As part of my series about the “How to Navigate and Succeed in the Modern World of Finance,” I had the pleasure of interviewing Rich Penkoski of Deloitte Consulting.
Rich is a principal and deputy CEO—Markets for Deloitte Consulting LLP, responsible for defining and delivering the industry-specific insights and solutions clients need to solve their most complex business challenges. He also serves on the Deloitte Consulting Executive and Management Committees and as chairman of the Board, Deloitte Consulting Management GmbH & Co. KG.
Rich has led many of Deloitte’s largest Finance and IT-enabled transformation programs and has served many of Deloitte Consulting’s most significant clients across Financial Services, Retail, and Consumer Products. He believes that measurable and sustainable value is only achieved when strategy, implementation, and ongoing operations are delivered through a combination of business acumen, technical excellence, and extensive industry depth.
Thank you so much for your time! I know that you are a very busy person. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
Your question makes me reflect on just how much our past shapes our present and to some degree our future. I am the product of a working-class family from Long Island. I grew up in a culturally diverse community, and while our neighborhood was not affluent, it was a rich melting pot of ethnic traditions, which I loved. I worked my way through school at SUNY Albany while earning a degree in management science. This was right around the time computer technology was starting to be applied to business. I’ve always been a bit of a tech geek, so that blend of technology and business was a perfect mix for me. I’m one of those few people who ended up actually using my major in my career — I still explore how technology can optimize business, and I still find it fascinating. I have been in the consulting profession for my entire career and have enjoyed varied experiences; from shop floor optimization and supply chain design to highly technical programming. I joined Deloitte over 25 years ago, and have focused my career on the intersection of Finance and IT.
Can you share a story about the funniest mistake you made when you were first starting out in your career? Can you tell us what lessons or ‘takeaways’ you learned?
I started my career on a deeply technical track, so was doing quite a bit of programming in my first job after college. I was pretty proud of my programming capabilities and would often look for ways to use the most technical solutions to solve basic problems — a clear rookie mistake. I decided I was going to do some coding to help my mainframe emulator run faster with my newly developed Assembler skills. In the process, I somehow managed to deactivate the letter “T” on my keyboard. You would be surprised how often a T is needed… I sheepishly had to call my immediate supervisor over and explain what I did. Rather than just help me fix the problem, he encouraged me to avoid using the letter T in my programming assignment. As you might imagine, that really slowed my programming efforts and forced me to live with my mistake for a day or two. It was a great lesson in humility.
Is there a particular book that you’ve read, or podcast you listened to that really helped you in your career? Can you explain?
One of the most impactful business books I’ve read is Execution: The Discipline of Getting Things Done by Larry Bossidy and Ram Charan. It is hard to believe the book is almost 20 years old at this point — I’ve read it five or six times. Larry shares some great perspectives on how to truly drive the behaviors and create the culture needed to execute on the strategic vision of an organization. I have adopted many of his techniques both with my clients and in my internal leadership roles. One of my favorite quotes from Larry goes something like this — “We don’t think ourselves into a new way of acting, we act ourselves into a new way of thinking.” I love this advice and have applied it in so many ways both with my clients and within our Firm.
Are you working on any exciting new projects now? How do you think that will help people?
Right now, I’m leading the effort for Deloitte in optimizing the way we address industry convergence in the commercial marketplace. Historically, clients have leaned on us as consultants to use a practical, industry-specific lens to help solve their issues. But the blurring of industry lines and blending of experiences are rapidly accelerating, and it’s becoming increasingly difficult for clients to define themselves within just one industry. For example, healthcare and life sciences companies are seeing the need to adopt leading practices to create customer loyalty. Banks are championing not only financial wellness, but overall wellness in new product offerings. Major technology providers are moving into adjacent sectors like retail, healthcare, and financial services.
I’m excited about what industry convergence means to society — the innovation that comes with new entrants reshaping an industry often leads to new products that improve customer service, lower costs, and create more value.
Extensive research suggests that “purpose-driven businesses” are more successful in many areas. When you started at Deloitte, what was your vision, your purpose?
I came to Deloitte from a big software company where I was charged with developing a professional services organization that combined their software products with services to help drive more predictable and cost-effective outcomes. When I joined Deloitte, my purpose was to determine how to weave together disparate technologies to solve complex problems. And I wanted to do that in a way that made our client’s employees more effective and fulfilled. Interestingly, the notion of mobilizing ecosystems is becoming even more relevant in today’s world. Companies need to think about their whole ecosystem — academics, vendors, technology, employees — and see a solutions-driven, holistic picture that will drive business outcomes.
Do you have a “number one principle” that guides you through the ups and downs of working with your clients?
I live by the Maya Angelou quote: “people will forget what you said, people will forget what you did, but people will never forget how you made them feel.” It really drives home the importance of empathy, particularly when working with clients and providing exemplary service. When we’re helping a client to solve a problem, understanding their views is just as important as the actual recommendation. It’s a critical factor in getting through. If you don’t truly understand where they are coming from and what advice will resonate, the best recommendations in the world could go unheeded.
How should the C-Suite be collaborating during times of transformation to ensure proper investment for growth down the road?
