Just the Facts, Please

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 sales person 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 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 will 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 anticipate this, and correct for it in forecasts. An excellent Chief Revenue Officer will see Happy Ears as an undesirable trait in his team, one that needs to be trained out.

Happy ears are dangerous.

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 difficult decisions easy.

However, difficult decisions can be made easier with facts.

When a Chief Revenue Officer has Happy Ears, the business only learns the true sales numbers 4 times per year: on the last day of every quarter. Every other day of the year it is fed a steady diet of optimism.

It is also very tempting for us CFOs to be overly optimistic about the state of business. We 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.

As an on-demand CFO, I could pretend that things are always awesome.

I could pretend that we have enough cash for everything. That every hard-working employee can get a raise. That Marketing can buy all the ads, Sales can hire all the people, and Development can buy all the ping-pong tables they want. That I could staff my department with 10 Controllers, 10 Ninjas, and a person whose only job was to format my slides.

But then I’d get fired when we don’t make payroll.

And we’d all lose.

I don’t want your optimism, I want your facts.

It’s not totally our fault: facts are not so popular among humans. We make decisions based on emotion more than on 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.

Actually, sharing drinks and cheering on the team will build up the camaraderie and goodwill that are critical for when difficult conversations need to occur.

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.

Facts help make difficult decisions easier.

This is a core operating principle of any CFO worth their salt. Give it to me straight. Get to the truth. Turn off your Happy Ears and let me work with the best intel so we have a fighting chance to make the right decisions.