Just the Facts, Please

I LOVE SALES!

If you spend as much time as I do around sales teams, you might be familiar with the term “happy ears.” Happy ears are what a salesperson has when they report back nothing but sunshine and lollipops related to calls, demos, conversion rates, or bookings… until the quarter is over and they fall short of their quota.

Generally, sales reps take great pride in their work. They want to keep their jobs and are usually competitive. A sales rep doesn’t like knowing that the guy in the next cube will kill the quarter when he will not. He wants to kill it. As such, he may wait until the very last minute to admit to himself (and you) that he did not accomplish what he set out to do.

A great Chief Revenue Officer will anticipate this and correct it in forecasts. An excellent Chief Revenue Officer will see happy ears as an undesirable trait in his team that needs to be trained.

OH, HAPPY EARS

There is no secret sauce to make tough decisions easy.

However, difficult decisions can be made easier with facts. 

When a Chief Revenue Officer has excessive happy ears, the business only learns the sales numbers four times per year: on the last day of every quarter. Every other day of the year, a steady diet of optimism is fed.  It’s pretty hard to make decisions based on optimism. Think of how this plays out in your daily life. I think I will fit into a wedding dress two sizes smaller a year from now. I think I will pass my classes. I guess I won’t get hurt. I think I will make it if I hurry. I think I will be just fine no matter what happens.

In business, this may or may not be accurate. We all may be just fine! But since this is work and not our own lives, it is less responsible for accepting the fate of the unknown as an executive regardless of how comfortable one is with the uncertainty at home. 

It is very tempting for us CFOs to be overly optimistic about the state of business. We are just as competitive as the sales reps. Browse through the LinkedIn profile of your garden-variety software CFO, and you will see—proudly displayed—the number of IPOs, number of exits, and capital raised. We are what we kill or grow, or we are what we have done. Take a look on Linked In, and you will see the most successful subsection of humans in the history of the world according to their accomplishments proudly recited for public consumption.

As an outsourced CFO, I could pretend that things are always excellent with my clients. I could pretend that my clients have no problems, enough cash for everything and that my mere presence washes away all difficulties. But then, I would not be dealing with facts. 

And as excellent as optimism is, it does not help me make better decisions.

PLEASE SEND FACTS

It’s not our fault. Facts are not so popular among humans. We make decisions based on emotion more than facts, even in business.

But I can’t pay employees with optimism, and I can’t raise capital on hope. I don’t want to think we are killing it when we are not. I want to know we are killing it, and if we are not, I want to help define a path forward, wherever that leads the organization. Yes, sometimes a CFO needs to look up from the spreadsheet, go out for a few drinks, and celebrate the team’s progress. But back at work, your CFO should sort through the optimism to get to the facts.

Sharing drinks and cheering on the team will build up the camaraderie and goodwill that are critical when difficult conversations need to occur. However, much like optimism is not a proxy for facts, sharing a few drinks is not enough to get to the bottom of a complicated situation.

This is a core operating principle of mine as a corporate finance consultant. Could you give it to me straight? Get to the truth. Turn off your happy ears and let me work with the best intel so we can have a fighting chance to make the right decisions.

Facts make difficult decisions easier.