Chris Williams: I was introduced to Michael Kennedy by an old friend and serial tech industry CEO Tod Nielsen. He suggested that I interview Mike because he’s a good leader, and as the CFO of the Muscular Dystrophy Association, he has an intriguing challenge, especially recently.
If Tod thinks someone is a smart and talented leader, I listen. My conversation with Tod is coming in a few weeks. I hope you’ll listen. And I’m sure you’ll agree that he’s an interesting leader as well.
I’m also fascinated by the leadership requirements of nonprofits, even more so in these most difficult times. The pandemic has wreaked havoc in the charitable landscape. It’s particularly hard on those who relied on public events for the bulk of their funding. For the MDA, it is especially so given the demise a few years ago of the famous Labor Day telethon that so effectively leveraged Jerry Lewis, and made a huge difference for “Jerry’s kids”.
Finally, I’ve wanted to interview a CFO from the beginning of the podcast. Leading a finance organization is complex. They play a vital role in ensuring the health of virtually all organizations, yet are often undervalued or even invisible. Tying their work, which is often seen as a little more than “back office”, to the overall mission of the organization, is a leadership challenge.
For all these reasons, I looked forward to chatting with Mike. We got to all those things, and more. Yet, what I wasn’t expecting was a world traveler who also offered insights about the joys and challenges of leading around the world. That was an added bonus. And that’s what this is all about.
This is Leading Smart, the show about managing in the brainpower age. It’s a field guide to the joys and challenges of leading and working in the modern workplace.
I’m Chris Williams, your guide to the stories and ideas that I hope will inspire you to be a better leader in the world of knowledge work.
This episode, we talk with the CFO of the Muscular Dystrophy Association, about leading in finance, in a nonprofit, and around the world. This is Episode 215, my conversation with Michael Kennedy.
Michael Kennedy came to the world of corporate finance the old fashioned way. He inherited it. His father was the CFO of the Children’s Television Workshop, the home of the world famous Sesame Street.
Michael Kennedy: Yeah, it’s interesting, you know, that your surroundings can dictate so much. But in my, in my understanding, and I’ve done a lot of study around Myers-Briggs, my understanding is a lot what you’re born with as well. And it’s a combination, I you know, I witnessed my father, who was the CFO of Sesame Street Children’s Television network. And so that gave me a perspective of what that role was about. So you know, and it was quite interesting.
But that wouldn’t be enough, because how many children actually follow in their father’s footsteps? Probably not many, maybe it’s the opposite. I know, my children want nothing to do with me. They say I work too hard. And I don’t want any part of that.
And I think it’s my innate, wanting to be in the center of what’s happening. And it’s interesting because in sports, I was a catcher, which is right in the middle like nothing happens I was the ball comes through your hands at some point, right? And it’s that ability to be part of what’s happening and that’s what’s always driven my decisions of where I’ve worked is, it became very important for me to feel I was making a difference. To feel I was part of making that difference, not just you know, in the room when it happens. And, and business and CFO track and through business gave me that ability.
So in the beginning of my career, you’ll see a lot of it was learning, you know, learning skill sets. You know, I started in public accounting, with, you know, Ernst and Young and it was Ernst and Whinney at the time. And that gave me a deep understanding of accounting, and how to evaluate financial statements. Then I moved on to certain companies, and I’ve been fortunate to have a few people I worked for that really said, “Okay, that’s what you learned in school, but here’s how it works.”
And then eventually, and probably my biggest change is when I went over to the UK and worked for an individual there. And he, he taught me how to get people to follow what you’re trying to do. And that was like, the last stage of me maturing as a leader. You know, many, many people have the skill set to be a leader and are very knowledgeable. But making that transition of being able to get people to see your vision, buy into your vision, and participate in your vision is, is probably the hardest part and takes many years of, of trial and error and trying to figure that out.
CW: Do you remember the first time you ever were somebody’s boss?
MK: Yeah, well, when I went over to Europe, for the first time, it was interesting, I was with American Express in and I had the choice of going to either Mexico or Germany. And, you know, I chose Germany, it was more of a it was a Southern European region. So I had Germany, Australia, Austria and Switzerland, in my, under me.
And it was interesting.I was in my young 30s. And I’m thinking I’m gonna have a big company American Express, don’t worry there many people behind me not not, you’re on your own, we sent you for a reason, because we don’t want to deal with it. Right.
