Striking and Maintaining a Balanced Board of Directors

Welcome back to CFO Weekly, where we're talking with financial leaders about how to build efficiency in their teams, create time for strategy, and ultimately get results. With your host, Megan Weis. Let's jump right in.

Megan - 00:00:18: Today, my guest is Inder Singh, CFO, and Board member. As CFO of a New York Stock Exchange-listed company, a VC-held company, and units of Fortune 50 public companies, Inger has built a record of success leading the full spectrum of global finance. He has also built world-class teams and created and executed financial strategies that drive company revenue growth, earnings power, and stock price gains. Inder, thank you very much for being my guest on today's episode of CFO Weekly.

Inder - 00:01:06: Thank you, Megan. It's really a pleasure to be with you today.

Megan - 00:01:09: Yeah. Today we're going to be discussing how to maintain the right balance with your Board, and I'm really looking forward to learning from you. So let's get started.

Inder – 00:01:18: Terrific.

Megan – 00:01:20: First and as always, let's start with you and your story.

Inder - 00:01:23: Yeah, thank you. My story consists of sort of three buckets or three chapters which I'll go to in a moment. But the past decade for me has been around being a core CFO at some technology companies, but also serving on the Board of Directors of three other companies. So I've had a really lucky opportunity to see it from both sides and what makes that relationship resilient over time. So as I look back at my career, I see it in the three chapters I said, and probably each one was a bit of a boot camp, maybe not because by design, but because I wanted it to be. And so the first phase of what I did was having gotten an Engineering background and then a Finance background, apply these things. Right. So the first chapter was about working in a Global Complex Company, having an opportunity to work on different things, and exercising different muscles. So even as a finance leader or really an analyst when I first started, but having an opportunity to lead and sometimes co-lead or work on teams that were not only doing the day-to-day FP&A type of planning or reporting but also working on commercial deals. So going side-by-side with the sales team. I remember one was a multibillion-dollar contract in the Middle East that my company was trying to win. We had a good sales team on the ground and it was a perfect learning opportunity for me to see how the sales aspect of something, the financial aspect of something, the customer side of it comes together in reality, and that I've carried with me through my career. I did this for several years. I had an opportunity to do an IPO too during that time because this was a large company that was AT&T, so it was actually spinning out some businesses and I worked on some of those IPOs. But as with any other person that's gone to do an M&A, for example, there's always this part of you that wants to also see if you can make it on Wall Street. So the second phase, or chapter of my career was to spend several years on Wall Street as an Equity Analyst and follow two or three companies to see which of them might win or lose from an investor standpoint and advising a Fidelity or a Wellington on which ones to look at from a buy or sell standpoint. Learning how to do that, frankly, first, but also learning to walk in their shoes. And that chapter was really important for me because, yeah, it definitely felt like boot camp. It was Wall Street after all, and it was very intense. But at the same time, it gave me a sense of resilience because, again, you got to see through many windows into many companies as opposed to out of one window of the company you're working in, and also just to understand where to focus and where not to focus. So those two chapters then led to the third and I guess current chapter, which has been around boot camp as a CFO and applying some of what I learned at companies like Cisco and Comcast and then Unisys, which is an IT services company, and an Arm, which is a semiconductor company more recently. But each of these has brought a learning curve. They brought a mentor or two along the way that I've benefited from. And then, yes, each one has involved getting to know a CEO, getting to know the board, the rest of the C-suite, and then helping make hopefully have a positive impact.

Megan - 00:05:21: And today you sit on three boards. So I'm just curious because I've never sat on a board. So how do you come to sit on a board? Is that an opportunity that you seek out or did those companies seek you out?

Inder - 00:05:34: A little bit of both. It never happens organically unless you sort of raise your hand and say, yes, this would be interesting. I'd like to look at opportunities. It involves a lot of networking, of course, to get to know folks that are in those circles already. And it's not always easy to crack the code on getting on a board, but it's a bit of both. There's demand and supply. The two have to meet. You have to have the right culture, and skill sets that they're looking for and hopefully, the company or the industry they're in is of interest to you and you're going to learn from it. So, yeah, it's nice to actually be able to see something from the lens of the Board Member and then get to know what makes an effective board member from the other side of the table.

Megan - 00:06:26: And today we're talking about balance. So in your opinion, what are the components that need to be balanced and what are the challenges associated with achieving that balance?