When it comes to transformation, the C-Suite’s collaboration is as important as what it is they’re trying to transform, particularly when it comes to the pace and breadth of their efforts. It’s easy to get enamored by an idea, bite off more than you can chew, and end up missing the mark. Alternatively, if you don’t approach transformation strategically or take into account the cultural implications, you could also be unsuccessful. Transformation is not a one-size-fits-all deal. Thoughtful collaboration and strategic planning — that incorporates the entire C-Suite — is needed to ensure an organization is embracing the right technologies at the right time.
The C-Suite needs to be aligned on both understanding its organization’s capability and the goal of what they want the organization to be capable of. One client explained that when undertaking a rapid transformation, they were less concerned about the scope of the project and more focused on changing the clock-speed by which the organization operates across other functions. This really stuck with me because I think it applies to everyone who has a transformation agenda.
What are the key areas of tech expertise CFOs should arm themselves with?
Part of the importance of C-Suite collaboration in my mind centers on the relationship between the CFO and the CIO. CFO and CIO’s respective priorities can often be a point of tension, with the former hyper-focused on preserving capital, and the latter charged with staying ahead of the latest technologies. The key here is for the two to collaborate on which technology investments solve for the business challenge at hand or optimize the business for significant growth. For a retail company, that might be a new customer relationship management tool. For a large-scale manufacturer, that might be data analytics to better assess potential vulnerabilities in the supply chain. CFOs should study the technologies that are most aligned with advancing a particular strategy or priority so that they’re equipped with the right questions and frame of mind in assessing ROI.
How can the finance function in businesses across better embrace technology?
I often tell CFOs to remember that the finance function has long-been the incubator for many of the technologies organizations seek. From ERP to data analytics to RPA, finance can and has been a lab-like setting for which technologies have the greatest impact. CFOs should take stock in their tech savviness. Furthermore, CFOs should take this time to really assess the skillsets needed now and in the future within their own business line and with a people-centric approach. What skills are needed as technology becomes more and more integrated into enterprise operations? Do you need to hire an MBA for financial analysis, or a data scientist? How can you cultivate a sense of experimentation and tech know-how in a function that is fast evolving? CFOs that embrace technology with that mindset will establish an agile and modern finance function that will in turn, enable greater business growth and opportunity.
What are the top three lessons from the past six months that CFOs should put into practice?
I often think about how these last six months have played out differently than anyone really expected. Our recovery, and ultimate return to “normalcy,” has been more drawn-out than many CFOs originally suspected. While some CFOs’ natural instinct is to hunker down during trying times, those that have been resiliently creative have ended up shielding their companies from the biggest economic aftershocks. So, one of the biggest lessons I’d take away from all of this is the importance of scenario planning and thinking outside of the box to ensure strategic and financial dexterity.
Secondly, I think this pandemic has highlighted the value of having a CFO who is tech savvy. Technology can be your greatest asset or your greatest downfall, particularly in times where client and consumers needs are significantly shifting. It’s important the CFOs are attuned to the major technology trends that are appropriate for their organizations and their key stakeholders. This means partnering with CIOs to make sure technology investment is being used to propel the organization forward, rather than chasing the latest innovation.
Lastly, I’d say that the last six months have allowed organizations to really hit the reset button. The last few months have forced CFOs to take a fresh look at how finance is executed across the organization, and what their key priorities and goals should be. As workflow adjustments are embraced, CFOs can help forge better outcomes while expanding their talent base and embracing alternative way of working.
What are the most common finance mistakes you have seen other businesses make? What should one keep in mind to avoid that?
Two of the most important characteristics a CFO can possess are flexibility and agility. That’s only been underscored by the pandemic, where budgets are tight, and ROI is crucial. CFOs working to plan for both short-term performance and long-term success must leverage all that’s available to them, including detailed scenario planning exercises and the insights and expertise of their fellow C-Suite members. Ultimately, CFOs shouldn’t be afraid to scrap what they know and embrace new methods of working and thinking to successfully navigate these uncertain times. As CFOs evolve from operators and stewards, to catalysts and strategists, rigidity and doing things “how we’ve always done it” is the first thing that has to go.
Ok, here is the main question of our discussion. Based on your experience and success, what are 5 things every CFO should know about navigating the finance function in an uncertain world? Please share a story or an example for each.
Right now, CFOs are grappling with extreme economic and financial pressure and forced digital transformation on a massive scale.
- First, CFOs need to embrace their evolving roles as strategists and catalysts and make sure they take their seat at the table in wielding business strategy.
- That goes hand-in-hand with C-Suite collaboration, which must be at the heart of strategy development and positioning the company for long-term success, particularly during times of uncertainty.
- Third, it is critical for CFOs to exercise their tech-savvy to explore technologies that will deliver the biggest ROI.
- CFOs must also reimagine the finance function, given massive virtual work across many industries. How can CFOs redesign their departments with the technologists and data scientists the future demands?
- And lastly, solutions and strategies must be people-centric, putting employees and customers at the core of decisions to engender trust throughout your organization.
You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)
What immediately comes to mind is an incredibly powerful and important movement that’s already underway in every company across America and is something I work every day to maintain within my teams: diversity, equity, and inclusion.
I believe that trust is a core tenant of diversity and inclusion, allowing it to really thrive. The culture I work to create at Deloitte Consulting is one that ensures every team member knows and trusts one another, and then values their unique input day in and day out. If we put trust at the epicenter of every interaction –corporate, citizen and government interaction — only good can happen.
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