And so suddenly, you’re in a completely different culture. And, and, and at the time, and maybe even still, so the German culture was very much hierarchy driven. And so they’re looking for me to tell them what were what the priorities are. And I’m coming out of the US where “no, we jointly develop these priorities”. And now we know you tell us what to do and without doing, and that was my sort of my dropped into the deep end of the pool of learning that I now had over 80 people that I was responsible for. And we were trying to do a transformation inside of Europe into these, you know, service centers at the time. And there was a lot of change going on. And and it was a it was a rapid lesson.
But I you know, I’ve always believed you like it as long as you have people around the room let you drown, getting thrown into the deep end, and with the ability to ask questions, is the fastest way to learn. And if you spoon feed, you learn at a spoon fed pace. And so but you do need some sort of safety net, because otherwise you could crash and burn too easily. Right? And I had, I had that safety net. But it was up to me to make decisions. And it was, yeah, okay. When it’s up to you to make a decision, you start learning how to make decision.
CW: I’ve read a lot of resumes in my life. And Mike’s was one of the more interesting. He’s lived in Germany, Belgium, England, he’s managed teams in South America from Miami. He’s had responsibility for teams in Asia while headquartered in Boston. And of course, several experiences in the New York area, his home base. I wondered if this globe trotting was by choice.
MK: I’ve always been fascinated to this day, I wish I could do more now. But I was always fascinated with both travel and more so, you know, being intellectually curious. That’s, you know, I even when I interview people, you know, and they say, well, what’s the key to success here? You know, here and you need to be intellectually curious. If you see something that doesn’t make sense, or something that is something you’ve never seen before, and you walk on by, probably not the right environment to grow in. But when you’re anxious to see “hey wait a minute, I’ve never seen this before”. I’ve never seen how a German culture operates in business. I’ve never seen how I’ve been in the UK or Belgium or, or Asia or Latin America. And it’s there’s common sets in there. But they approach it differently. And it really opened my eyes, and which has been very helpful coming from the US is a lot from the US. It’s us centric, which we have so much volume. We You know, we’ve taken the leadership on a number of businesses, where it seems like it begins and ends here, when in fact, there are many, many ways of looking at a problem and solving a problem. And my travels have taught me that.
CW: What did his family think about living around the world?
MK: It took some adapting. Fortunately, my wife felt that this was a good thing my kids were … when we first started out, my oldest was four and my youngest was a little over one and so Yeah, they went wherever we went. And, and so it was more convenient that point convincing my wife. You know, the harder part was when we came back to the United States for a period of time, and then I went back over with MasterCard to Brussels, that was a little more difficult because my boys, my oldest was in, had just completed freshman year in high school. And so it was a little more adapting.
But fortunately, they were up to the experience. And and I made the decision early on, that it wasn’t all about my job, it was about making sure that had experience. So, you know, you look at a lot of expatriates at the time. And, you know, they would get someone to babysit their kids, when they went off to Paris, or … No, we made the decision, now we’re going to Paris, they come up, and they need to make sure that they’ve come away, seeing that the world is a smaller place. And today, they have more friends outside the US than inside the US, because they’ve made those connections. And, you know, the world is just smaller to them, you know, because they’ve seen how other people do things.
CW: One of the key challenges of managing a local team that is part of a large multinational corporation is translating the corporate vision to meet the local environment. I face this when I managed teams in Europe and Asia for Microsoft. I wondered how Mike dealt with this challenge, particularly when he worked for American Express. It’s not just about language, it’s also about translating the culture.
MK: Well, it’s interesting, because with American Express, because there was always a single entity, was able to brand their way fairly well. And I would suspect, Microsoft, Google, and some of the other you know, Amazon have done the same, you know. And that is, you understand what your your businesses, you understand Customer Service is critical to your business. And so those things you don’t have to deal with, because even whether I was in Germany, or I went to Zurich, or I went to the London, they all understood those basics. It was the interpretation of how to get there, that you got your cultural education, and, and, and their approach. And, and, and, to some degree, a nationalistic sort of pride to do it their way, which you which gets overlooked a little bit in, you know, I guess we have the same thing here. But it’s, it’s in a different way, and you get to see it in a little more smaller version of it, and it becomes a little more intense than when you show.
