TOM FENCL is CFO at Pricefx a leading SaaS-based price management, price optimization and Configure-Price-Quote (CPQ) business. Tom has over 20 years of experience in financial management and investment banking. Before joining Pricefx, he held CFO positions at several privately owned middle market companies and advised on M&A and financing transactions across multiple industries, both in Europe and the United States. Tom teaches a private equity class at the Institute of Economic Studies at Charles University.
Tom also holds the CFA designation, a Masters’ in Business Economics and an MBA from the Ross School of Business. He is currently based out of Chicago, Illinois, USA
Key Quotes from the Episode:
[On the criteria of the people you want on your team] “You obviously want people that are smart that’s kind of important, but you are also looking for people who just are naturally curious and they want to learn and want to challenge themselves.“ [6:36]
[On important qualities of finance professionals] “I think that quality is important for finance professionals as much as anything. And in terms of then how can you learn quickly? Well, you have to be willing to listen to other people and observe and analyse and digest that.” [6:45]
[On analysing and mitigating risks] “We can mitigate that particular risk by creating more value here. And it will create a defensive buffer. So if I make more money here, I can then afford to take some losses over here” [9:34]
[On contributing strategic insights] “Really ask the tough questions and see where the value can be created. And then often there are opportunities.” [12:41]
[On creating leverage using technology] “I think that finance people should be paying attention to that and should be thinking how they can leverage those technologies because it will empower them.” [15:42]
[On comparing traditional business process against the digital process] “We had customers who would typically do a quote or RFP. They would take three weeks to complete it. Not because they are stupid, but because they take so many people and so many sorts of movement of information, while you’ve put all of that into one system, you can have it in five minutes or 15 minutes just kind of run through the algorithms and you’re done and you make the decision and you move on.” [21:32]
[On asking critical finance questions] “We as finance people don’t go and ask those questions and just leave it to whomever to manage that. That’s our loss. What we should really be doing is understand how is the margin different between not just different business units, but within the given business between different segments, geographies, and all that. And what drives it? Why is it different?” [26:25]
[On career advice] “It is important to be able to sit back and listen to other people. You need to get perspectives from wider range of people.” [28:02]
Key Points from the Episode:
- The Important qualities of good finance professionals and a great tip on learning quickly.
- Answering the question who is responsible for pricing and its 3 dimensions.
- How Finance can gain leverage by better adopting technology to streamline the business process.
- The important distinction value and cost, as well as how one helps you maximise/optimise and the other you tend to minimise, but there’s a disproportionate attention in finance on much smaller cost which generally you can only minimise.
Stamped Show Notes
[03:23] Tom shares his accounting finance journey that spans for 25 years and has taken him all around the world.
[07:20] Tom shares on how moving fast has helped him in his early career years.
[08:20] How Tom analyse risks and proactively moving forward at the same time.
[10:49] How to effectively contribute financial strategic insights.
[14:59] Tom introduces the 3 dimensions of pricing, how they work and the benefits finance can bring to the process.
[27:26] The Best advice Tom ever received.
[29:29] Tom shares his recommended books and resources.
[33:49] Tom shares how to connect through him on social media and also their website.
[34:42] Tom’s parting thoughts for finance professionals.
Resources Mentioned:
Book: Sapiens: A Brief History of Humankind Hardcover – Illustrated, February 10, 2015 by Yuval Noah Harari (Author)
Book: Homo Deus: A Brief History of Tomorrow Hardcover – Illustrated, February 21, 2017 by Yuval Noah Harari (Author)
Book: 21 Lessons for the 21st Century Hardcover – September 4, 2018 by Yuval Noah Harari (Author)
Book: Life 3.0: Being Human in the Age of Artificial Intelligence Hardcover – Deckle Edge, August 29, 2017 by Max Tegmark (Author)
Connect with today’s guest:
LinkedIn: https://www.linkedin.com/in/tomfencl/
Website: https://www.pricefx.com/
Twitter: https://twitter.com/tom_fencl/
Full Transcript
[00:00:30]Andrew: [00:00:30] Hi everyone. And welcome to this week. Strength in the numbers. today I’m delighted to share a rather special guest with you. His name is Tom Fencl he’s CFO at priceFX, which some of you might’ve heard as a leading software as a service based price management optimization and quoting business. And it’s a pleasure to share Tom with you today because I’m a bit of a geek when it comes to pricing. That’s where my own career has moved towards. So it’s fantastic to have an expert come on the show and deconstruct where pricing. And finance can come together to go and drive more value in the organizations we support to help us begin to be able to better influence and drive impactful decisions, meaningful decisions within our organizations too.
