The CFO's Essential Role in Driving Innovation

Megan - 00:00:18: Today, my guest is Melissa Howatson, Chief Financial Officer for Vena Solutions. As CFO, Melissa is responsible for overseeing the strategic direction and operational excellence of Vena's finance team, including financial reporting, financial planning, controllership, and procurement. As a strategic CFO, Melissa has enjoyed a career helping lead organizations through scaling up while in high growth mode. She is a chartered accountant and most recently served as CFO at D2L, where she oversaw the company's IPO on the Toronto Stock Exchange. Melissa prides herself on strategic thinking, team collaboration, coaching and development, and driving business and operational results. Melissa graduated from Wilfrid Laurier University and obtained her CPA/CA designation while working at KPMG. Outside of work, Melissa keeps busy with her husband and three kids. She also volunteers with a passion for organizations that support education and better outcomes for families and children. Melissa, thank you so much for joining me on today's episode of CFO Weekly.

Melissa - 00:01:59: Thank you so much for having me, Megan.

Megan - 00:02:01: Yeah, today we're going to be discussing why CFOs and finance teams shouldn't reinvent the wheel with new tools and processes and why, at times, the best solution might be making current processes more efficient, particularly when it comes to navigating new trends such as AI. And I'm really looking forward to learning about you and your experiences. So let's jump right in.

Melissa - 00:02:26: Sounds good.

Megan - 00:02:27: So, Melissa, just that we know a little bit about you, can you start by giving us an overview of your career to date?

Melissa - 00:02:34: Absolutely. I started my career with KPMG and spent some time in the audit group there, went and did a secondment in Australia with them. And then after I left, I wanted to get into industry. I joined a company that was in the automotive industry and spent 10 years there, actually was there during the collapse of the automotive industry, which was very interesting learnings for my career. After that, we ended up selling that company to private equity. After doing a management buyout of the company, I decided I wanted to get into technology. That was something I dealt with technology companies when I was at KPMG and wanted to get back into that industry. And I joined a startup and spent a little bit of time there. Then I did a bit more time at another startup in the technology industry and realized quickly that mid-size scaling companies really was for me. The sweet spot for me to be in terms of I liked that we had enough resources to get things done, but still needed to roll up your sleeves and get in there. And so I ended up joining a larger technology company that was in the process of scaling called D2L, which was in the education technology sector. Helped scale that company, and eventually we took it public. And then I joined Vena Solutions, which is where I'm at now as a CFO, which is a scaling, fast technology company that's actually our product is for finance professionals. So it's a product that also we are, as CFOs, the target audience and finance professionals. So that's been exciting, helping to scale that company now.

Megan - 00:04:13: And you're also the host of a podcast called The CFO Show. So will you just tell us a little bit about that show and what prompted you to start that?

Melissa - 00:04:25: Absolutely. If you'd asked me early in my career, when I was thinking I wanted to get into finance and accounting, if I'd be hosting a podcast, I would have said, no way, that's not part of it.

Megan - 00:04:36: Amen.

Melissa - 00:04:39: As your career goes on, I think one of the things I've learned along the way is. You always want to be learning and evolving and trying new things. And I think pushing yourself outside of your comfort zone. And for me, when I was talking with our CMO about doing a podcast, at first I thought, oh, I'm not sure, not me. But actually, the more we talked about it, it was an exciting opportunity. At this point, I've had a lot of experiences. I've got to live so many things. I've learned so much along the way from mentors. And I thought it would be such a great way to share some stories and experiences with others, whether they're early in their finance career, later in their finance career. People looking to raise their general business financial acumen or figuring out how to work better between finance and the rest of the organization, because I do think, the partnerships are so critical between finance and the rest of the organization. And so, we decided we would do this and it's been amazing. I've learned so much and I'm getting to talk to so many great guests. And really our goal is to just help share those experiences with others. As a way to just give a bigger, broader voice to some of those experiences that people had. So it's been a lot of fun and really enjoying it.