So I think that was the difference is trying to understand how they needed to hear direction. How they needed to react to direction. And you know, and making sure you didn’t just like bring your American Way to them. And you know, you you had it, you had to understand how they want to hear leadership and that, you know, fine, I would say Germany, I was there three years was most of my education on that. And that that culture wasn’t shy to speak up when they weren’t happy. And so I got instant feedback. It’s all thank you for that, you know, but it quickly dawned on me, it’s how I explained it. It’s how I took the time to understand what was meaningful to them.
And it was interesting, there’s a lot in common, but the approach is dramatically different between Germany, Belgium, England, dramatically different, and a level of competition amongst themselves as well, of where they fit into the the play of, of making American Express successful.
But we delivered cards, we delivered a utility for people to spend. That was common in everybody. But it’s interesting. One of my first major projects was an activity based costing project when I got to the UK, and how in some cultures it was okay when you lost your card to get your new one in 30 days. And in some cultures like the US it was like horrifying, like how could … look at all that spend you missed right? And putting together the pieces. You found out that how different cultures would go through different approval processes. And and the acceptance of making a decision on your own even if it’s the right one without checking with multiple layers was different in different cultures. And that project sort of showed everybody — Hey wait a minute, Spain, you have over 60 processes to get a new card out the door. UK, you may have 35 … guess what we need about six. And so that we can because the ultimate guide here is not internally, it’s getting that plastic back in somebody’s wallet so that they don’t use another plastic or even worse get used to using another plastic.
MK: And so that was the big difference is how you went about your day to day how you earn trust, ie how you were able to communicate to them now? Yeah, remember, I didn’t know the German language. And so there, you know, there was a little bit of that. It turned out to be okay. Because many of them said, “No, we prefer to practice our English” and “I’m okay, as long as I’m doing your favor.” But it’s more of how do you make people feel comfortable, that you’re here to help them be successful and not be different in different cultures.
CW: There’s also always the need for them to it, they need to make it their own in some way. Right. So so and and, and so they do want American Express. I mean, it comes with it a name, you know, that is American. And that’s obvious and pretty straightforward. But but it also is, I mean, we’re American Express Germany, we’re American Express UK, we’re and so there’s, it’s kind of like, say Renault bringing their cars over here. They still want them to be a little French, right?
MK: Correct. Correct. Correct. Right. Yeah, Italian cars and so on. And the rover, Range Rover, and, and so on. You’re absolutely right. Yeah. And you have, you can’t lose that flair. Because if you do, if you try to cookie cut them, you lose the renovation, they lose their ability to explore different ways, because they feel inhibited, then you have to let them allow them to be creative in their own culture.
CW: Leading remotely is a challenge. You’re away from the headquarters and you don’t have the same support system. And leading remotely in a different culture adds more layers to that problem. How do you make it work? Especially when you’re trying to make major change happen?
MK: That’s right. And it all goes down to I’ve always believed it’s, you know, they “What about me,” is the first question everybody’s asking in change. And you need to get at that or you don’t get many followers. And it’s interesting, because, you know, when I tell people initially that I work for big companies, it’s sort of like, wow, that things just float along, and you’re a cog, just one of the cogs in a wheel. And I said, no, yes, that may be true when you’re in the headquarters. But when you go out in the field, it’s like working for your own company. And so you have a set of parameters that you need to fit in. But you need to make the decisions on the ground, there aren’t vice presidents presidents the left and to your right to help guide you you’re in.
And whether it comes to a fraud happening, I had a number of those cases where we had react within, you know, 72 hours or millions of dollars were at stake, or it’s somebody that is disruptive, and you need to coach them out of the organization, or it’s simply trying to do whatever transformation you’re doing or keeping the focus on the business. It’s all on you to try to figure out, and it teaches you that ability to make decisions without 100% of the information. That you learn to get enough information to understand what this problem is. And you start working the problem with the full confidence that if you can halfway through and the problem turns out to be differently, okay, so you’ll shift where you don’t get frozen like some people will do and that is if I don’t understand this fully, and kind of know the outcome. I don’t know when they get started.
And that ability to go internationally was when I was working for a midsize company in Europe at the time my first foray. At the time it was it was across 23 countries and billions of dollars of revenues, which would be even times X now. So it wasn’t small. But it wasn’t as large as as the whole American Express was. And, and that gave me that ability to to learn and operate in a decision making mode, which is, you know, it’s been probably the biggest asset that I have in my career.
CW: We then shifted to leadership in the world of finance. I asked Mike what he sees as the role of finance in an organization.