[00:01:14]So during our conversation, Tom asks, but also helps us answer the question who is responsible for pricing. We deconstructed three dimensions of pricing and were also finance professionals and accountants
[00:01:29]can drive each one of those, our conversations broadens out a bit into the important qualities of good finance professionals and timeshares an excellent tip on being able to learn quickly.
[00:01:40]Tom is also a big technology fan, so there’s some ideas on how we can better adopt technology within finance and our businesses. To streamline processes and take a bit of cost out of things. And one of my favorite discussions was the important distinction between value and cost and how one can help you maximize or optimize where the other one you can only really minimize and how in finance, we tend to focus on the minimization of the smaller cost element and sometimes avoid spending more time on the pricing element, which allows us to drive more value. Something can maximize and optimize.
[00:02:21]and for those of you that are interested in some of the resources mentioned, there’s some great books, Tom calls out at the end, and I would encourage you to go check out and read during the year ahead.
[00:02:31]So I hope you enjoy the conversation as much as I did having it together with Tom. If you did, you can check out ways to connect with Tom detailed timestamped show notes, transcripts, and links to the resources mentioned there and much more at sitnshow.com.
[00:02:45]And we really appreciate you investing your time with us today. So I think that’s enough for me. So without further ado, over to Tom and the show.
[00:02:52] Tom, welcome to the show.
[00:02:59] Tom: [00:02:59] Thank you, Andrew. Thanks for having me.
[00:03:01]Andrew: [00:03:01] It’s our pleasure. And I’m really delighted to get to chat to you again. Our last conversation was really good, fun, and I know we were joking about that. If we just recorded it, we pretty much of this podcast done already. But before we jump into the podcast, would you mind maybe just sharing a brief story of your journey in accounting finance, with our audience, please.
[00:03:21] Tom: [00:03:21] Sure of course. I’ve been doing finance for 25 years now. Feels shorter, but time flies when you’re having fun. I have a little bit of a checkered past, if you will. The way I ended up in financial management is not necessarily sort of the typical career. I didn’t go through the sort of corporate structures and so forth.
[00:03:41]I first started after college. I started in commercial banking. Actually while I was at college, I was actually briefly in at the minister of finance in products. So I even worked for the government in financial function .After banking career, which I didn’t find very satisfactory.
[00:03:58] I moved to London and I worked for two years for a corporate finance consulting firm. That was very interesting, sort of conceptually didn’t find entirely gratifying the consulting role. But, the substance meta was very interesting was actually economic value added EVA.
[00:04:14] Some of your listeners might be my sort of familiar with that concept. So there was a very interesting, especially for my sort of early years to kind of get into the depth of some of the concepts there. I went to take my MBA in the U S afterwards, and after MBA I went to work on wall street for about five years.
[00:04:34]So investment banking and from an investment banking I moved to private equity. I was working those back in Prague, Czech Republic, and I work for a boutique private equity firm. And that’s really how I ended up in financial management because one of our portfolio companies, this is 2009.
[00:04:51] So the great recession and one of our portfolio companies get into trouble. And the partners at the firm had to say goodbye to CEO and they kind of said like, well, Tom it’s sort of is your responsibility. So why don’t you go and sit in his chair? And it was scary as it was at the time, but it was a great experience.
[00:05:13] And I landed in this job and I really enjoyed the change of roles, the transition from. But traditionally is more maybe transaction oriented aspect of finance to more sort of managerial responsibility was great change. And I’ve been doing it in one of our own ever since.
[00:05:33]Andrew: [00:05:33] I suppose, Tom, thanks for a very honest and open journey and for some of our audience as well, might’ve picked up on your accent. Is it Czechoslovakia that’s where you ever see him from, and you’ve now worked in Europe, British Isles over in America. You’re in Chicago now
[00:05:49] Tom: [00:05:49] been to China. I’ve been to Israel, been to all
[00:05:51] Andrew: [00:05:51] the journey to Israel. Like, it’s just, you have a reading great perspective to share. And I do want to get into the pricing side of things because I passed the price now myself. But I do want to get to that, but before I do, in terms of. Preparing yourself from going from that transactional mindsets all the way to the strategic mindset and having that responsibility, I suppose you didn’t have time to prepare yourself by the sounds of it.
[00:06:16] How do you adjust to that new environment of having all this additional responsibility?