Inder - 00:06:37: Yeah, balance is really an ongoing thing, right? Things stay in balance for periods of time and then have a habit of going out of balance because there's something that happens in the world, a pandemic, a black swan event, and then suddenly now the priorities change, and so on. So many of the things that I've had the benefit of actually learning from mentors, and also, seeking out their advice from time to time, even after I had stopped working with them. And years later, they were still making themselves available, but really understanding kind of the shifting priorities that drive the agenda of a board. And boards are people. And each board consists of people from different walks of life and backgrounds, understanding those, listening to them, building and cultivating a relationship. Only then can you even try to strike a balance between the long-term and the short-term, between what the company is trying to achieve, and between what investors might be expecting? And then it helps again to have walked in the shoes of some of those different stakeholders to try to see from their side.

Megan - 00:07:56: And how do you build and maintain a positive relationship with the Board of Directors while also ensuring that you're fulfilling your responsibilities as a CFO? I imagine it's a bit of a tightrope.

Inder - 00:08:09: It is for sure, and for CFOs in particular. And the audience here is CFOs, and many of them have probably experienced what I'm going to say here. But it takes time to cultivate a relationship, any relationship. Again, a Board is not a singular body. It's a group of people. They happen to be together, just like a leadership team is a group of people who happen to be together with a mission. And so we have to have sort of a balance between listening maybe twice as much as talking, but also avoiding the instinct we all have. And CFOs in general are wired this way I find, we all have an instinct to begin to kick in right away because we think we know the answers. And it's really important. What I learned by working with Boards is to listen to them first, listen to their different opinions, and see if there's a consensus on some things. And then, of course, the board usually includes the CEO and maybe someone else as well from the company. So you're going to get different interpretations sometimes of the same thing, or you're going to get a situation where there are different opinions on the same thing. So you need to first listen, understand the landscape before you go to your natural instinct. And it's great that the Board is made up of people from varying backgrounds and walks of life because that's when they will be more willing, frankly, to show their weakness, sometimes. They may not understand something about your business, about the financial drivers of it, or they may have a different point of view that they want to express. So encourage the board to be blunt. I always like to make sure that I cultivate a relationship with the audit chair as an example, which is a super key stakeholder, but also some of the other Members of the board that express an interest in hearing more frequently than just once a quarter. And ask them to be blunt and honest with their opinion if they have one, but is also really extremely important to, in my opinion, not only listen to the board but also listen and talk directly with investors. And in every CFO role where there's been a major investor, one of my first ports of call has always been a listening tour with those investors and you will find out the darndest things. Why they invest in your stock may be very different than what you think about your stock and its drivers of it. And so I can give examples of maybe an example of that as well if you like.

Megan – 00:10:58: Sure

Inder – 00:11:00: But one really interesting meeting I had was with and I'll disguise the company and the investor, a very large institutional investor company, obviously, that I had had experience with from my Wall Street days. But now I was on the other side of the table from them in terms of being in management. And in my first week on the job as CFO, I went on this listening tour. So of course I'm going to meet the largest investor. And I asked them the blunt question because again, you know someone, they're going to trust you enough that you're not going to get insulted by what they say. Why do you own the stock? And to my surprise, in this case, it wasn't because we had made great products, or great strategy, or great management, or an intense market presence or et cetera, et cetera. They said to me, we own your stock because for us you are an interest-rate hedge. And I was at a tech company and I said, well, how are we an interest rate hedge for you? And they were using us to hedge the other investments in their portfolio, which moved in the opposite direction when interest rates went up or down from our company stock. So who would have thought that your biggest shareholders basically don't care if you make cereal or automobiles or something else, they just care that you earn an effective interest rate hedge.

Megan - 00:12:31: And what's your advice for cultivating relationships? Because board meetings happen sporadically. I mean, how do you go about developing and nurturing relationships?

Inder - 00:12:43: Yeah, much like any other relationship, right? A Board Member relationship is very similar. And what I found is that often, even if it's around a board meeting, a dinner, if there's an opportunity to meet a group of the Board for a dinner or a one-on-one with certain Board Members because they happen to be in town, take advantage of those. Those are really key moments because they're about to attend a Board meeting or they just attended one. They are immersed in your company because remember, it's once a quarter that they often get together, and maybe the rest of the time they're spending with other companies on other types of industries or topics. Now they're tuned in to your company. So that's the ideal time to grab them one-on-one. And not only will it help you be more effective in what you have to do, but you'll catch them in the moment in being open and honest about what's on their mind relative to your company. And so well-timed meetings like that I think, are important, offering yourself to be available for any questions they may have at any other random time in a secure environment. Right. Sometimes Board Members are shy or gun-shy about asking something in a live Board meeting simply because they think others know the answer and they don't. They don't want to come across in the wrong way. But if you offer yourself in this other environment where you say, feel free to call some of them, take up your offer, and call you. And I found that worked on Wall Street really well. I found that worked with Boards really well. So that would be something that I would encourage others to try to pursue.