MK: So there’s there’s three pieces in finance’s role. One, protect the assets. That’s what people mostly understand. You know, guard the assets, make sure everything is things aren’t being stolen, things are accounted for correctly. Then there is producing information that tells where we are. And a lot of finance stops there. And it’s a shame because that you’re only halfway home.
The last piece, which is we makes you at the center of, of how for an organization is using that information. But first providing the trust the information. And then using that information to influence business decision making. If you are not influencing the business decision making, you’re just dropping a book of numbers on somebody’s desk. And that’s not enough.
And so the CFO is now, you know, and for a number of years now have understood that it’s a matter of what we can do with that information, we have a seat at the table, we have a huge advantage that we see the flow of information. And it’s our job to use our left brain brain to interpret that. But then find a way to, to bring it down to a driver level that what is really driving what’s happening out in the field.
Perfect example, I could tell my executive team revenues are up expenses are up. What does that mean? What is revenues me. But if I instead say that you try to let’s use the card, you tried to get a distinctive card out into the market for American Express or MasterCard, and it generated this response. And the math of that response, turned it into a revenue up or down. But it’s the actions of what you were trying to do that need to be addressed. And that’s the transformation that a CFO and his finance organization can do, is not only talking about what’s up and down. But to be able to connect the dots and say, Here’s why it’s up and down, related to the decisions that we made in marketing, we made an operations or you know.
For example, is finding out that it’s not only X amount of cost to replace that card in your wallet. But why is it x and not y? Because you have 60 steps, and not six? And why did you lose some of your you know, your volume there? Because you couldn’t get it in there fast enough? That gets executive teams to react. Now they have something to discuss. I don’t have all the answers, I never will. But I can propose an awful lot of good questions to the table. And I can participate in the answer of those. But by proposing in the right way, I get everybody to participate in the answer. And then I find the executive teams, I can sort of lead them a little bit to perform at a much different level, because they’re addressing what’s relevant.
And it’s very little driven, actually off of that P&L, that just happened to be a way we add things up and starts maybe starts to compensation. But it doesn’t lead to any answers on its own.
And so that’s probably the big thing when I’m looking for as I’m recruiting people to work for me, is man, everybody, you need the people that are guarding the assets, you need the people that are producing the reports. But you definitely need a group that understands how to read information, and what it’s really meaning. And tying it back to the business drivers that the rest of your organization is operates under.
CW: Mike’s resume is filled with roles in finance-oriented companies. He’s worked for American Express and MasterCard. He’s worked for financial consulting firms. He’s been in companies focused on finance. Does the role of the CFO play an outsized role in those firms because they’re all about the money? Or to put it another way, would the CFO play a less significant role in a retail or tech or manufacturing company? Where it’s not all about the numbers?
MK: Yeah, you the drivers are different. But the concept of getting to the driver is just as important. If you’re a mail company, what are your drivers cost the stamps and volume amount? Right? So just saying that your mail costs are up, that doesn’t lead to a decision, but saying that, no, we’re operating under the same volume, but the post office has raised their rates. Okay, so you may or may not be able to do something about that maybe you can negotiate a business rate but but if your volume has moved up, that may be a good thing while your postage cost is going up.
So it doesn’t whether you’re selling cars, or your your your Amazon trying to deliver goods. It’s it’s all about understanding the drivers that are generating the cost of your business. And the drivers that are generating the response to get people to buy what you’re offering.
And that and the same thing with nonprofits if you can, same concept. It’s hard to raise $1, you want to make sure you don’t waste any of that dollar once it comes in. And then the remainder, instead of going to a shareholder goes to a mission. But the process of getting that last step is very identical. And that’s why I felt comfortable making the transition over to you know, MDA, is because what they needed was to understand the flow of how to bring in more dollars through technology innovation, how to then protect and spend less doing so. And so that I can utilize that what was a great organization here, and that moving more of those dollars to research and to care of our patients. And so, but it was no different than what I did for American Express, or I did for MasterCard, and here I am doing it for a nonprofit, because the flow is the same.
CW: But is there are respect difference? Like I would assume that the CFO at a finance company gets more seat time at the table, more respect than the CFO, you know, in some company that is busy worrying about, you know, making widgets or something like that.