[00:06:21]Tom: [00:06:21] Well, I guess you have to learn really quickly. And this is something that I tell people when I hired them, or this is even a sort of criteria when I’m looking for people to join the team is you obviously want people that are smart that’s kind of important, but you also looking for people who just are naturally curious and they want to learn and want to.
[00:06:41] Sort of challenged themselves. And I think that quality is important for finance professionals much as anything. And in terms of then how can you learn quickly? Well, you have to be willing to listen to other people and observe and analyze and digest that.
[00:06:57] And yeah. And then you just jump into the water and you swim.
[00:07:01] Andrew: [00:07:01] Well, I know that’s why I appreciate you covered on the show because a lot of our listeners are already parked away there. The fact that they’re listening to our conversation bit curious, willing to learn more, observe, learn, understand what can be done also what to avoid as well, the pitfalls,
[00:07:17] Tom: [00:07:17] Yeah, the one thing that it’s sort of an interesting insight, I think, is that in many of these situations and I’ve been not now with price effects, thank goodness. But before I’ve been in some very hairy situations. And the one thing that I’ve learned relatively early on is it’s just, you move fast.
[00:07:33] You sort of, I think it was Churchill who said that if you walk through hell, you keep walking and I have the Tom’s addition to that. Then walk as fast as you can, right. You just don’t want to dwell on the hell and you just want to move through. So moving fast is another sort of a tool too.
[00:07:51]Andrew: [00:07:51] That’s a brilliant one, actually. I have to say, that’s a nice addition to Churchill statements. So I figured out, yeah. Don’t dwell too long. Move as fast as you can. And I suppose that’s an interesting one for finance because historically, we’re the ones that are trying to put the brakes on something sometimes, you know?
[00:08:09]So we need to understand the risks here. How you found being able to manage that trade off between, taking time to analyze the risks and actually being proactive and moving forward.
[00:08:18] Tom: [00:08:18] Great question. And I would attribute some of my views here very much to the early part of my career. So even though I’m happy to move from the sort of transaction side of business to management, I think that I’ve learned something there, particularly the investor perspective on things, right?
[00:08:35] So what investors are looking at, and if they’re doing good job, then they want to create value, right? And there are different ways to create value, but in the end you still just count that dollars or euros or whatever it is. And. So as an investor, you’re indifferent, whether you created value by cost-cutting or by increasing revenue or increasing margins.
[00:08:59] But when you then do the math, you realize there’s only so much you can create by cost cutting because eventually you just run out of things to cut. But you can always create more in terms of growth and improving efficiency and so forth. And so to answer your question about risks, I think that you have to write as a finance person, you are the goalkeeper, you have to think about risks, but I think that you want to avoid being boxed in only the negative side of the equation, right?
[00:09:28] So you want to also say, well, you know, we can mitigate that particular risk by maybe creating more value here. And it will sort of create a defensive buffer. Right? So if I make more money here, I can then afford to take some losses over here. So I’ve been, always trying to, and I often hear from my colleagues that I’m not a traditional CFO, so I’m not a traditional CFO, I guess, but I’ve always trying to kind of take the holistic view.
[00:09:57]And not like just like some mumbo-jumbo, but truly as, you know, take as broad of a view as you can, where is the value in the situation where you are and how can you maximize it? And that can be cost cutting, but it can often and often is not cost cutting, but other measures
[00:10:12] Andrew: [00:10:12] yeah. Cause it’s interesting that’s one massive take we had from our last conversation was. If you look at a cost there’s only really one mindset, you can take with cost. We’re not known for maximizing cost, but we’re very good at minimizing it, but you can only go so far because cost is generated from activities we’re currently doing.
[00:10:29] If we’re doing current activities generating costs, and you can only really minimize cost if you want to be a successful business. Whereas when you look at value. It doesn’t make sense to minimize value. It’s not what we’re paid to do. It’s more maximize value and there’s more to go with it.
[00:10:43] You’re talking revenue margin, you know
[00:10:46]Tom: [00:10:46] And that there is another kind of angle to this, which is we obviously review budgets, right. That’s part of what we do as finance and often we laugh at when people say, well, we’re going to invest in marketing, right. And often there’s just like a corporate speak for, we’re going to just throw some money out of the window. Right.
[00:11:05] Andrew: [00:11:05] You’re in safe company here. There’s no marketing I think lesser than that.
