Why the Future for CFOs is More Than Just Number Crunching

Megan - 00:00:18: Today, my guest Ilana Esterrich. Ilana Esterrich Financial Officer at Planned Parenthood Federation of America. She was the Chief Financial Officer at the American Coatings Association, a trade association in the paint and coatings industry, and was the Chief Financial and Administrative Officer at the Center for Strategic and Budgetary Assessments, a national security and defense research institution. Ilana is an advisory committee member of the Washington, D.C. chapter of the CFO Leadership and sits on the FP&A Council at the Association for Financial Professionals. Ilana is also a senior member of the Fairfax Composite Squadron, National Capital Wing of Civil Air Patrol, where she serves as the logistics and personnel slash administrative officer for the squadron's cadets. She is a frequent public speaker on topics related to leadership, the future of the office of the CFO, and financial management. Ilana has a BS in economics from the Wharton School at the University of Pennsylvania and an MBA from the Booth School of Business at the University of Chicago. Ilana, thank you very much for being my guest on today's episode of CFO Weekly.

Ilana - 00:02:04: It's a pleasure. I'm happy to be here.

Megan - 00:02:06: Yeah, today our topic is future CFO and how this evolving role is no longer just about making the numbers. And I'm excited to learn about you and your views on this topic and we've got a lot to cover so let's jump right in. Great. First, can you kind of just talk us through your career and how it is that you got to where you are today, which is Planned Parenthood?

Ilana - 00:02:29: Well, first of all, I look at my career as having been formed by three significant phases, which have led me to my current role as CFO of Planned Parenthood. I started in management consulting as part of the Office of the CFO or financial management and business analysis practices. These were the early precursors to what we now refer to as financial planning and analysis or FP&A. The value from this part of my career was observing a large number of organizations from the inside, learning how to manage time, how to manage projects, how to work collaboratively with others very quickly, undeploying and redeploying for new projects and new clients, working with new teams, and really learning to synthesize financial data for a variety of audiences. The middle third of my career was in large Fortune 500 companies as part of large corporate finance organizations. I was lucky that these roles were rotational so I had the opportunity to practice finance with marketing, sales, R&D, logistics, and across different brands and businesses. The value of those experiences was working with organizations with internal and external stakeholders, with boards of directors, and organizations with visibility within their local communities, as well as across the global marketplace. And because I was able to rotate through finance roles, the IT Department meant learning new responsibilities fairly quickly, trying to make connections to be as effective as possible as quickly as possible. And learning about the business, not just from a finance perspective, but also understanding how sales, marketing, R&D, packaging, logistics, warehousing, all of those functions, intertwine to get products and solutions to the end user. This, the most recent third of my career, has been as CFO for three organizations. These organizations happen to be in the not-for-profit sector but are all very different. My first CFO role was as CHIEF FINANCIAL Officer of a U.S. #1 National and Defense Security Think Tank in Washington, D.C. IT Department was a really nice introduction to being CFO since the organization was relatively small, but the role was very broad. So, in addition to finance, I was also in HR and tax and publishing, facilities, administration, you name it I did it. I did everything but research and write, which was the focus of the Think Tank. My second CFO position was at a large trade association, also in Washington, D.C. In this role, my responsibilities were more confined to traditional CFO activities and to a more textbook organizational structure. So, I had a dedicated controller and accounting team, a revenue team, and an FP&A team. And then we worked with HR and IT which were separate. We worked with the CFO, but we did work collaboratively with them. The finance team was bigger than in my first role so people management, providing a learning and development environment, and providing career path and guidance. Well, that became a lot more important. Although the mission of the Association Information Systems is very different from the think tanks, the core functional work of the OCFO remains the same. So there are table stakes for the finance function. Do we have enough cash on hand to maintain optimal operations? Do we have the right people in the right roles? Are we passing the audits with no significant deficiencies or material weaknesses? All of that table stakes. But with these organizations and OCFO, my responsibility isn't just to provide the flat numbers with plus or minus variance calculations and explanations. Being able to tell the stories is what drives me there. My current role at Planned Parenthood Information Systems is even larger. It's about three to four times larger in terms of total revenue. And I would argue that because of the mission and structure, it's probably about 10 times more complex. I also have a much larger finance team at about 33 to 34 people currently and we will probably grow another 10%. Over the next 18 months. So Planned Parenthood Information Systems is a very different industry. And as a federation, there's a very different organizational structure with different complexity issues than my two previous CFO roles and with the larger size comes bigger issues to handle. All at a time when organizations and their respective boards and corporate committees across all industries are demanding more and more from both finance and data teams and IT and IEFs. So, yeah, that's how I got here that's who I am as a CFO of Planned Parenthood.