MK: That’s right. And in some cases, yes, I think the CFOs role is getting more and more appreciated, over the last, I’d say five to 10 years. It certainly always was appreciated if finance companies, especially if if copy of complicated formulas, or determine your results such as provision for bad debts. That that that is a numeric issue that typically the the they depend on the finance organization to watch and monitor, as opposed to maybe a retail organization that wouldn’t necessarily see that as so critical up front.
But the our ability with today’s technology to be able to point to weaknesses in the chain is the keeps us I think very valuable. And if you’re not providing that role, then your value becomes less and less, and then you will get pushed to the side at the table.
But if you’re if you’re constantly pointing to no matter what business you have, and so I’ve worked in insurance companies, and I’ve worked in in financial companies, I’ve worked with credit cards and direct FinTech companies. But I’ve also worked in a consulting company, which utilization became the issue. And so yes, the probably the rock stars were the people who had the clients. But my ability to show the utilization from group to group, and to help, you know, get people to optimize their hours more, when that brought a bigger payout to these partners at the bottom at the back end, I was, you know, I was a very likable person at that point.
CW: As a leader of a team, that’s part of the company’s core mission, it’s easy to sell the vision, the company’s vision is your vision. When you’re leading a distribution center for UPS, you can easily relate the company’s vision to a delivery drivers daily job. How on the other hand, do you relate a support role such as finance to the company’s vision? Do you start with the company vision or a specific finance-focused vision?
MK: It starts and has to start, I think into with a company vision. So what are we trying to accomplish? What is our strategic direction? Where do we start? And where are we trying to end? And then I then look at it as Okay, so what’s happening in between? What is that end to end process that pulls that beginning and end together? And that movement that may very well run through my organization of finance and run outside my organization of finance.
So as a CFO, I do not look only inside my finance organization such as, you know, procurement or payables or general ledger. No, it starts, where does it start? And where does it end? And when you look at it that way, you are tying yourself to the vision and trying to maximize that vision along the chain. That’s my skill set to maximize that what they’re trying to do as a vision. So yes, marketing is trying to stimulate your eyeballs on what we’re selling, right? Operations is trying to fulfill what you’ve ordered. And I’m trying to look at, okay, so we have all those pieces. How are they working hand to hand and are we missing something? So instead of, instead of selling something for $1 and costing 80 cents, can we sell something for $1 and have it cost 40 cents? And then how do we reinvest that additional money as well, you have to put some money back otherwise you’re going to slowly die.
CW: How do you translate that finance vision of being able to identify the drivers and proposed changes down to the person in the finance organization whose job it is to route that invoice or prepare the P&L? Especially when you’re trying to make fundamental changes.
MK: So you just defined the leadership. And because that is my job, because I need that person on the line, who understands his bit better than anybody to buy into what I’m trying to do, and feel a sense of ownership on it, because he will say something at the table that I’m not thinking of, because I just don’t have as much day to day touch there.
And so I do spend an awful lot of time up front, trying to simplify what we’re trying to do. So everybody can grab on to it.
An interesting example is that at MDA, I started out with these four boxes, and everybody just like, “oh, here’s Mike with his four boxes.” And but it was put the basic things we’re trying to change into four boxes, you know, and, and it’s funny, at the end, when we successfully did the transformation, they print the T shirts with my original four boxes on it, just to say, “Yeah, we did listen, but we weren’t gonna let you know that right away.” And, but it was a good feeling that they heard me,
You know, and it’s getting it’s simplified. So that has problems happen. It gets very jumbled. And you say, right, four boxes are going off. First of all, which box you’re trying to talk about. Okay, so we don’t have to talk about these three, you’re, you’re talking about there’s a problem over here. And as we fix that, when it passes to the second box, did it cause any problems? No, okay, good fix, let’s move on. And then when everybody sees that, Oh, okay. And they start getting confidence that they’re getting more comfortable, this is gonna work.
And, and you’re really what you’re trying to tie it down to no matter what level of the organization is, I hold my job, because I successfully do ABC, I may hate the infrastructure around, it may make my job torturous. But I do ABC, and I get paid to do it. Now you’re going to change this up, how do I get comfortable that I still can be successful doing a ABC. And that’s why I try to simplify because I need that light to go on for them that they can be successful with the new way, as opposed to the old way. And but enjoy. It’s not easy. If I say it simply on our call today, by there’s some terrifying moments when you do change.
CW: In case you can’t tell by now, Mike is a professional change agent. He likes to fix things. He’s had more than 10 roles in the last 15 years. I wondered what draws him toward problems.