Megan - 00:05:56: And as you look back throughout your career, can you share a pivotal moment in your career journey that shaped your approach to balancing innovation with optimizing existing processes and finance?

Melissa - 00:06:08: Gosh, there's been a few, but I'd say one of the experiences that has absolutely been pivotal. I mentioned when I was in automotive, how that was during the time when the automotive industry in the U.S. Was collapsing. And we had our top three customers go bankrupt in the course of under six months. Which As a finance person, feels like a really scary moment in your career and as your business. And our leadership team came together. To figure out what are we going to do And I was really impressed. At how many ideas were coming forward. Ideas that previously we would have thought were impossible. Things like changing our work schedules for employees. We had to change some benefits. We had to ask suppliers for longer payment terms. We had to go to some other customers and ask them for quicker payment terms. We had to come up with a whole list of things. We had to decide what projects we were going to put on pause. And yet... We identified these things. Many of them felt probably a long shot. And we got them done. And It was amazing how when people rallied together to think differently. And you communicate really well. What is possible? And we came out the other side of that, a stronger company. We survived. While many companies did not make it through that time, especially... Mid-sized suppliers like we were. And on the other side of that, we were a much stronger company because we'd shaken some waste out of the company. We changed some approaches to some things. It made me realize how, one, you build up goodwill as you're going in a company. And when it matters is when you know how well you've done with that. But also, you can be more innovative than you realize and think differently about your business and what you've been doing and not take it for granted. And it was interesting because automotive is an industry that thrives on continuous improvement already. So you think you're constantly optimizing, but there's always some more that you can do. And so that certainly made me think a little differently about every once in a while stopping and just checking what you're doing. And are there some different ideas on how you could do it? And they may seem extreme, but they're still worth considering.

Megan - 00:08:34: And in your experience as a CFO, how is it that you balance the allure of sexy new technologies like AI with the practicality of optimizing what's already there?

Melissa - 00:08:46: I tend to think of the technologies as Supercharging, once you've refined your processes, sometimes you do... Refine the processes as you're implementing new technology. But it's really easy to fall into thinking that The problem is the technology and everything is going to be fixed with a piece of technology. And I think. If you can't manually lay out what you're trying to do in your processes and make sure that you've actually got pretty good processes or a vision for those processes. The technology isn't then just going to suddenly to fix it. And so I do think you want to be looking at. Is this really needing new tech or? Is this something that if we refined it, we could actually get a lot more out of what we're doing? And I think that one of the other things is looking to the vendors as experts when you're looking at technology, if you're going to be implementing something new, question your own processes. You have a roadmap. You know what you do. You know your business best. But I always like to ask, well, what are others doing? What's the best practice? And challenge ourselves to think whether those practices could be feasible in our business. Because sometimes I think we... Get down a road of overly customizing things. And I usually that just tells me we're doing it quite different than others. And do we need to be doing it so differently? Sometimes, yes, but. You want to be really open-minded, I think, when you're going through it. But a system alone isn't going to fix things. You need to know what your processes are going to look like.

Megan - 00:10:25: Yeah, I think the saying is trash in, trash out.

Melissa - 00:10:30: Absolutely.

Megan - 00:10:31: So how do you know when your processes are clean enough or good enough where adding on that layer of technology is a good idea?

Melissa - 00:10:40: First, you have to be able to articulate them. And you have to get consistent answers when you sit down with the team to lay out what the process is to... Understand what your grasp and your company's grasp of the process really is. Because sometimes you find... There's different takes on why we do something in the step one and what it leads to step two, three, four. So if everyone has a common understanding, I think that's a good starting point. And then it's do people know where the time is spent and where the waste is in that process? Can people articulate that to you? And have we taken attempts to minimize the biggest waste in the process? So for me, those are a couple of things that I generally will at least look for to know that, okay, we've thought through this process. It's been refined. People have looked for the waste here and thought about redefining it.

Megan - 00:11:42: And is there a specific example that you can share throughout your career where enhancing current processes prove to be more effective than adopting a new tool?

