CFO Core Concerns Conference 2010
June 30, 2010
Thanks to my friend at HJMT, Lisa Gordon, I got an opportunity to attend the 2010 CFO Core Concerns conference in Baltimore MD June 27-29, 2010. This conference - a 3 day event - was designed by CFO Magazineto help and assist CFOs to identify and mitigate risks in today’s world, as well as take advantage of opportunities. The topics covered were broad - everything from traditional accounting issues (borrowing and debt) to more IT related topics. So you might ask yourself - why should I, as an entrepreneur, spend time with bean-counters and accountants?
Well one thing you’d find if you actually attended is that bean-counters and accountants and especially CFOs are pretty darn smart people - and not boring at all. They have to handle all sorts of impacts to their companies, evaluate risk, take advantage of opportunities, and in general protect the company and track and optimize it’s progress. This is not an easy task. They have to think like entrepreneurs - trying to get the best bang for the company’s buck, protect the company from catastrophic events, optimize it’s assets, investigate new opportunities for growth, decide when best to invest, and be sure that the company doesn’t run out of money in the process.
Equally interesting were the vendors that showed up for the conference - coming from every avenue of risk that the CFOs might be tackling from health care, to import/export regulations to cloud computing, to general IT support and everything in between. The core concerns identified as important at the conference were:
- Credit Markets/Interest rates
- Federal Government policies and regulation
- Health Care costs
- Managing IT Systems
- Federal Budget Deficit
- Accurately forecasting results
- Managing and obtaining working capital
- Consumer Demand
- Maintaining employee morale and productivity
- Financial regulation and changes in regulation
- Currency risks
- Cost of Fuel
- Margin Maintenance
“So what?” you say - why should I care, I’m just a lowly entrepreneur - most of these are things I don’t have to worry about. My answer is - you are wrong. Now you DO need to worry about some of these things within your own company. If you’re developing a music delivery platform and all of a sudden there is a court decision handed down, or a change in copyright regulation - you could find yourself holding a product that is both useless and suddenly illegal. If you don’t pay attention to patent law you might not have noticed that the supreme court allowed a business method patent to stand - strengthening the status of all business methods patents. Assessing these risk is an important part of your job as an entrepreneur. You must envision both the best case “hockey stick” scenarios and the worst case scenarios as well and develop measurement and contingency structures to be sure you don’t get in over your head.
More importantly though - every concern issued above is a problem looking for a solution. A problem that has been stated as CORE to a business’s ability to thrive and grow in today’s world. A problem that there is probably some funding to solve because CFOs who write the checks across the world share these concerns. It is a built in market, with specific desires and requirements, and an awesome potential for the right entrepreneur to create a solution and step into the fray.
You can check out the twitter history to see my CFOCore tweets from the event, that cover most of the main speakers, and check out the speakers and their topics for the event at CVent. As an entrepreneur I was fascinated by the issues that the various speakers raised. Frank Partnoy, a professor of Law and Finance at USD, covered how today’s recession and lead up to a crash were eerily similar to a time 79 years ago when Ivar Kreuger nearly brought the world economy to it’s knees. He pointed out the similarities - and the differences - to today and how that might affect the economy in the next few years. He also said that the Moody’s and other bond rating agencies were useless and should be replaced by cold hard facts. Moody’s rated many failing banks as “A” or better right up until they collapsed - proving that their predictions for an investments risks were practically useless.
Rita McGrath, a professor at Columbia University, gave an awesome talk on using Discovery Driven techniques to stimulate, encourage and foster innovation and growth within large companies. In discussing the topic with her after her speech I discovered she has a similar presentation that applies to entrepreneurs, and another that applies specifically to software development. Interestingly, she’d heard little of Agile Methodology, which her proposed tactic resembles.
Michael Hughes CIO At Large for C4si, was heard saying that the end of the company sysadmin could well be approaching - that cloud technologies could, and would, shift the burden of technical support off internal staffs and onto remote and outsourced solutions like no other technology before it. He also claimed that systems security wasn’t as big a deal as everyone made it out to be since most data was obsolete after 1 month anyway (I beg to differ with him on this point - maybe I misunderstood what he was saying).