MK: I like the innovation, I like the creativity, I like the problem solving element of taking my skill set. And applying that to there. When you’re like that, you tend to be pointed towards problems.
And so you know that, you know, I could like I could talk through every single change how it made sense at the moment, you know, and but most of it is driven by I’m just trying to make a difference and change things. And, and, and when that runs out and organization either because … they lose their desire to continue to make changes, it becomes a bit unappealing to me. And so I’ve been able to move into positions that I felt my in my contributions made a big difference.
And now, not all changes were something I wanted. I mean, I worked for two companies that failed and went bankrupt. And so both of them had great prospects that I thought I’d be there for 10 years each. And, but sometimes it just doesn’t work out. And especially in the rapid pace of today, if you if you have a weakness in your in your business strategy, it gets exposed fairly quickly today. And you may not be around the advantage of the bigger company where you could change inside the company. So that said, my creativity, my ability to be innovative. I went I went to Germany. Started in the US I was in the US for about six years, then went to Germany, then went to the UK and so on.
And even when I came back I went to john Hancock in Boston. I really didn’t work in Boston, it was it was an international CFO. I just didn’t want to move my family over to Asia where most of their business was. So I flew back and forth. But it was applying the same sort of concepts and yeah, it’s it’s difficult you have to quickly In a new culture, the first it’s like a three – six month stint. And I’ve always felt that even as an expatriate, or starting a new job.
The first six months, you’re trying to understand less, make less change, unless it’s your, you know, the dam is broken, right. But you’re trying to understand what’s happening here. And you’re trying to understand what to do about, then and earn respect, that you’re here not to eliminate people’s jobs, you’re here to try to help that organization that stay ahead of the curve.
Then the next six months is you’re digging in deeply. And now you are impacting people. And this is the hardest part, this brings out the biggest test of your leadership. And that is, you’re affecting people’s day to day job. You’re telling them that what you knew for 5,10, 15 years, we’re going to do it differently. And so and here’s why. And it takes probably 10 times the patience I ever thought I had, but I don’t have a choice, you know, because if I don’t bring them along, you’re like, I say to a lot of people, digital transformation is not the end goal. You can put any system you want in place. But if you don’t generate innovation and change out of it, which is you just wasted money. You know, being on the cloud is not an end in itself and end point using your ability to be on the cloud. So you so when a COVID-19 hits, you don’t skip a beat, because you already were on the cloud. And now people working from home work exactly it was when they were in the office. that’s meaningful change.
I’m trying to sell what I do, and people who need it and want to buy it from me, it’s fine. And if I’m not there forever, I’m okay. I’m not a big nester to begin with. And so I’m a change agent. It’s an easy word. It’s very popular, but I do enjoy that part. And but it comes at a price. It comes at a price.
CW: I then asked Mike how he ended up at the Muscular Dystrophy Association.
MK: So the last company I worked, previous to that was sold. And so it really came to a point Am I ready for retirement? And I was like, No, I can’t I have way, way too much energy. I’m not just not even close to thinking about it yet. And so, but I wanted to take a few months, you know, when a company has sold, it can beat up a CFO pretty bad. And so I was exhausted. But what I thought was going to be a six month break turned out to be … I think I made 30 days. And it was over December. So it was great. I had some holiday time.
And then I got a call in in January, saying that this great organization who I knew as the Jerry Lewis telethon, you know, from when I was a kid and needed a CFO that helped needed to help fix them. They had allowed their their operations and technology to get very antiquated, very cumbersome, very costly. And when I asked to say, “Okay, can I see your technology blueprint?” There were 63 systems and one of those spaghetti charts. That was everything. I said, you don’t have to say anymore, I see a problem. Because if you think this is an architecture, that’s the beginning of your problem, it’s like, you know, this is a mess, this is like a patchwork of yours. And so they basic trouble, can you fix it, I say yes I can, but some parts have to start right away, it’s probably going to be an 18 month journey.
But you know, I need to make sure I have your backing. And so my meetings with the CEO is very important, because I knew that would be my day to day. But my meeting with the board was equally important. And I and I insist on a meeting, I think I met with six or seven of them to make sure that they saw the same problem. And they were willing, I’ve been down a path many times that when always come short, back office gets cut off first.