Melissa - 00:11:53: I had one time in my career where we were trying to get a better handle on our customer health. And we were heading down a path of the team, the customer success team. Insistent that we needed to implement a new system. And we could have quickly run and done that because the payback on the outset looked great. Oh, once we do this, then we're going to raise the health by this much. And of course, Knowing your health of your customers and your retention of customers is such a critical part of a business, a healthy business. But as we dug a bit deeper, we found that Again, we couldn't quite articulate what the key items to measure were that were going to really get our arms around it. And then when we started looking at the list, it was a laundry list. There were so many things and we were going to be boiling the ocean if we were to put a system in. And so we forced ourselves to go down to, okay, what are the six things? That are the most key indicators, getting alignment on what that was. And then where does that data reside and how are we streamlining getting it? Putting a system on top of this without having that conversation and understanding first wasn't going to fix the core of what we were trying to get at here. And so we decided to redirect the energy away from the system implementation towards better simplifying the smaller list of things and getting the data sources clean and plumbing them to come together. And we actually ended up building it into our CRM system. Instead, as a starting point dash forward. Both for the customer success managers to understand their own accounts, but for us to more broadly monitor the health of customers over time. And it gave us a huge boost, bigger than people imagined we could do without adding an entirely new piece of technology. And we got quite a ways. We were able to go for a couple of years with that. And the idea always was... Technology, maybe later. But step one, let's do this and get this really refined. So then technology could come along and supercharge it. Yeah, that was a good eye-opening one where we just got a lot done with refining processes and making sure we clearly knew what it was we wanted to measure.

Megan - 00:14:12: And as the CFO of Vena Solutions, how is it that you approach the evaluation of new technologies and tools? And what criteria are you looking at in determining whether or not to adopt a new technology or to improve an existing process?

Melissa - 00:14:30: I think in terms of evaluating. That's one. Clarify the problem you're trying to solve and the benefits you're looking to gain. You'll often find that it becomes everything in the kitchen sink once you talk about new technology, where people think, well, that's going to fix this and it's going to fix this. And before you know it, it's this mythical thing that's going to solve all the problems of the day. And so getting really clear on that. Then step two is I like to get a list agreed to of what are the must-haves versus the nice-to-haves in the system. So that then you can create a scoring rubric as you look at the different pieces of technology and you can keep yourself on it. With your original intent, by making sure that you don't become emotional in the process, but that you're scoring with greater weight, the things that really matter with what you're trying to solve. I like to have people create, fill in their rubrics independently of each other. Rather than getting in a room just to talk about it right away. You can talk about it after everyone's submitted the feedback, but I find it helps you keep the bias out or the group think from creeping in after. And you want to have enough people, I think, also as part of the evaluation team that you can get the different perspectives. Depending, of course, on the piece of technology. How far and wide it's going to impact your organization. And I would say the other thing that for me is critical in evaluating technology is looking at your networks and getting references. I always learn so much either in those references or talking to my own network in terms of what does and doesn't work and where it really did solve real problems for the business. You also then... Get to know people who sit in your very feet at their business and they become great founding boards, even as you're implementing the technology. Bounce ideas off each other. I think it's such a missed opportunity if you don't do that. Now, when you talk about the essential criteria determining whether to adopt or improve your existing processes, I think it comes back to, again, number one, know your process. Do we really know what's taking the most time in these processes? And is that time we're spending adding value? Or is it just trying to get the technical stuff done so then we can get to doing our job? And again, sometimes I think you're surprised to learn that you don't really have as solid a grasp on your process as you understand. Or people understand in their silos their piece of the process, but don't understand more holistically what it's doing for your business from start to finish. I think the second criteria is understanding what the blast radius is of this problem you're trying to solve. How many people does this impact? What is the downside if something goes wrong? How critical is this to your internal control? From there, you can decide how big will the payback be from adopting new technology or simply tweaking your process. And I think the third criteria is really understanding what the work effort will be. It's really easy to underestimate and you have to know how you would resource for success. Whether it's implementing new technology or improving your existing processes. And I think that comes down to having those conversations again with the vendors, but also with the network and others to make sure you've got a solid grasp on. What it's really going to take to have success on the other side of this.