Megan - 00:14:31: That's great advice. And how do you navigate potential conflicts between the Board's priorities and the financial priorities of the company?

Inder - 00:14:42: Yeah, look, I think that the priorities of a Board, particularly public listed companies, public listed companies, SEC regulations, and other regulations kick in. And that's true. By the way, I work for global companies, non-US companies as well, and other geographies too. But for sure the boards of US companies have a fiduciary obligation to the same shareholders, frankly, that you are trying to meet the expectations of as well because everyone's a steward of their capital. So by and large, the board's priorities are going to be aligned. And similar to investors, where they may differ sometimes is on timelines. So company management, when they think about their company or their business, they're thinking three years out, five years out, what are we going to be? How are we going to get there, how do we win? What products do we need to have? What capital structure do we need, et cetera? Whereas investors may have a three-year view of the world as well, but more often they also care about the short-term. What are you doing for me in the next 90 days? What are you doing for me in the next year? And the balance they're trying to strike is with their stakeholders because remember, these investors are also managing capital for somebody else and they're responsible to them. So often boards will spend more time on strategy and sometimes less time on the here and now. And you have to make sure as CFO that you're helping them balance both of those priorities because both are important. There's no long-term if there's no short-term.

Megan - 00:16:29: And how do you manage expectations with the board regarding financial performance and forecasting? And what methods have you used that have been successful in the past?

Inder - 00:16:39: Yeah, it's a really great question. The board obviously needs to have full transparency in everything, right? So one of the fundamentals for any CFO is transparency. The good, the bad, and the ugly are all in there. And then here's why we think this is the most likely outcome. And be very transparent about that. Where boards sometimes go and boards and management teams, frankly, go off in a different direction is group thinks and a bit of sort of drinking the Gatorade and then believing your own narrative too much to the exclusion of reality maybe of what's happening in the market, the reality of competition, of new competitive solutions coming up that maybe are unexpected, et cetera. So I like to think about scenarios always. I don't like to think about just a financial outcome. I like to give them sort of the envelope of possibilities and then give them a probability waiting for the high and the low, let's say. And then here's the most likely, but there's a funnel of outcomes, and you should be aware that one looks really good and the other maybe not. And I think that's just I'm sure many of the folks that you have in your audience may already be doing this, but it's become even more important in the last few years when we've had all these black swan events happen all in a row, a pandemic, a regional war. So predicting and forecasting have become less certain, and therefore scenarios become really important. And no one has a crystal ball. And by definition, any forecast you put out there is going to be wrong. So you've got to make sure that you have a funnel of outcomes that you share with the board.

Megan - 00:18:41: And do you have any advice for delivering bad news?

Inder - 00:18:45: Um, yeah, just be direct about it. Right?

Megan - 00:18:48: Yeah.

Inder - 00:18:48: And so there's no sugar coating. One of the mentors I had the opportunity to really learn some really great things from was the CEO of Cisco Systems when I worked there as part of that organization. And his mantra was, Tell me the bad news. Okay, all right, I'll let you tell me the good news first, but get it over with one page. We'll celebrate and then get into any bad news or things that you need help with. Tell me what you're doing about it, and then where you or your teammates around the table here can help you. And let's spend more time on that and make sure that we've got that underpinned. I carry that with me in terms of companies I've been at since then, which is to make sure that you say all the things that are happening that are going right but give equal time to making sure that you address things that need attention. After all, the board is there to help you. They're not like your teacher in school giving you a grade. Yes, they are, kind of, but they're doing that on the basis of, for a CFO at least, how transparent were you? Did you provide the full narrative or just the good part of it? And therefore, how much weight should I put in the next thing that you say?

Megan - 00:20:11: And you've mentioned mentors. So in your mind, what's the importance of a mentor and how do you go about finding a good one?

Inder - 00:20:23: Yeah, I wish there was a science to it. There really isn't that I found anyway. So if somebody out there has the answer to that, please, by all means, email me. But I think that your aim should be not just to have one mentor, to have more than one. Each one will help you learn different things. Odds are you will probably learn 5% of what each one knows, but that incremental 5% that you gain from having more than one mentor is going to come more in use for you because you're not going to face the same situation every time. I've had some early mentors from AT&T my first boot camp, for example, I worked with a woman named Carly Fiorina, and she and I worked on an IPO. And I learned some things from her, and I learned some things to avoid from her just as much as well. Whereas the next one that I had was on Wall Street. And here was somebody that I had a ton of respect for and still do, and it remains the mentor guy named Steve Buell. And he's just very steady in any kind of environment. So I learn how you become steady no matter what's happening around you. You have to be that port in a storm that may be happening, and then you have to be a CFO, be the one that actually strikes that balance no matter what the circumstances are. And then I've had a chance to apply that in my CFO career. And so, yeah, have a handful of mentors. Not too many people won't take that much time to invest in you unless, frankly, you do something for them as well. So these mentors are always a two-way street, but having a few of them is what I've learned. And there's no science to it. I mean, as I say, I have some mentors that I probably won't name that I learned less from than others.