[00:11:09]Tom: [00:11:09] But actually I set it on purpose because I want to challenge that mindset. And I said, okay, well, how about we actually take our colleagues at the word right? You saying you’re going to invest into. You know, new headcount. Okay, great. Show me how it is an investment. So show me, what is the efficiency that you’re going to gain or what is the increase?
[00:11:29]And then my answer would be, yes. Sure. Of course let’s spend the money as long as it’s not just throwing it out of the window, but it actually is an investment, but what it often, means that and that’s what I said earlier about getting out of the box we’re put in. We need to be the ones leading the conversation, right?
[00:11:49] We need to be the one asking the right questions and do you need this much money? And recently I read somewhere an interesting article about budgeting and it adviced that you should actually ask the question. Well, what about we spend twice as much right? And often the answer is you know, I don’t know.
[00:12:06] I don’t want to twice as much. I just want a little bit more, right. It’s like, no, no. What if he like, can you do something and obviously ,you have to follow up with a question. I would have been half of it right? But wait, it will still work right? And , the point is that too often, we play these games on a margin.
[00:12:19] And I think that the thing that I would encourage her when I suddenly tried to do it, and I think it’s something that is rewarding in a sense that it’s intellectually stimulating, but it’s also great responsibility is not to fall into the deep tracks, right? Not to just kind of, you know, tweak things at the margin and just assume what was done yesterday.
[00:12:38] You know, just can only improve a little bit, but really ask the tough questions and see where the value can be created. And then often there are opportunities.
[00:12:47] Andrew: [00:12:47] Yeah. See I think that plays rather well, Tom, because. That’s a really good challenge for audience. We shouldn’t, you know, try not to be safe and play at the margins. I think that’s probably more our nature, you know? I mean, how many of us look backwards to say what the run rate was on an expense and use that to guide a forward.
[00:13:02] And it might go up or down a little bit, but what if we were to do two X and then you’re getting into the situation of, okay, where’s the diminishing marginal returns on this? You know, how far can you push the budget before you get you to start losing that efficiency effect?
[00:13:15] Tom: [00:13:15] And the other benefits that you get from this is that often some of my finance colleagues, are they telling me that their aspiration is to be more strategic well, or how do you become a strategic other than by being strategically irrelevant. Right? So when you’re not going to be strategic and relevant, if you’re only going to assume that what is, is what is and cannot be anything else.
[00:13:35] So by doing this analysis, you just mentioned, Andrew, what can happen is that you actually stumble on an answer? Well, we can’t do that because, and it may be a good reason why we can’t do that, but that because of an indicates, something else that’s happening strategically around you, whether it’s internal or external.
[00:13:53] And then all of a sudden, lo and behold, you’re a finance person. Then you’re contributing a strategic insights.
[00:13:59]Andrew: [00:13:59] I just started thinking, I just think some of our audience members are thinking, okay, some of us started the air, just maybe. Some of us kicking off with two cycles or whatever. It’s like, All right. I’m going to go and ask, my brother told her, what could they do if we get into extra budget, you know?
[00:14:12] Yeah. And then like that, or you see their eyes light up. Why you got to give me all this extra money. So, no, not yet, but tell me how you, what you would do if you had this extra money, don’t yeah, that’s difficult. Let’s yeah, but that’s but then that gets into the second piece, which is i see finance professionals into the future.
[00:14:29] Be more like sparing partners. Just trying to bring the best out of the person they’re sparing with. Right. That’s what aspiring partner is. You’re not there to beat them up. You’re there to try and help them take a few punches that throw some good ones themselves and learn a bit more about themselves.
[00:14:43] So they’re stronger, better prepared, more resilient, and that’s probably, I mean, that’s why I liked your question. that’s really great advice, Tom. Is there, I suppose that from another perspective, you know, what’s exciting you most about your current work?
[00:14:57]Tom: [00:14:57] Maybe just by way of introduction, what we do is we do pricing software. What did really is a big part of is, this part of the broader digitalization of business processes, a trend. And it’s new to me. I’ve been with price fx for a little over three years before that I was more into traditional industries and not software.
[00:15:18] And coming from that sort of more traditional sectors, it’s just mind boggling, right? It’s just mind boggling. How fast the changes are happening, what is the impact and literally have a front row seat of that. So the transformation that digital technologies, and there’s just a ton of software out there available for all sorts of business processes is really opens new doors.
[00:15:39] And I think that finance people should be paying attention to that and should be thinking how they can leverage those technologies because it will empower them.
