The expertise and rich experience of FCLTGlobal’s researchers is part of what makes our work unique and incisive. A prime example is Senior Research Fellow Bruce Shaw
, the former CFO of Holly Corporation (later President of Holly Energy Partners) who is working on a study of long-term thinking among CFOs and assembling a checklist CFOs can use to ensure they stay focused on long-term success.
Our Director of Research Communications, Evan Horowitz, sat down with Bruce to talk about his work and life.
Hi Bruce. Thanks for much for joining me.
It’s a pleasure.
So Bruce, you're a real research-practitioner in this space — a one-time CFO now trying to understand how CFOs can help their companies focus on the long-term. How does that shape your thinking?
Had I not been in the CFO job, I doubt this project and its potential would resonate with me as much as it does …because from the outside, I don’t think I would have realized how difficult the CFO role is in real life. Early on, I wrestled with my own qualifications for the job (I had an engineering undergrad and no CPA), but I quickly recognized the variety of CFO backgrounds.
In addition, I wouldn’t have had the experience of hundreds of investor conversations — and over 30 earnings calls, audit committee meetings, and board meetings. Like any job these days (especially at the C-Suite level), there’s more to do than hours in the day so you are constantly having to choose the balls to juggle and those you have to let drop.
Looking back, I wish I had had a copy of the checklist I’m currently developing, which would have helped me prioritize long-termism. For example, I remember being energized when an investor meeting centered around long-term strategy and what we were doing to build value over the next 10+ years, but we didn’t actively seek those investors out. Nine out of ten conversations were short-term oriented.
Being an engineer-CFO does sound like a unique path. Did you run into CFOs with other unique backgrounds?
Yes, I did. That’s one thing about the CFO role: there are many paths to the job. In fact, I haven’t met many CFOs that actually started out with a career objective of becoming a CFO.
The most typical internal paths to the job include accounting, finance, strategy, investor relations, and business development, but CFOs also come from the outside—like former investment bankers, commercial bankers, audit partners, and consultants.
One side effect is that because CFOs come from so many worlds, each brings to the job unique holes that they have to fill – and often they ‘don’t know what they don’t know’ until they are in the job for a little while. To me, this is big reason I’m excited about this project to create a checklist or toolkit for CFOs, new or seasoned.
You also spent the last year studying "the Future of Capitalism" as a fellow at Harvard. In your view, are CFOs central to the future of capitalism?
You know, in some ways this project came directly out of my time at Harvard. I was talking with one of the leaders there and I mentioned my desire to work on issues about how to keep capitalism healthy. He said, “You were a CFO – is anybody doing anything to help CFOs?”
So in terms of CFOs and the future of capitalism, if you’re asking whether CFOs can make a meaningful contribution, then the answer is yes for sure. CFOs are on the front line where many short-term pressures naturally live (for example, communicating financial results quarterly to investors and the board), which gives CFOs an opportunity to frame information and conversations with long-term timeframe as a first priority.
In addition, everyone expects CFOs to be on top of the numbers and hold managers accountable to quarterly budgets – so when the CFO also emphasizes long-term results and decisions, the echo may have a bigger impact than if only voiced by the head of HR or a chief culture officer. Put another way, second only to the investment bankers from Bonfire of the Vanities, the caricature of the CFOs is expected to be greedy, self-serving and short-term oriented. So when they emphasize the long-term, it resonates.
Funny you mention the caricature of the CFO. Does it bite? That is, do CFOs get pigeonholed by the companies they work for, in ways that limit their ability to focus on the most vital topics or tasks?
It doesn’t particularly bite, but sometimes it takes a little extra work for CFOs to convince investors that they want what’s best for the long-term health of the company. And internally, CFOs have to demonstrate how they can add value outside of their traditional functions. For example, a recent McKinsey CFO survey found that 40% of CFOs believed they added the most value through strategic leadership and performance management, whereas the non-CFOs said CFOs added the most value through traditional finance functions.
Last thing. I’m interested in the global contours of this. Much of your working life was spent in Texas — where you still live — and corporate culture there is presumably different from corporate culture in Boston, which is in turn different than London or Singapore. What kinds of CFO-challenges cross these borders?
I recognize that my experience is just one experience, and since I’ve been at FCLTGlobal, we’ve had the chance to get input from a wide range of interviewees—some of whom operate in the US but in different industries, and some of whom have experience outside the US. My thesis is that US public corporate culture is pretty consistent overall and even more so within industries – with geography offering cultural tweaks at the margin. It is true that different cities have different investor vibes – with NYC feeling the most short-term oriented on average, and Boston and Toronto appearing more long-term.
The early feedback we’ve received so far from Europe and from Asia suggests long-termism is already better implemented in many cultures (e.g., the Netherlands, Germany, Singapore, Japan) and short-termism is still strong in others (e.g., North America, China, Hong Kong).
Well, I’ve got a lot more questions, Bruce. But maybe I’ll wait ‘til your work is published and then we can chat again. Sound good?
Looking forward to it.