Megan - 00:06:52: And you've been at Planned Parenthood for how long now? 10 months. Okay. So just under a year. How has it gone? and when you started, think back to how it was that you were able to hit the ground running.

Ilana - 00:07:06: Yeah, it's been a very exciting, very busy 10 months. And I think even within Planned Parenthood, we joke about our time in dog years. So it's felt like a lot longer than 10 months in both good and bad ways. With a federation as large as Planned Parenthood, there is a lot to learn with many moving parts and lots of interdependencies. So as you can imagine, there's a lot going on in our external environment, which adds some complexity to what is considered, quote, the normal course of business for an organization. My role, along with my colleagues in the traditional back office functions, is to ensure that the organization has a solid, strong foundation to support the Planned Parenthood house to that end, we're undergoing some major transformative investments in automation and integration to reduce and eliminate some manual work, integrate an array of new financial systems to our tech stack, and evolve the finance function into more of a state-of-the-art finance organization that can easily partner across the programmatic and operational functions to ensure that the entire Planned Parenthood organization most capable of achieving its mission goals and objectives across the near and mid and long term. As you can imagine, it's also a very interesting time given what's been happening externally with regard to abortion rights in light of the Dobbs decision overturning Roe v. Wade, as well as with the pending 2024 election season.

Megan - 00:08:28: Yeah, to me, it t sometimes feels like we're living in medieval times. Making steps backward. Right. So the last three roles that you've had have all been with nonprofits, so it is important for you to be a passionate advocate for where you work or what Information Systems it you like about nonprofits?

Ilana - 00:08:49: Oh, of course, you have to be passionate. I choose my organization as much as the organizations have chosen me. I think that's an important part of finding purpose, ensuring cultural fit, and kind of forming part of a career, not just a job. We spend an awfully large part of our time working. Work Information Systems is a significant part of what I do each week it would be really sad if we couldn't find purpose in the organization, especially since we give so much of our time to it and it impacts our families. So if you don't have necessarily a passion for what you do or a passion for the organization you're supporting it becomes less of a career and more of a job. And I think that's kind of sad.

Megan - 00:09:28: And you've now been a CFO for three different organizations. So can you talk to us about how the role has differed between those three and how much of that was due from organization to organization versus the evolving role of a CFO?

Ilana - 00:09:43: Yeah, I think part of it depends on the size of the organization. It depends on the industry. It depends on the nature of the work being done and just from talking about my past, I've had consulting, I've had Fortune 500 companies, and I've been in the not-for-profit space. There are table-stakes skills that are critical across any finance position or any CFO role. I think what's evolving that we've been doing more and more to graduate away from just telling the numbers and using Excel spreadsheets and cumbersome manual processes and we really are moving closer to automation, closer to strategic business partnering, being able to tell the narrative of what the numbers mean, particularly for the large number of non-financial folks. So the role has changed. The role of finance has changed. And then, of course, as you move into a career, you're progressing into larger organizations. The softer skills, the people skills become much more relevant because you're in an organization where the day-to-day is being handled one, two, maybe three levels below you. So my work over time has been less about the day-to-day and more about looking to the future, long-term strategic planning, really thinking about how we use staff, what skilling, upskilling, or even reskilling necessary to make sure that the finance team is able to grow alongside the organization.

Megan - 00:11:15: And when you're the CFO for a non-profit organization, how does that change the role compared to a business that's focused on making a profit?

Ilana - 00:11:25: Yeah, let me be clear on one thing, being the CFO of a not-for-profit organization is fundamentally no different from being the CFO of a business focused on growth. What I think you mean is a for-profit organization, whether it's public or private. So regardless of the designation of nonprofit, we still have to follow the basic business principles of revenue minus expense equals profit. So we might call net asset gain instead of profit, but we still need a positive margin at the end of the day, because after all, no money, no mission. So in addition to depending on the nature of the source of revenue, nonprofits have to be pretty smart about the use of funds on the expense side. So we don't make or sell widgets. So we don't necessarily have a sales trigger the way some for-profit organizations may have and for organizations where revenue comes primarily from fundraising, we have to be respectful of the donations made to us and ensure the maximum amount of funds go directly to programmatic aspects of our mission. So nonprofit CFOs still have to properly account for revenue and work with our revenue teams, whether they're teams focused on membership dues fundraising or certification revenue. We are still custodians of cash because cash is still king for nonprofits. We have the responsibility for budgets and forecast and scenario planning, committee and board management, audited financial statements, FP&A, and collaborating with HR, IT operations, and the strategy teams. The only thing that really changes is we file a Form 990, of Organization Exempt from Income Tax return instead of regular income tax statements. We have no shareholders per se, but we do reinvest our retained earnings back into the mission of the organization. So the organization's mission is in effect, our shareholder, and as a nonprofit, we do face external and public scrutiny in a way that might be a little different from public and private entities.