Megan - 00:18:04: Given your background in scaling companies, I have two questions, one related to process and the other related to technology. So the first part is, how do you know that you've outgrown the process?

Melissa - 00:18:16: I think that it's really easy not to realize when you have outgrown the process. I like one, you'll find... That suddenly there's a lot of other things that are needing to compensate that are starting to be built in and around the process, whether that's in your own team or other teams that are doing things. And I take, for example, you can get so far on... Say email as a way of communicating certain things or filling things into a spreadsheet and then having others look at it. But when you start to see that often it comes from growth of your business. There's too many people now on these emails or so many people going in to fetch the data and not always clear who's doing what with that or where their roles are. Those are moments to stop and rethink. This might have worked where we were, but does it work now in where we're going? The other sign I often see is so many people in a meeting. When you show up in a meeting and there's 16 people needing to come to the meeting because this is the way we find out what's happening, so we then can go off and do their job. You start to realize that maybe there's not a process in place that would help you do this more efficiently. And I think it's also knowing where you're going and looking at where you are and then thinking, where are we going and at what point will this process? Start to break. Because it's simply not scalable. And that's when tools and technologies, you redefine your processes, but that's where different tools and technologies. Really can come to bear because what you're doing today is at some point likely going to break.

Megan - 00:19:55: That's a great segue to the next part, which is when you're choosing those new tools and technologies, how do you choose something that you can grow into without choosing maybe something that's too small or too big?

Melissa - 00:20:09: I usually start with understanding. For the size of company we are, what are the top... Companies serving that space. Because you do get different tools at different places. There are some systems that are very much enterprise tools and you try to leap for those and you just won't have the resourcing to put it in place and it likely won't do what you need and you'll be paying. Likely more money. I do tend to try and understand who the vendors are that play in the different spaces. And some of them will play. More widely across the space, which is great. Again, I often talk to my network and see what are the tools that folks are seeing success. Tell me the story of what it actually did for your business. And understanding what the resourcing is. I think a vendor that can be really clear with you on what success looks like on your side of the implementation as the customer, that often will help you understand if this is going to be the right tool for you or not. And if this is one that's going to get you there. And understanding what some of their largest customers are and how far they got to go, I think, is also a good question to ask. Because you do want to put in place technology that, depending on how much effort you're going to be putting into implementing it, you then want to make sure you're going to get the payback on it on the other side of that. And so you're going to want, nobody is usually implementing technology with the intention of taking it out one year later, two years later. But you do want to know that it's... Where your stage of your company is, but this is a tool that can get you to ideally five years out when you look at what size company you plan to be by then.

Megan - 00:21:47: And how is it that you foster a culture that encourages experimentation with new technologies and maybe the ability to fail along the way while still ensuring controls as well as stability in the core financial operations?