[00:15:48]Andrew: [00:15:48] I suppose, look forward it, you don’t realize as well. Like my background is I wrote a deal-making team, worked very close with sales pricing is very important, understanding marriages and so on. And I think I liked it, our conversation the last time, how it was sort of bucket it into three main areas.
[00:16:04] Would you mind sort of maybe sharing what those areas are with some of our audience who might not be as familiar with the pricing end to end cycle?
[00:16:10] Tom: [00:16:10] Sure of course. So, my pricing maybe let’s just take a step back. So every business needs to set prices, right? However, it becomes a sort of a standalone discipline when complexity creeps in and then all of a sudden you need the specialist to manage that the complexity generally tends to come in two forms, one or the other, or both, which is either you have, complex setup, complex organization.
[00:16:37]Typically this would be, you know, you have a long list on the price list. You have a long price list of many, many SKUs, you may have different channels. You may have different locations, you ship goods to and so forth. And all of these things obviously affect the enterprise that you need to charge, you may also have discounts on the invoice often was and all that kind of stuff that you’re familiar with.
[00:16:58]The basic logic of what the management or financial management of the company is trying to do is relatively straightforward, but to actually keep it all together is a complex exercise. Historically this would have been relegated to often even right to go large teams working with Excel and pen and pen and paper.
[00:17:16] And generally that’s slow and prone to errors and then you cut corners all sorts of ways. And so, replacing that with a kind of modern SAS cloud-based architecture it really allows you to do the same thing much faster, more reliably. And that’s one source of value of software like ours.
[00:17:35] Well, the industry is sort of moving that way. I have an example here, by the way, one of our, one of our customers, I’m not going to name, but they had, when we came in, this is years ago, but they had, I believe something like 300,000 SKUs on their list. And this was the automotive aftermarket.
[00:17:54] Right, these are parts that are created for better house. And then you wait, if someone needs a part and you ship it to them, right. And they were repricing annually and because there were so many of those parts. And they didn’t have any good software for that.
[00:18:10] So like, how are we going to do that? So some smart consultant told them 80 20 rule. So take the top 20% of the SKUs that create 80% of the value or revenue or whatever. Have you do your exercise on it and the rest of it we just increased the price by inflation or something, right. So they did that for a couple of years, and then they realized that every year. They ended up scrapping physically scrapping bunch of parts because they were overpriced. It was just priced out of the market. When we implemented our software, the cost of our software was less than what was the physical cost of physically doing, removing and destroying scrapping. So forget like lost value and opportunity cost.
[00:18:56] No, no, no. We’re talking. We saved them. The fact that they didn’t have to physically scrap the parts that are not moving. And of course there was a lot more valuable downstream. So there is impact shift from what traditionally were business processes. And when I say, traditionally, we’re not talking 20, 30 years ago, we’re talking, you know, eight years ago, five years ago.
[00:19:17] Right. The things are really changing really, really fast. So that’s price setting or it’s price management. There’s price optimization is the second sort of area that, that we operate in, which would be the sort of all sorts of algorithms around, optimization, problems. Optimization problems generally are multi-variant problems.
[00:19:35] Right? So you’re trying to, rather than just solve for one of the nearer linear problem, but you’re trying to kind of optimize for multiple variables at the same time. Typically this would be things like I want to increase revenue without losing margin, or I may want to increase profits without.
[00:19:53] Sacrificing volume and these kinds of constraint problems. So that would be the second area. And the third area is what you were kind of alluding to, which is setting up quotes. So this would be a situation where. Typically pricing is a centralized function in corporations, right?
[00:20:10] So somewhere in their headquarters, they would be one guy or a team of people who would basically set the price list for everyone and then cascaded down to the organization that works for many areas. But then when you, and we operate. Predominantly not exclusively, but predominantly in the B2B space.
[00:20:29] Right? So our customers don’t sell typically to retail, but they’ll to retail customers, to consumers, but they sell to other businesses. And in that space you don’t just sell off prices, there’s negotiation with the sales people are doing. And not only they don’t negotiate about individual item, but they negotiate a basket of an order. So customer wants not just one thing, but they want a group of things and the sales person needs to at that point, say, okay, I can sell this to you for X. And that X typically is some sort of a discount off the price list, but how big of a discount? Well, maybe it depends on what was the discount you sort of.
[00:21:13] Given to a similar customer with a similar order in some other region. And you may want to know that well, in the traditional setup that you couldn’t, I didn’t traditional setup. All you do is I have a right to give you 5% discount and anything above that, I have to run up the chain and that takes weeks.