Megan - 00:13:15: You said that it might be a little different from public and private entities. How are Information Systems that external view different?

Ilana - 00:13:24: Well, given that we are a nonprofit and we fall under the 501(c) codes, C3, C4, C5, and C6 of the Internal Revenue Service, there are certain rules that we need to follow and maintain and force to maintain our not-for-profit status. So that's a little bit different than maybe a for-profit that is receiving scrutiny from external shareholders, from Wall Street, from private equity firms. You know, we don't necessarily have that kind of scrutiny. We have a more public-focused level of scrutiny. And then as a result of not only the nature of the work we do but also our not-for-profit status, we do have scrutiny from our donors, scrutiny from the folks who may be in opposition to our mission, which is a little bit different than in the for-profit space. I'm not saying it's any better or any worse, just different.

Megan - 00:14:14: Yeah, I see. So you put a strong emphasis on soft skills, such as leadership, problem-solving, and even disruption. So beyond financial acumen, what abilities and character traits are crucial in order to be a success? Sure.

Ilana - 00:14:29: In my opinion, it's an investment in people. You want to hire the best people for the work that needs to be done and then give them the space to do their best work. This means being able to develop them professionally and provide an environment of continuous learning. I'm a real big believer in ABL or always be learning, a little different from, you know, always be closing on the sales side. A good working environment for people means providing them with a clear vision, a unified intent, you know, very clear performance objectives, and having or inculcating the trust and organizational safety to elevate the issues and problems that they come into or they encounter in a timely manner so that they can be addressed and they don't escalate into bigger or worse issues or problems. There's also a certain amount of creativity and flexibility that I think someone in this role needs. Trust and psychological safety is key because I don't always have all the answers. Which is you know, surprising for someone to say, but at the C-level, but I don't always have the answers. This role does not come with a magic wand or with a Harry Potter sorting hat. So when I go to the team to ask for solutions or to get ideas or new perspectives, I want every single member of my staff from the top to the very bottom to feel like they can speak up and put forth what's inside their heads. And when we do settle on a plan or solution, I want each of them to feel a sense of pride of ownership and custodianship, to take the idea from the kernel of an idea to a full-blown solution.

Megan - 00:16:00: And you've talked about using vertical and horizontal cross-functional teams to drive success. So can you give us a glimpse into how you would go about assembling a project team?

Ilana - 00:16:11: Yeah, coming into a new organization, fine line between, hey, I know what I'm doing. I'm an experienced CFO. And you have to balance that with, well, this is a new organization and I'm coming into an established team where I'm the outlier. So in addition to the usual first 90 days checklist that most of us have in the back of our heads when we move into new positions or organizations, I made it a point to go on a full listening tour to meet everyone. It wasn't easy as I came into this organization during the big year of our forecasting process, a whole slew of boarding committee meetings where I was kind of tossed in and you're the new CFO, here you go. And then right before budgeting season. So it was a lot it was the proverbial drinking from the fire hose. But it was important to understand on a personal level what the team was like. Who are the standouts? Who is high-willed but low-skill who needs training? And who are the high-skill, high-willed staff who are strong, independent workers? What parts of the team are not productive and are not functioning at their best? Where are the pain points? What are the recurring themes? When I asked what's working, what's not working, what could work better? It was important to identify the sacred cows and pet rocks. What is the finance team's reputation across the organization? And who are its allies and who are its detractors? So in addition to all that within the OCFO, I set out to meet the rest of my colleagues on the executive leadership team. And I asked, who else on your team should I meet with? And I tried to go down as far as I could. The goal of these meetings was to develop really good relationships within the business and to build trust in the finance team's competency and vision. I was actively looking for opportunities to turn pain into productivity, so I would ask, you know, what did they think we were doing well? And let's keep doing that. Well, what do you think we should be doing differently? How can we support you to run your team better financially? In other words, what are the itches that need scratching? Once I had the macro level perspective and all along been formulating potential solutions, reorganizations, that kind of stuff in my head, I worked with my direct reports to bounce off what I had learned, give them some of my initial impressions on which roads to go down first, and then solicited their support and feedback in privatizing the work. My goal was to ensure that I could bring the entire team along the journey to build a more empathetic data-informed partnership where we could connect finance across the broader organization to build the story. It was a collaborative effort. I've had some wins, and I will admit I've made some errors, but that's really all part of the fun of the goal, right?