Melissa - 00:22:03: I think it's interesting that failure, I sometimes talk with my own team about that because I think, especially in finance, we are so driven by getting it right and being perfect. Because there's not a lot of margin for error in many of the things that we do. And we pride ourselves on that, getting it right and being on top of things. And so you do have to be deliberate about making it clear where it's okay to fail and to try things and experiment. And that comes from leadership in how we respond when something is tried that's new and it does fail. It can be human nature to either not want to accept that this thing isn't working or to jump all over it and possibly overreact. And so I think we have to temper that and make sure. That the reaction. Is really appropriate for the situation and actually celebrate the failures where somebody tried something and it didn't work and actually shine a light on the fact that This is the mindset that you really want to see in the business. I think on the flip side of that, celebrate the wind, even the small ones. I talked about continuous improvement and Kaizen back from my automotive days. And I believe that's applicable in all industries. Constantly iterating and innovating is the way you go. It seems daunting when you overscope a project or something you're trying to achieve. And so breaking it up into smaller bite-sized pieces and being able to feel like you're getting forward momentum, I think is really big. And when you celebrate it, it helps others on the team. Think, what things do I have underway that look like that? Because they don't always have to be the big one. I like to try to staff thinking of an 80-20 rule in that try to staff for where 80% of the time teams are busy with their day-to-day, but trying to leave 20% for projects and innovating. Not always perfect. And especially with the seasonality of workloads in finance. And so I look at that as the over the course of the year, are there those windows? And is it roughly represent 20% of the time that we're giving people the space to innovate, think differently, try new things? And in that... I talked about seasonality of our... Workloads, don't waste those windows. We definitely need downtime for teams, especially when they come off the back end of a really... Busy time. We want to rejuvenate, but I also want to look at those windows as the opportunity. To do some things that advance us so that when the next wave of busyness comes, Hopefully we've alleviated some of the pressure so that over time we're trying to smooth this out and not live with so many big waves of up and down. I think the other one is letting your team own their time and having them think about it as their most precious resource. Sometimes we don't even realize what's wasting our time. Sometimes employees... Don't feel empowered to say no or question and ask that comes their way. And we have to, because we don't as leaders know what all those things are. And sometimes you don't even realize how the plate's gotten filled up. People need to feel okay with raising the flag either to their leaders or asking the person, asking them to do something that new. To really make sure that it is a good use of their time. And if their plate's getting overloaded, then what's going to give here? What are we going to take off the list? And I think the other is being realistic about what it's going to take and deprioritizing things or staffing for it when you do decide you're going to alter a process or put in place new technology. Because if people feel like... They're just going to have to do that off the side of their desk. You can do that once or twice, but it's not sustainable. And I don't think it breeds a culture that continues to want to experiment.

Megan - 00:25:52: And with the rise of AI and automation, how do you foresee the role of finance professionals evolving over the next five to 10 years? And what skills and competencies are going to be critical for success?

Melissa - 00:26:06: We talk a lot about finance being such a strategic part of the business and that that's greater now than ever before. And I really do believe that. It means we have to evolve to make sure we're able to be strategic. And that, I think, does go hand in hand with some of those skills and competencies that are going to be critical. We have to know. Okay, so if we're going to free up some of our time to be more strategic and the insights that we're going to have, well, what are we going to do with them? Are we refining the skill sets that as we get those insights, we're going to be able to deliver those effectively to the business? Are we going to improve our ability to influence and partner with the business? I think some of those soft skills really come into play because it's not always inherently something we are comfortable with as finance people, whether it's how to present information, how to tell the story in a crisp way, having that influence. If we don't focus on those skills, I think it's going to do us a disservice. And I think core as well is curiosity and things. We have to be curious about how this is going to work, not just in finance, but beyond in the broader parts of the business. And give it a try with some of the new technologies. Not that we have to become coders, but I do think... That willingness to try and understand the technology and how it works, artificial intelligence. What is it really? How does it work? How do I help train these models? We are going to have to lean into that. And definitely something that I think about a lot is if we don't embrace some of these technologies and start to learn some of these skills. We could be left behind because companies and employees that do. Lean into this. Will run quicker. The employees might be getting different skill sets. And I think as leaders, we have a responsibility. To make sure we're helping. Upskill our own employees to make sure that they're keeping up with the changes that come.

Megan - 00:28:11: What role do you think that CFOs play in driving digital transformation within their organizations? What's the role of the CFO versus CIO and how can they collaborate?