[00:21:29] We had customers who before they started with us, they would typically do a quote or RFP, right? RFP is another sort of similar situation. They would take three weeks to complete it. Not because they are stupid, but because they take so many people in so many sort of movement of information, while you’ve put it off that into one system, you can have it in five minutes or 15 minutes just kind of run through the algorithms and you’re done and you make the decision and you move on.
[00:21:56]Andrew: [00:21:56] That’s the great thing about algorithms now. Isn’t it. It’s good to say, but the algorithms now they’re so getting so advanced that they learn as you go along and incorporates when losses and you get into a sense of alert plasticity. So you’re actually taking that information constantly learning.
[00:22:11] I’m driving better business, chances for better business forward so it’s like taking all that data and rather than just leaving it, sit there doing something with it.
[00:22:19]Tom: [00:22:19] I agree. But just to kind of not to scare folks, listen I’m not necessarily promoting the logic and it may come it, we may get to a point where machines will take over even here. what we’re seeing is not necessarily machine taking over people’s jobs.
[00:22:36]It’s much more that they, what we can do is eliminate the delays that are historically inserted only because you just don’t have the right decision makers at the same time in the same place. So you may be right that one day we’ll come to algorithms replacing people. But we can certainly speculate about how the world’s going to look like, but in our experience, we’re not yet there, what we’re doing is replacing rigid rules.
[00:23:04] That are sort of bureaucratic rules with more of a sort of a market, a market driven rules. Right? So for example I can tell a salesperson that they cannot price above certain branch or outside of certain branch of what our transactions have been and historically, if they didn’t see what those transactions wherever, how do they know?
[00:23:24]
[00:23:24] Andrew: [00:23:24] Yeah, exactly.
[00:23:25] Tom: [00:23:25] that’s the band and the band can be dynamic as you start, because over time that’s changing. So yes that would be true.
[00:23:31] Andrew: [00:23:31] But it’s cool. Cause it just means we’re leaving less money on the table. And I think that’s where I got like, traditionally, like I’m an accountant. I would never thought I would’ve got into this pricing world, but it’s actually quite cool because you’re taking a lot of the training, like even down to reconciliations reconciling price books, you’re sort of saying the price management setting process.
[00:23:49] It’s always important to make sure we’re quoting the right prices we set and if there’s a disconnect in the system, we could be even more on the table. Same with this sort of the more dynamic pricing, as well as just making sure that things are working as we would anticipate or making sure.
[00:24:03] And even if that didn’t exist, we could start creating systems like that by setting better governance and learning from it in terms of what’s working and what’s not working, it’s just feeding that, learning back into the system.
[00:24:14] Tom: [00:24:14] It’s funny, you mentioned your own sort of transition here because one of the things that I’ve been seeing for a while is that when I first came to a price of facts, one of my earlier questions to my colleagues was so who in the C-suite onto pricing. Right. And I kind of got like, it looks like maybe the head of sales, maybe that’s not the right person, maybe head of marketing, maybe that’s not the right.
[00:24:37]And then someone invariably would say like, well, it’s the CEO, right. Because these are responsible for everything. I was like, okay. Okay. Well, that’s great. That’s great.
[00:24:44] Andrew: [00:24:44] really helpful.
[00:24:45] Tom: [00:24:45] out of the jail, out of the jail card, right? Yeah. But so I said, you know, maybe I’m biased, but I said, why not the CFO?
[00:24:52]and yeah it is true that with some of our customers that is the ultimately the CFO, but it’s not typical. And I think it’s a real shame. I would suggest that folks, if they are thinking about advancing their career and jumping on this digitalization trend and as we discussed earlier today is being more strategic than focusing on how your company does pricing and how you as a CFO or a finance manager.
[00:25:21]How you’re involved in the process and what visibility you have and there is just so much that I find on a person can do here that it would be a real shame to pass on.
[00:25:34]Andrew: [00:25:34] Yeah I know I take that’s a really great challenge and just set out there, Tom. And I’d add to that is. Back in those days, we used to do budgets and costs and so on. And I’m like cost is only one part of the P and L. That’s actually, if you think about it, the bigger part of the P and L is that piece at the top, the revenue and driving margin there.
[00:25:51] So if you want to make a more like bunch of things to a degree is important and managing costs is important. Yes. But if you want to make a bigger impact or more meaningful impact, Sustainable stay relevant in the longer term, you wouldn’t go far wrong by, by enhancing the pricing, understanding, and skills and where you can add value there.