Megan - 00:18:46: So piggybacking off of that response, how vital is it to have the ability to connect with people and build relationships both inside and outside of Planned Parenthood?

Ilana - 00:18:58: Yeah, it's absolutely vital. You know, you cannot live in a vacuum and still always be learning. I enjoy sharing what I know and learning from others and doing so gives me some space for the day-to-day work that I do. I make it a point to bring others from my team along with me wherever possible, you know, offering shadowing opportunities, not just to my direct reports, but one skip level down, even two skip level downs whenever possible. I think that after years of COVID, it was time to reignite professional development, and networking, and bring back functional learning back into the team. For example, I was fortunate enough to take a pretty large contingent from the finance team to the Association for Financial Professionals 2023 Conference in October in San Diego. I get invitations to a lot of events that I cannot always attend. So I share those with others on the team as I'm trying to give everyone an opportunity to stretch their wings, to learn something new, to meet external colleagues. All of this is really important to avoid the dreaded echo chamber where we get too comfortable with the status quo. We get very conformist. I believe that exposure to people and experts outside of your current employer keeps things fresh. It provides new perspectives and you just never know what you might give out of it.

Megan - 00:20:13: And have you had to bring order out of chaos in any of the places that you've worked? And if so, what extent does that involve disruption?

Ilana - 00:20:23: I think this is the most fun thing in what I do. You know, I'm not sure I would 100% enjoy the CFO role, or any role for that matter if everything were completely in a steady state. So in that case, what role would I serve? You know, where's the opportunity for innovation and change? And after all, the only constant is change. I'm a big fan of stress testing processes, of implementing red teaming, of asking, is this the best that we can do? I don't like to create chaos or be disrupted for the sake of being chaotic or disruptive. But when things do get too complacent, it's time to get down in the trenches and verify that we're being as effective and efficient as we can be and that we are doing the right things at the right time for the right reasons, with the right tools, with the right people.

Megan - 00:21:08: And how much pushback do you usually need to push through when you're restructuring or making changes? And how do you get buy-in?

Ilana - 00:21:17: Yeah. Well, I think this usually involves three very different groups. The adventurers are usually the 10% to 20% at the top of the parabola curve. The followers, which are the big hump in the middle of the parabola, and then there are the resistors, who are the 10% to 20% at the bottom of the curve. I think that bolstering the adventurers and giving them some ownership is very helpful in having them bring along the followers. The resistors are where I spend a little more time and effort because of the vocal minority phenomenon. They might be a smaller grouping number, but sometimes they have a bigger voice than they should have. They need a little more care and handling, a little more training, more explanation of what's in it for me. And, personally, I'm happy if I can convert a third to half of them because there will always be some resistors who just won't buy it. And I'm okay with that. I have to be. The focus on change management in advance of change, not just during the change, is really key. I like to focus on a few really key questions and convey that to my resistors. What's in it for me? How will this make my life better? Will I be able to do something better, faster, more efficiently? And does this solve something in my organization or my area of the organization that's important to me? I think if you're able to provide that perspective, it's a lot easier to get. Buy in when you're trying to push through major restructuring and in these times where data and knowledge are actual currency in an organization, sharing as much about what you're doing, the details behind the numbers, the insights that weren't possible prior to restructuring, that kind of is precious and being generous with it is very important.

Megan - 00:23:00: So how do you see the role of CFO expanding, evolving, and changing over the next decade or so? How is it going to be different and why?