Dennis Jacobe, Chief Economist at the Gallup Organization had a fascinating lecture on measurements of consumer demand, company confidence, and the attitude of the general public. He cited, for example, that while 95% of people favored small businesses and entrepreneurialism, 36% of the same group of people believed that socialism (which is antithetical to the aforementioned concepts) was a viable economic alternative for the United States. Consumer confidence has remained flat for over a year, and those with money have not yet tired of saving and begun spending. Jacobe claims that the recession is not ending but we are entering a long tail where there will be considerable volatility and only small organic growth in the marketplace.
Greg Schaffer, Director in charge of Cyber Security at the Department of Homeland Security came and talked to CFOs about the new, more dangerous, online world we now live in - stating that most company manufacturing and production infrastructure had little or no hacking or security protection - endangering the lives and the livelihoods of many major US Firms - as well as our overall global economy. He pressed CFOs to examine carefully their spends when it came to cyber security risks and evaluate them carefully.
We heard encouraging news on the technology front from Edwin Yuen, Microsoft and Hope Cochran, Clearwire on how broadband ip based 4g networks were coming from companies like clearwire, and that virtual technology had allowed some companies to consolidate from over 600 running servers to just 40 at tremendous cost savings.
We heard discouraging news on the health care front, with some analysts predicting 20-40% raises in health care insurance costs for companies witih under 100 employees over the next few years until 2014. Some said that these rate increases would disproportionately affect companies with under 100 employees. This will force many small businesses out of providing health care benefits and into the state-run pools, which may well not be up to the task prior to 2014 of absorbing so many subscribers, and may create two levels of care: one for the “have-nots” on the public funds and one for the “haves” that are in private insurance or are self paid. Most large companies that self insure were interested in creating wellness programs to be sure their rates stayed low - some claimed that could result in discrimination against overweight people, or those with chronic diseases prior to hiring.
We heard a fascinating panel discussion on risk management and how to plan for and mitigate everything from natural disasters, to cyberintrusion to key persons becoming ill. The panel had the Lizabeth Zlatkis, head of risk management for Hartford Insurance, who stated that you have to put most of your risk management eggs into the baskets of problems that would put your company out of business. While it’s good to have plans for smaller risks - you MUST have plans for the risks that can ruin your business.
We heard from the supply chain manager at OfficeMax, Ruben Slone, about how he used the downturn to implement a series of cost reductions and supply chain optimations that saved his company millions of miles of truck time, improving the environment and saving the company millions of dollars - using just a few simple changes. We heard from Ronald Jadin, the CFO of Grainger - one of the largest catalogs in the world - about how, despite the downturn they continued to grow by optimizing their relationships with customers and suppliers to meet their own needs and the needs of both. They cut turn time on inventory by 20 days in less than a year, while improving on-time delivery of product.
We heard from a career expert at Accenture and author of ”The Workforce of One”, David Smith, about how today’s consumer driven world is changing the expectations of employees - that they want their careers and their day to day jobs to be more like their experience outside work - customized to their needs and their desires.
If you read the above and thought to yourself - hey, I could come up with a solution that solves one of those problems (or even a part of one of those problems) then you probably have a pretty good seed of an idea for and entrepreneurial venture. The first thing that they teach you in “entrepreneur school” is that you must come up with a compelling solution to an entrenched and difficult problem or desire that people have. This conference was FULL of such problems and desires - and is a hotbed of ideas for an entrepreneur to live off.
For more information you may want to consider getting one of the books from the presentation authors. I’ve organized the books into an Amazon Store which you can visit by clicking the link. There is even a link there to subscribe to CFO Magazinewhich I highly recommend you do. So if this interests you - think to yourself - what convention can I attend and learn from that might be slightly outside my normal field and how can that enhance my ability to either run my company or come up with awesome sellable entrepreneurial ideas?