[00:26:12] Tom: [00:26:12] And the other thing here it is, which I would say that sometimes as finance people we’re guilty off is we’re thrown at P and L , right and it’s just a bunch of numbers and revenue is one number and maybe gross margin is one number, but in reality
[00:26:27] okay. Maybe you have business units, right. But there are segments. there are channels. There’s all the. If we as finance people, don’t go and ask those questions and just leave it to whatever ourselves or whoever to manage that. That’s our loss. Right. What we should really be doing is understand how is the margin different between not just different business units, but within the government given business.
[00:26:50] Between different segments, geographies, and all that. And what drives it? Why is it different? Is it different? Because the cost structure is different. It’s a different, because pricing is different. I mean when you go back to college and when you did your ECON 101.
[00:27:04] Those were all the things that you are were saying like, yeah, this is great. This is what economics is all about. And then all of a sudden you become an accountant and you forget you know, Adam Smith, you know, so pull back Adam Smith and start applying these sort of basic economics thinking to the financial management, because that really belongs there.
[00:27:24] Andrew: [00:27:24] no, exactly. I think you’re completely right. Tom look, you’ve been giving us fantastic advice. I’d be curious to know though what’s been the best bit of advice you’ve ever received.
[00:27:32]Tom: [00:27:32] I’d said that the best advice that I receive is. And this goes a little bit back to what we discussed earlier, about how as finance people, we kind of search for truth and for a sort of deeper understanding and sort of learning. And I think that’s absolutely critical, but I think that the best advice I received then best in a sense that I wasn’t expecting it was important as that truth searching inclination is it’s also important to be able to sit back and listen to other people. Cause it’s the dogs of war of sort of getting to the truth we could sometimes trample on other people who are maybe less that’s sort of forthcoming and if you want to ultimately get to the truth, you need to get multiple perspectives.
[00:28:16] You need to get perspectives from wider range of people. And so I’d say that was something I didn’t expect you to do here. And I did well when I finally learned to listen to that advice.
[00:28:28] Andrew: [00:28:28] that’s great and again, i don’t think our listeners, our audience are ahead of the game by getting these multiple perspectives from the guest mentors we have on the show, Tom. So say you’re talking to a good audience here. They know what they’re about, but you don’t have to think that’s really impressive with this
[00:28:42] and I think this is I’ve got older. someone told me that when I was younger and said, yeah right whatever. But as I got older, I really appreciate those extra perspectives because I always felt that I needed to know the answer myself. And it was only when I sort of embraced the fact that like now as a leader of teams in multiple continents, it’s like you value those perspectives.
[00:29:00] It’s a balance. Obviously you don’t want to take too long. And, you know paralysis by analysis, but actually having those additional perspectives helps you get to a better version of the truth. That’s what I feel.
[00:29:11] Tom: [00:29:11] yes, I would.
[00:29:11] Andrew: [00:29:11] guess you feel it
[00:29:12] Tom: [00:29:12] I would sign that. Yes.
[00:29:14] Andrew: [00:29:14] I suppose the next question I’d have for you, Tom would be more about resources. what resources or maybe book or whatever would you turn to? Maybe we recommend our audience go check out.
[00:29:26] Tom: [00:29:26] So, there’s a bunch of different resources, the one kind of old fashioned media that, I would sort of remind people it’s out there. If you forgot about it. It’s the economist magazine. So I recently subscribed again after many, many years of being absent and actually subscribed to the printed version.
[00:29:44] So that as well as the digital one, so that there’s something there. It’s still good media in today’s world where a lot of the media diet that we consume is not something to recommend.
[00:29:56] Andrew: [00:29:56] Yeah. Can I ask you about that one top extra? I used to be a subscriber myself. Well, you know, probably 15, 20 years ago, is it? I saved it so it’s not like that fake news we have now going
[00:30:06] Tom: [00:30:06] so, I mean,
[00:30:07] Andrew: [00:30:07] quite credible. Do you think.
[00:30:08] Tom: [00:30:09] I don’t want to get too deep into this question, but I mean, it’s probably too much to ask any sort of media outlet to be completely without bias. And, you know, if you’ve been around and seen the world that you can discern what the bias perhaps is, but it is remarkable.
[00:30:25] And I have to say particularly about the similarly long absence from consuming is that they still are. And I would say similar to let’s say BBC as I sort of a broadcasting station, right. They are still maintaining a remarkably high standards. So I would say that as someone who suffers from sort of not being able to procure a good source of sort of journalists, and I would say that’s a bright spot, more on the book side.