Ilana - 00:23:09: Yeah, I think the prevailing wins are a fundamental shift from CFO as an accountant with a team completing backward point-in-time financial reporting. We're moving from that backseat, rearview, mirror view to the passenger seat next to the CEO. If I were to use a race car analogy, the overall watch of the CFO is a high-performing picker. So obviously, the basics aren't going away. Those are table stakes. We still need to close the books, report, and complete financial statements. What is changing is what we were adding to them. And fundamentally, we are going to shift from solely playing a controlling role to one of partnering in the true sense of the word. So we'll move from the what, or just the finance and accounting facts, to incorporate more emphasis on the why, variance explanations, and automated drill-down capabilities, to more on the now what, which is what are our recommendations. This is now what becomes a partnering relationship with all factors of the organization. We can provide insight. We will partner, we will influence, and we will be strategic partners and value creators, actively engaged in strategic planning, data-informed decision-making, and cross-functional collaboration. So we will be leveraging real-time data analytics, innovation, and digital transformation to drive revenue growth and create value. I think we'll need to create new competencies that go beyond the technical competencies that we're used to. So in addition to solid finance skills and accounting, financial control, budgeting, treasury, and financial planning. We'll also need really strong competencies in strategic visioning, risk management, effective communication, leadership, not just management, and adaptability and flexibility. And these are some things that quote-unquote numbers people aren't usually known for. We'll also need to foster in our opposite CFO teams a sense of curiosity, insight, and determination, a certain flexibility in thinking as well as digitization and automation and other technical skills that we traditionally left to data analysts or data scientists in our IT IS groups.

Megan - 00:25:12: I'm curious, what do you think of AI? Is it going to disrupt the accounting and finance profession? And if so, in what ways?

Ilana - 00:25:21: That's the million-dollar question. I think AI is an ever-growing useful tool and AI capabilities are evolving daily. I'm not the best person to talk about AI, but there are a growing number of finance subject matter experts out there that I can recommend. Ashok Manthena, the co-founder of Chapin Information Systems one. Glenn Hopper at Adventus Information Systems another one. These are two off the top of my head. Listeners can connect with them on LinkedIn to learn more about generative AI and finance. And of course, all of the finance consulting firms are aggressively building their gen AI research and advisory capabilities. It is a really hot topic at each and every conference and CFO Forum that I've attended in the past 12 months or that I'm registered to attend in the next 12 months. Technology will remove some of the grunt work and switch the finance role to explain why, give insights, and spot trends and patterns. But I will quote from Clifford Stoll, who said, We need to remember that data is not information. Information is not knowledge. Knowledge is not understanding and understanding is not wisdom. So we'll really need to determine how AI provides real value to our respective organizations. I'm eager to learn more and see how it fits at my organization within our digital footprint and given our future finance needs.

Megan - 00:26:38: Another thing I'm curious about, but what are you doing to prepare yourself and your team for the future. Are there specific trainings or how are you preparing?

Ilana - 00:26:48: Yeah, well, we need to stretch from being corporate specialists to being more corporate generalists. So, you know, I've been sending my team to leadership and management training. They are working more collaboratively with our Office of the General Counsel to understand risk management and what our role is with risk management. I'm encouraging the team to really get involved on the programmatic side to understand what are some of the issues that our colleagues on the programmatic mission side, on the strategic side, are seeing. And really thinking about not just preparing numbers and throwing them over the fence and hoping that non-financial folks will understand, but really being able to craft the message of what the numbers mean and where can we go. And of thinking not just about closing the books, but understanding where we are at any point and what it means for the long-term strategy. So putting a lot of emphasis on non-traditional finance education and training of developing professional development, and then also on our FP&A side, really understanding how we can leverage technology, AI, or advanced FP&A solutions to be able to derive deeper insights into the organization.

Megan - 00:28:07: And last question, what is it that is keeping you up at night as you think about what the future holds?

Ilana - 00:28:14: That being kept up at night infers a certain state of panic. I would turn the question on its side and assert that I sleep well enough at night knowing that the office of the CFO is doing everything in its power to sustain and move forward the mission, vision, objectives, and goals to help people live full, healthy lives regardless of income, insurance, gender identity, sexual orientation, race or immigration status by providing high-quality, inclusive, and comprehensive sexual and reproductive health care services that all people need and deserve. We are stretching from being corporate specialists to being more corporate generalists and we are going to be financial, we are going to be strategic, we are digital, we are analytical, and we are innovative. We've been around for 107 years. The office of the CFO at Planned Parenthood is working to ensure that the next 107 years are the smartest, most strategically capable years ever.

Megan - 00:29:09: Ilana thank you so much for being my guest today. It was a pleasure.

Ilana - 00:29:12: Thank you for having me.

Megan - 00:29:15: Yeah, I really enjoyed speaking with you. And thanks for finding the time to be here with us today to share your experience and knowledge. I wish you and Planned Parenthood all the best. And to all of our listeners, please tune in next week, and until then, take care.