Megan - 00:22:22: And you've mentioned having Board Members with diverse backgrounds and expertise. So how is it that you adjust your communication style when interacting with a very diverse Board?

Inder - 00:22:36: Yeah, and look, I think of Boards as being diverse from a diversity of ideas, a diversity of backgrounds, a diversity of professions, a diversity of how they think and approach things. But all the members of any given Board, in my opinion, have the same foundational set of expectations and needs, and then each of them needs, let's say, 80% common, and then 20% custom, if you will. And that 20% custom depends on if the Board Member comes, let's say from a CMO background or a CTO background, or a former CEO or a CFO or something else. And each one of them has key strengths, of course. Each one has maybe some areas to learn. And your role is to help them appreciate the three to five business drivers that matter for this business, the drivers that help create shareholder value, not the drivers that we track in addition to that, because there are many business drivers, there's dashboards. These board members are inundated, sometimes with 300-page PowerPoint texts. And believe me, I can speak from experience in having created them and posted them, and then also from having to read them. And they also want to know, kind of tell me the five things that I should really focus on here. And I think if you can strike that need for each one to say, here are the three to five things. Now, they will all approach it from different angles, as I said. Then it becomes a common language that they all can appreciate and understand and then have context. So the next presenter in the Board meeting may be from one of the business units, maybe a different functional leader. They're thinking of what they're saying, of course, and listening, but also thinking of it in terms of how it affects the drivers and then asking questions accordingly. And now you've armed the board members, no matter who they are, with what they need to have and where they need to probe. Does that help?

Megan - 00:24:50: Yeah, absolutely. And what strategies have you used that have been successful when it comes to differing financial backgrounds and levels of financial expertise? And how do you ensure that everybody's on the same page?

Inder - 00:25:04: Yeah, look, I started as an engineer and didn't know much about finance so decided to invest in a finance degree and pick up the parts that I didn't know. So I come from the roots that say I definitely don't know everything for sure at any point in time. And there's always a learning curve. And so when I try to present or explain something to a Board, I try to distill it down to if I were on the other side and I didn't know what I'm just about to say here, would I understand it? The less complicated I can make that narrative, and the more fundamental I can make it, the easier it's going to be for someone like me to understand it. And so let me think of it from that lens. You're not going to be able to do that. In every case, of course, there are Board Members who are Einsteins, very super smart, really indexed on a particular technology or whatever it might be. And you have other Board Members who are more generalists, who are coming from a different industry, maybe a university professor for example. And you've got to now talk a common language. And then that's where you've got to distill it down to, as I said, a key counted on one hand number of business drivers. And then no matter what you are explaining or telling, whether it's capital structure, whether it's investor expectations, whether it's the machine learning forecast that your team just did, or whether it is something that is happening in the business and products are running behind schedule and therefore affecting the financials and blah, blah, blah. You've got to explain it to them through the lens of the three to five things that you are consistently coming back to.

Megan - 00:26:53: And I'm just curious, how has your background in engineering helped you in the world of finance and as a CFO?

Inder - 00:27:01: Yeah, look, I think that both finance and engineering are pretty quantitative. They're ways of taking something that is gray and making it black and white, or at least trying to. And both involve analytics, both involve thinking through things like problem-solving and both involve trying to understand things from many different lenses. And so there are some things that are very common between the two. By the same token, there are things that engineering helps you with, that allow you to look around the corner in a technology landscape, for example, to say what's coming at us differently than you would if you're just a finance expert trying to predict the future based on the past and not quite understanding disruptive technologies. And again, the Cisco system is a great example where there were disruptors all around. Cisco was one of them, of course. But how do you predict the future not just based on the past, but actually what might be happening from a three to five-year, sometimes even ten-year lens? At the semiconductor company I worked at, we actually built a ten-year plan and tried to forecast that out and build. Sometimes you forecast backward from the future, sometimes from the past into the future. So the engineering, the quantitative aspect of it, thank God I haven't had opened too many textbooks until more recently when I've gotten onto the board of a quantum computing company and suddenly I'm having to refresh my memory on quantum physics and quantum entanglement and things that I thought I'd left behind. But yeah, it provides a foundation very similar to the finance one, but it's complementary.