[00:30:49]It wasn’t entirely surprise, always sent us maybe. But the book that I recommend is the Sapiens from Noah Harari. and the reason why I recommend it is precisely because it gives you a very broad perspective on including economic development. Right? So it has a little bit of economics in, it is not just sort of historical treaty, but it really brings together how the whole.
[00:31:14] Evolution of how we got to be, where we are, has to do with us. What makes us as humans inside his notion that money is religion is something that at first, when I first saw it, I was like, You know what a bunch of BS and then ,you read the chapter. If you want to start with just one chapter, read that chapter and you’re like, come out of it with eyes wide open
[00:31:36] and you’re like, wow, this guy actually has something meaningful to say and I think it’s a great book and it’s a great challenge to what too often they say these days, most of us probably are sort of so busy with work. And so kind of narrowly focused on, on just looking at the one thing that we need to deal with that, that having this sort of zoom out moment.
[00:31:58] When you look at the entire it’s about a 350 pages, it’s not that big of a book and it covers the whole human history. So
[00:32:07] Andrew: [00:32:07] it’s pretty good at that. Isn’t it.
[00:32:08]Tom: [00:32:08] It’s a very fascinating story. And it’s something that helps provide perspective. But I have more books if you want.
[00:32:14] Okay.
[00:32:14] Andrew: [00:32:14] Yeah, for our audience who are going to watch a video of this, Tom has got a great collection of books or we, if I find off a couple of their last dime and it’s just like, wow, you know? Yeah. We’ve come across some good ones. That’s a great one. And I actually say, I second, what you suggest because, it does take us on a fascinating download of history and human development in one book, you know?
[00:32:33] And, you can get through it in a few hours, but like it’s a really good, and I liked the section on commerce and our money , I think it explains a lot about people’s behavior. And we haven’t developed that much if we go back but did you have a chance to read his follow on Homo Deus? I think, or something?
[00:32:50] Tom: [00:32:50] Homo deus and then 21 lessons for 21st century. Yeah, I read both of those. They’re good I would say that if people were to read just one book, it’s definitely sapiens.
[00:33:00]Andrew: [00:33:00] Yeah. Start with that one. But I did like the forward looking questions on the 21st. Was it the questions for the 21st century or something like that? It wasn’t a 21 lessons or something.
[00:33:09] Tom: [00:33:10] If you are more interested or your listeners are interested in more in future looking books then I would probably Max Tegmark: Life 3.0 is the one that I would recommend, that he’s a Swedish physicist and I believe he’s an MIT, if I’m not mistaken, it talks a little about AI and it’s some scary reading there for sure.
[00:33:32] Andrew: [00:33:32] Yeah, so for orders, I would make sure we get the proper links to those books in the show notes. Just so I get the right names great recommendations. Thanks Tom. And I suppose if our audience, wish to continue this conversation, where’s the best place to connect with you at.
[00:33:46] Tom: [00:33:46] So , I guess that’s, as far as what we do at price fx and pricefx.com it’s an easy place to go, in terms of my own personal sort of profile I’m probably most active on LinkedIn, look for Tom Fencl at LinkedIn. I have a pretty decent real estate there in terms of, my name is being the easily searchable.
[00:34:05] And I am on Twitter too. But I’m not super active. And that’s probably demonstrated by the fact that I don’t remember my handle, but happy to provide it too.
[00:34:15] Andrew: [00:34:15] Take it out.
[00:34:15] Tom: [00:34:15] but I don’t know that I don’t know that you need to follow me there just yet.
[00:34:21] Andrew: [00:34:21] Awesome. I’ll tell you what, we’ll put those links into the show notes as well. And I suppose look, you know, we could talk, it’s like, it’s obviously it’s early or Friday, late by Friday, but, we could talk and talk. I feel like grabbing a beer next, but I want to be respectful of your time.
[00:34:35] So look, if for audience, would you perhaps have any parting thoughts before we wrap up?
[00:34:39] Tom: [00:34:39] I think we covered the great topics. Maybe the only thing I would say is finance is exciting. It’s more exciting now than it was even few years ago, precisely because of all the things that with technology, you can do these days and yeah. And I would say that be bold, there’s definitely something exciting to do and interesting to learn.
[00:35:02] Andrew: [00:35:02] Awesome. Well, Tom, really appreciate having a chat again. Fantastic advice. Great resources, great points. And yeah. Thanks for coming on the show today.
[00:35:11] Tom: [00:35:11] Thank you for having me.
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