent, you will build trust, which means your fellow CXOs are more likely to share information with you.

Remember that most of these people want the same thing as you: prosperity for the business… and big bonuses.

Tip 3: But don’t be soft

Being nice does not mean being a pushover. Your boundaries will be tested frequently…

A COO who commits to a deposit on a capex project without bringing you in the loop. A VP of sales who gives up 30 days of payment terms to secure a contract. A business unit president leaning too hard to create a fantasy forecast.

These are clear-cut cases, but there are plenty of more gray examples.

You should define reasonable boundaries, communicate them clearly, and then be ruthless about enforcing them. Likewise, you should expect your C-suite peers to do the same with their function.

Remember when Karl (Waystar Royco CFO) suspected Kendall (acting Co-CEO) had juiced the forecast behind his back the night before an investor presentation?

The nice guy turned pretty quickly. By threatening to whistle blow on the fairy tale forecasts, he attempted to keep Kendall in check. In this case… it didn’t work, but Karl protected his deniability of the forecasts through this conversation. He actually handled it pretty well.

Most experienced CFOs have had a few stories to tell like this one. I know I do.

Tip 4: Each dynamic is unique

You MUST vary your style. Your dour COO will need a different engagement style to your sunny CHRO. Forgive the stereotype…

What works for one won't work for another.

Remember Tamagotchis? And how they each needed their own unique combination of meals, snacks, water, and cleaning in a unique order?

Think of each peer group relationship like its own Tamagotchi. They each broadly need the same things. But in what dose, in what order, and at what time? That’s less clear.

And the only way to get it right is to be attentive and listen carefully.

Most finance leaders are bad at this from my experience. They have a pattern of things that works for one or two people, and assume it works for everyone.

Tip 5: Debit & credits

In ‘7 Habits of Highly Effective People,’ Stephen Covey described the ‘emotional bank account.’

Every interaction you have with someone will create a credit or a debit in your emotional bank account with that person. Do something good for someone, and you put a credit in the bank. But if that same thing has a negative effect on someone else, it will have a debit in a different account. Every ask of someone is a debit too. Maybe small, maybe big. Depends on the ask.

The art of influencing is to keep all of your emotional bank accounts in a net credit at all times. It means people are more likely to help you when you need it.

By defaulting to a style of being generous and helpful, you are constantly placing little credits in your various accounts with people. These add up over time.

And it means that when you do need to ask for something, you can. Maybe you need something unreasonably quickly, and don’t have time to explain why as clearly as you would like.

That’s when you cash in your credits.

Maybe you need to ask a CTO to give up 10 heads in their budget. Or get a quick turnaround on some analysis from the CRO. Or need your CHRO to drop everything and help you with a people problem.

If you’ve got enough credits in the emotional bank to avoid ‘going overdrawn’ you will get the help you need.

As a general rule, I like my ask-to-give ratio to not exceed 1:10. And I don’t bother with small asks. I make them worthwhile. An infrequent but sizeable request paid in advance by being consistently helpful.

Note: ‘7 Habits’ has become a bit unfashionable. And has a reputation for being a bit ‘boomerish’. It remains the book that has influenced me more than any other in my life. If you haven’t read it, I implore you to do so.

Tip 6: Don’t burn bridges

The corporate world is small. Much smaller than you think. As time goes on, people tend to specialize around industries, geographies, and role types. Which builds these mini bubbles of corporate professionals who operate in similar territory.

Just recently I ended up working with someone nearly twenty years after I last saw them. We never got on well. But we are both longer in the tooth now, so could put it behind us. And have built a great relationship second time round.

It always shocks me how often the same faces come back around. And when you extend that to one degree of separation, the chance that a new colleague is someone you know…  or knows someone you know, becomes high.

So DON’T burn bridges.

I once saw a head of commercial leave a business I worked for on particularly bad terms (I was middle management at the time). It was an acquisitive business. Lo and behold she found herself working in similar roles in businesses that were later acquired by the company she’d left on bad terms. This happened not once, but twice. And on both occasions, she got fired on day 1 following the acquisition.

Tip 7: Avoid talking behind people’s back

This one is obvious. But people can’t help themselves.

I’ve never been part of a C-suite that was completely harmonious…

The arrogant COO and the oversensitive CMO. Or the cold war between the sales team and the product team.

These politics are destructive to a business. They sap energy and time, two of the most valuable commodities you have.

I always wondered who actually was running the business, while the Waystar Royco power struggle marched on. No-one ever seemed to be doing any real work.