Melissa - 00:28:25: I think we're a critical driver. I think that we are partners in this. We see a lot across the business in finance. That not Other teams don't have the same privilege seat that we do, where we see so many things. And our CIO similarly sees a lot of things, but I think it's when these two come together to understand a roadmap and a game plan for where are we going with digital transformation, that it really matters. And then I think that there's other key stakeholders across the business that you also need to make sure you're soliciting feedback and understanding where they want to go, because it all sounds great, but you can only do so much. And it's as much about deciding what you're going to transform as it is what isn't going to be in scope on your transformation journey. And part of that is understanding what different parties in the business are trying to achieve and what are the biggest impact items so that people understand the things that aren't in scope, why they are, because of the things that you're leaning into. They say often Today's CFOs set the pace for our organization. And so as part of this driving digital transformation, We're going to set the pace for how that's going to go alongside our CEO. I think that we have to have a vision and articulate it. People will get on board if they understand the why, but there is a lot of change management that happens and you don't want to underestimate the change management aspect indicate effectively using your internal communications experts and you're determining who your change champions in the organization are going to be will be key to this being successful. The other thing I think is identifying project management and where that's going to come from some projects. It's easy. The individuals themselves can project manage, but some of them, especially when they impact broader across the business. Project management. Can make or break your success. Along the way.

Megan - 00:30:26: And when you implement new tools and technologies, speaking of change management, but how do you get people to adopt them? How is it that you make sure that it's not just something that's implemented and then nobody uses?

Melissa - 00:30:42: So I think it's, you definitely upfront want to have solicited enough feedback, understand your users and what they're going to need to make sure you're not missing the mark entirely. And if people feel heard and were part of contributing to the decision, it helps a lot to set it up for success. It doesn't mean that everyone's going to get what they wanted exactly, but at least they'll understand that you heard them. You prioritize the most critical parts. And this is where I think the communication along the way matters and them understanding why it is you're doing what you're doing. So it doesn't just feel like change for the sake of change. And again, not underestimating that change aspect. This is where I think, especially if it's a bigger project, getting some change champions on board to help you with your testing, will help you with your evaluation, but then help you with your testing, representing their department and their needs so that they're being heard as you're going. That way, as you make your way to your go live decision, they are helping break down the barriers and the things that could get in the way later once you've gone live, because hopefully you're identifying most of them. As part of that testing. And readiness. And then... I think it also is key that you... The business understands what's not negotiable. Once you've made a decision and you're at a certain point in the process, it's really easy to want to keep hanging on to the old ways, the old processes. And you do have to be really clear and not just get off your path. Because it's hard and it's different. You have to, this is where we're going. This is our timeline. This is our project plan. These are the steps along the way. This is what you need to do to get on board. So that at GoLive, it's not set up to just fall on its face. And you have to have a date at which the old processes or old technology are going to be obsoleted so that. People know they hang on to them forever.

Megan - 00:32:37: That's a great answer. Thank you for sharing that advice. So last question, looking ahead, what do you think will be the next big shift in finance operations? And how should CFOs be preparing their teams to embrace this change?

Melissa - 00:32:52: I think one of the biggest is that some of the things we used to do or do today. Will become self-serve to our stakeholders. And I think that's something that can create fear in finance people because we are sometimes the keepers of the data, which can be a bit of a source of power for us and can also feel like a threat in that, well, what if people don't have to come to me to get that information, those answers, that feels uncomfortable. What if they misuse the information or aren't getting it right? And I think we have to be willing to accept that because it's going to make our businesses go quicker, but we still are going to be stewards in that process. And I think we need to be talking about what that's going to look like. Understanding because we are still going to need to make sure that as some of the self-serve information is getting out there, it's accurate. We know how people are using it or the questions they're asking and that we're helping to make sure that the information they're getting is going to be correct and not misused. So it's just going to change where we play. It's not going to obsolete us or shouldn't be a threat, but, it's just going to change some of where we're going to be spending our time. And I think to free up time then to be even more strategic, I think we need to Start talking about what that needs to look like and those soft skills and some of the other skill sets that we're going to need. We need to. Think of them now and start. To plant the seeds and be building them so that we're ready as we go.

Megan - 00:34:25: Melissa, thank you so much for being my guest today.

Melissa - 00:34:28: Thank you so much for having me. It's been great chatting with you.

Megan - 00:34:31: 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. And I wish you and Venice Solutions all the best. And to our listeners, please tune in next week. And until then, take care.

Melissa - 00:34:46: Thanks, Megan.