Q: Why Ideas Are Not A Business

Rodney: Entrepreneurs have ideas a mile a minute, they think and I used to, I remember I was working in China, probably five or six years ago, and I had a CEO who had great ideas, very poor execution, couldn’t quite translate those ideas into effective operating models for the business and I remember sitting with him one day saying, an idea, no matter how good, is not a business. A business is the implementation of ideas into an operating model and marrying sales opportunities around that and effectively executing against those opportunities, and so, what I try to tell an entrepreneur is, you can only do so many things and you only have so many resources available at your disposal. Good reporting focuses the entrepreneur on the most effective throttles within their business and so, what I try to do for entrepreneurs is build them a framework within which we can discuss the business that keeps them focused.

I’ve seen entrepreneurs who bet the farm every time, the bigger the business, the greater the risk when they take those challenges, if it’s a small business, they can rebuild. If it’s a big business, it’s really hard to rebuild and you’re affecting a whole lot of lives and so, you have to be very careful about making decisions at the farm, because you have a staff that you got to think about it. You’ve got stakeholders and legal obligations you have to think about. Finance’s job is to make the entrepreneur aware of what they’re putting up, when they’re making those decisions, and then let them be entrepreneurs.

Q: On The KPI of Ideas

Rodney Davis: My first job is to make sure that they trust me. How do I gain that trust? I gain that trust by repurposing or reshaping the way that they look at their business from a financial perspective and then rinse and repeat. So, by creating the habit of looking at financial information on a regular basis, that’s prepared in a useful way that focuses on cause and effect. It’s amazing how six months in or eight months in that entrepreneur can at least pause, because they’ve had enough visibility of those drivers that when you bring up this conversation that might otherwise have had fallen on deaf ears, because you don’t understand, you’re just the finance guy. You always say no, or please, you don’t think like we do, we know what the opportunity is.

That habit of looking at KPIs in the context of the business that you’re evaluating with the entrepreneurs and decision makers of that business is so fundamental to having them pause and walk with you as you take them down the scenario building of what the steps that they want to take are likely to lead to and when you have that, and you’ve already got that routine, you’re halfway there, you’re not always going to win, but you’re halfway there.