You should be a role model against this behavior. Don’t join in with the corridor conversations, and be the peace broker when necessary.

Too many CFOs I know can’t help themselves engaging in this sort of bullsh*t. They’d be much better leaders if they didn’t.

Tip 8: Know when to bare your teeth

Sometimes it’s unavoidable and you get dragged into the muck. If you do, you need to bare your teeth and get out quickly.

Normally, the C-Suite won’t want to p*ss the CFO off.

You control the budget, pay the bills, and have the ear of the CEO. And, crucially, are often closer to the board of directors.

Occasionally you’ll have to look a fellow C-suite colleague in the eye and remind them of that… just to keep them in their lane.

Use it when you need to. But don’t abuse it.

Tip 9: Sniper shots

Sometimes one or more of the C-Suite is such a problem that they have to go…

Perhaps they are a toxic influence or are just not up to the job and bringing the whole ship down.

Often you will see this before the CEO.

If you cannot find other ways to resolve it, you should be prepared to step in. Force the issue directly with the CEO. Tell them that person A needs to go and why.

If you have built a relationship of trust with the CEO, and this is not something you make a habit of, they will listen.

But don’t take it lightly. It needs to be based on what is best for the business. Never because of a personal vendetta.

This is a one-way street, so it needs to be a precision ‘kill shot’. Don’t fire often, but when you do, don’t miss.

Hopefully, you will never need this, but… you probably will.

So that is how to survive in the C-suite viper’s nest. The corridors of power aren’t always treacherous, but they can be. And you never really know until you are in the trenches.

So, it’s best to be prepared. Think of it like learning self-defense.

Next week, we’ll turn to how to settle into a new C-Suite role.

Mini-CFO from Barcelona asked:

Have you ever been offered the CEO seat? In which cases would you consider it?

I hear often that the CFO is one of the natural successors of the CEO. I’ve been working for several years in the CFO role for a MM PE-backed company, in which the CEO is not far away from retirement. I can’t help but wonder: should I aim for that position? Should I accept it if it was offered? Should I stick to finance?

Would love to hear your experience, input, and position regarding this topic.

Thanks for your question, Mini…

I have at several points in my career had the opportunity to move off of the finance path into general management. At the sliding door moments, it always made more sense to grow through bigger finance jobs. It could have been different, though. I have run plenty of non-finance functions in my time, as part of my finance roles. Even sales for a time (covering a vacancy).

You are right that finance people hear a lot that the CFO is the natural successor for the CEO. This is often written by finance people, or people with something to sell to finance people. I believe it to be (mostly) bullsh*t.

The best CEOs directly face the product, customer, or operations. Great CEOs need lots of qualities, but one of the most important is to be able to sell something they haven’t built yet. A new product, a 10-year vision, a new idea. By selling first they get the validation of the vision (through demand), and also corner the resources needed to make the vision real.

This raw salesmanship doesn’t sit well with most accounting and finance pros. They like to be sure of something before they commit.

Not all CEO roles are that way. And neither are all CFOs. But it is a large number.

So in short, I don’t think the skillset that is needed to be a great CFO is hugely compatible with the skills needed to be a CEO. It doesn’t mean you can’t bridge the gap. Just that the roles are probably more different than you think.

The one exception is at the very top of large businesses. As you get to the top of large, multi-division businesses or multinationals, CEO roles look more like resource allocation jobs: capital, people, and technology. They usually have a large media/investor-facing component. These are all things that DO look more like CFO skills.

This is a long way of saying, it does depend on what the CEO role is, and what skills it needs.

On a side note. From my experience, CFOs do tend to make better chairs of boards than CEOs. The governance skills and stakeholder focus needed for a Chair role suits CFOs well.

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Footnotes

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• In case you missed it, you got an extra slice of crispy throughout September. We ran a special interview series on AI for CFOs:

  • Ramp CEO, Eric Glyman

  • Anduril CFO, Babak Siavoshy

  • Quora CFO, Courtland Showerman

  • Shopify CFO, Jeff Hoffmeister

And Finally

Next week we’re onto the final part in the series on C-Suite politics.

Stay crispy,

The Secret CFO

Disclaimer: I am not your accountant, investment advisor, tax advisor, lawyer, CFO, director, or friend. Well, maybe I’m your friend, but I am not any of those other things. Everything I publish represents my opinions only, not advice. And certainly is not investment advice. Running the finances for a company is serious business, and you should take the proper advice you need.