Megan - 00:29:00: And how have you seen the role of CFO change or evolve in the last five to ten years and where do you see it heading?

Inder - 00:29:09: I think most people have begun to appreciate that the CFO is a Strategist just as much as they are. The financial steward and successful CFOs, of course, can focus entirely on the financials and not have to think outside that sphere and be perfectly successful at what they're doing. But more importantly, these days, as I say, with the uncertainty that the world has become in a certain environment that it has become. It's really important to understand how different strategies drive different outcomes. And the leadership team of any company the C-suite brings together usually tries to bring together the best minds from a CTO, CIO, cybersecurity, product strategy, go-to-market, finance, and talent dimension, these different dimensions. And then if you think about what all of these differently focused individuals are doing, is they're bringing together the pieces of a jigsaw puzzle and where a CFO, and of course CEO, but certainly CFO can help, is piece together what that jigsaw puzzle picture looks like before you really know how all the pieces are going to necessarily fit together. And that's the strategy side of it. That's the harder side of it. It's not quantitative sometimes it's intuitive, sometimes more than quantitative. So not all finance people or not all even engineers will necessarily enjoy that side of it. But companies are depending now on that CFO being a symbiotic business partner to the CFO, to the CEO. That was something that was always said, but often not done. Now I'm finding it's done because CEOs have understood that they have the vision, and sometimes they have the strategy, but somebody has to make sure it's getting into execution. Who is that? And often that can be the CFO. Sometimes it's the COO, depending on the particular circumstance. But the CFO has every opportunity to step into that role.

Megan - 00:31:21: And what advice would you have for CFOs listening today who are interested in serving on a board? Where can they start?

Inder - 00:31:28: Well, look, a great place to start is your own Board, right? Of course, having a positive impact on them is key, but equally making it known to them that you have this interest. Talking to your CEO of course, comes first. Your CEO has to support your getting onto a board and offer often CEOs don't want you spending your time or your mind share on some other company. They want you to spend it on their company. But it depends on where you are in that journey, provided your CEO has bought in. Usually, they'll be comfortable with you. Maybe going on one board ish and then your own board, your company's board, or their network is a really great place to start.

Megan - 00:32:17: And last question as a finance leader, what is it that keeps you motivated? What excites you about the future? What gets you out of bed?

Inder - 00:32:29: This is going to sound trite, it's not meant to be, but a constant learning curve. Just a learning curve that is bolting on a new S-curve, every time. And intellectually stretching my imagination, intellectually stretching my abilities, helping me learn things, require me to go read something like quantum physics again. And not everyone is wired that way, for sure. This doesn't apply everywhere. But what keeps me excited more than anything is something new to learn. I mean, it's exciting to be a CFO in a dynamic universe, in a dynamic world market with geopolitical tensions and trade issues and supply chain bottlenecks and so on. Yeah, those are all equally important learning curve elements. But for folks that are earlier in their career, those things probably are enough because they're a lot of these types of things. And then just predicting the next 90 days is often enough. But deeper into your career, you may not be as excited about the things that you did earlier on, and now it may be time to make sure that you keep learning. At least for me. That's something that really keeps me motivated, it keeps me involved, and it makes sure that I know as much as I need to know, but also that I'm learning something new every day in what I do.

Megan - 00:34:02: Yeah, that's great advice, and I'm with you there. I think when we stop learning, that's when we start dying, I would say.

Inder - 00:34:11: Yeah, there are just too many things out there that are becoming black swans, as I said earlier. Right? I mean, we have so many black swan events happening. There's a constant new external driver, and sometimes we basically become firefighters and our instincts are to put the fire out, whatever it is, supply chain issue, go put out that fire, fix it, diversify, blah, blah, blah, move on. And it's good to be firefighters. Well, every CFO is one, sometimes. It's also good to do fire prevention, and that's where the strategy side of it comes in. And that's where sometimes learning curves come in.

Megan - 00:34:49: Definitely makes life a lot less stressful when you're preventing the fires in the first place.

Inder - 00:34:54: Exactly.

Megan - 00:34:55: Inder, thank you so much for being my guest today.

Inder - 00:34:58: My pleasure, Megan. Thanks for having me with you.

Megan - 00:35:01: Yeah, I've really enjoyed learning from you and about you. And I appreciate you taking the time to be here with us today and for sharing your experience with all of our listeners. Please tune in next week, and until then, take care.

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