If you spend as much time as I do around sales teams, you are familiar with the term “Happy Ears.”
Happy Ears is what a sales person has when he reports back nothing but sunshine and lollipops related to his calls, demos, conversion rates, or bookings, until the quarter is over and he did not meet his quota.
The best Chief Revenue Officers I have worked with manage Happy Ears within their teams.
Generally, sales reps take great pride in their work. They want to keep their job, and are usually competitive. A sales rep doesn’t like knowing that the guy in the next cube will kill the quarter when he is not.
He wants to kill it.
And 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.
A great Chief Revenue Officer will know this, and correct for it in his forecasts. An excellent Chief Revenue Officer will see Happy Ears as an undesirable trait in his team, one that needs to be trained out.
As an on-demand CFO, I work with companies in transition. What they all have in common is change, and all change is hard. There is no secret sauce to making really tough decisions easy.
However, facts pretty much always help to make difficult decisions easier.
If my favorite Chief Revenue Officer had Happy Ears, I would find out the true sales or bookings numbers only four times per year, at the end of every quarter. Every other day I would be fed a steady diet of information where optimism was a reasonable proxy for data.
As a CFO, Happy Ears is dangerous.
You do not want your CFO to have Happy Ears any more than you want your Chief Revenue Officer to be wrong with his forecast only four times per year.
It is very tempting for a CFO to be overly optimistic about the state of business. CFOs are just as competitive as sales reps. Browse through the LinkedIn profiles of your garden-variety software CFO and you will see, proudly displayed, the number of IPOS, number of exits, and capital raised.
Unfortunately, as an on-demand CFO, I can tell you that none of my clients are going IPO and no client of mine has ever gone IPO.
I know, they all must suck.
I could have pretended that things were always awesome. That we had enough cash for everything. That every hard-working employee could get a raise. That Marketing could buy all the widgets they want, Sales could hire all the people they want, Development could buy as many café tables they wanted, that I could staff my department with 10 Controllers and 10 Ninjas, and a person whose only job was to format my board slides.
I would be a total team player and would #bleedwhatevercoloryouwantedmeto.
But then I’d get fired when we – me, really – could not make payroll.
And we’d all loose.
As a consulting CFO, I don’t want your optimism, I want your facts.
It’s not our fault. Facts are not so popular among humans.
I can’t pay employees on optimism and I can’t borrow or raise capital on optimism. 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.
If you want to pay me to pimp your ride, share a few drinks, and cheer your team, I can do that, too. But, there will be a time where I have to get back to work and sort through the optimism to get to the facts. If anything, pimping your ride, sharing drinks, and cheering your team will build camaraderie for when the difficult conversations need to occur – which is necessary when building relationships based on trust, transparency, and shared vision.
However, much like optimism is not a proxy for facts, sharing a few drinks together is not enough to get to the bottom of a really thorny situation.
As stated before: Facts pretty much always help make difficult decisions easier.
If you prioritize optimism over facts, you should aim to build a company where you don’t have to.