And so, um, but I think they reached a point where they all understood that this had to change that they were hurting. And so I arrived there … by the time all that talking went on, I think it was the march of 2018. And the first phone calls January and I said “Yeah, why not? Let’s try this.” I’ve made a lot of people a lot of money. I think I’d like to contribute my efforts to driving some of that outcome to people who need some help. And so I had it feel good part of it to enjoy.
CW: Yeah. Did you have any personal connection to the mission know anybody with MD or any of that?
MK: I did not. I had a connection with people who have had other you know, constant problems and health issues. And I’ve saw that the impact it has on the families and the impact it can have just in surviving day to day, whether it was, you know, diabetes from 18 months or more people with, you know, mental illness or, you know, along the, the spectrum of different things that people struggle through. I’ve seen that, and both personally, you know, as well as friends of mine.
And so it was important to know that that, yeah, these families, and these individuals need a lot of help. And this country is just not built to provide the help other than through nonprofit organizations. And so they become critical. And I felt I can help them right away.
CW: When Mike came to the MDA, he got immediately into the problem of streamlining their systems. And it had an amazing effect, he was able to pull an astounding $10 million of costs out of their operations, which went directly back into the mission.
MK: Yeah, in the beginning, it was okay, what, how do I apply what I had what I know, to help them, and it became very mechanical, and that there’s a process that is broken, let’s break it apart, let’s bring in some some state of the art help here.
I understood the vision of that would lead to benefits, but I wouldn’t say I felt that appreciation of how much it would do. And so, you know, not only has this, you know, exceeded, you know, over $10 million of benefits. And we don’t have, we don’t have any external event that raises $10 million.
So I feel very much connected, that I made a contribution of bringing money back into the organization that went to research that went to the care centers. And what the things I changed were not just the financial nature, I changed the tools that the fundraising team uses, I changed the tools that the mission people used to manage their care centers. And so that helped me learn, wow, I really am making a very connected change here.
I didn’t start out thinking how big that would be. But I can sit back now, two years later, and feel good about it. And there’s nothing better than when you put a massive effort in. And believe me, it was non stop for a long time. But you say yeah, it was worth it. It was well worth it. And, and so I feel good about
CW: The phase out of the telethon as a as a fundraising mechanism. I’m assuming that was just an enormous change and shock to the system for how they go about raising money.
MK: That it absolutely was, and it was it was changed almost, effectively, almost eight years before I got there. There’s one or two years, it was a very small show, but didn’t do much. And and for many different reasons. You know, they, they, I mean, Jerry Lewis put the whole concept of telethon raising on the map. Um, and, you know, I have generated a lot of enthusiasm at a time. Remember it started in the 50s. That wasn’t something that was done back then. And so it had a very, very long run, contributing to the fact that MBA was able to put a billion dollars over it’s time and research. And so that billion dollars came out of all that successful telethon as one as well as all the other mission related expenses it had.
And so, but when it when it lost its ability to generate significant funding, they the board at the time, a decision to change. And that was a big disruptive change, to go to running field events. So holding galahs, holding golf tournaments, holding muscle walks, and having a great partnership with the firefighters, who if you’ve ever been on a corner, and they come up with a booth and fill the booth, that alone has been a highly successful, great partnership with them. And so this was different than just being on television.
CW: The changes Mike made at MDA were to completely overhaul the finance systems and move them to a cloud-based service. This was a difficult change to make at the time and he got a lot of pushback. It turns out that very change was a lifesaver for the organization.
MK: It’s it’s interesting how many … what do they say? Success has many fathers and failure’s an orphans, right. I felt very much an orphan in the beginning goes, I was trying to make that change, because it was the right thing to do and eliminated your dependencies on whatever could happen. Little did I know back then something like this could happen.
But that’s why you’re doing it is you’re preparing yourself to eliminate your vulnerabilities. And so by going cloud-based by streamline by going to centralized service centers, you I reap the benefits of a, a smaller process to do the same amount of volume, a less costly process. But I took away all the quite a bit of the risk and vulnerabilities. And sure enough, here’s comes a very big one. And we were ready for it. Ready so much where we were within three weeks, we were able to make decisions to drop our expense run rate from $10 million a month, to less than four … three weeks. Because I had the information in front of me.
When I first started at MDA, I wouldn’t have had a clue where to begin, I’d be going around asking people six months later, maybe I’d and and a lot of nonprofits, and I joined these, these groups to talk about it, they weren’t as quick to react, because they had to get their hands around first. And once they get their hands around it. We weren’t that’s so creative, that we did things nobody else did. We just did it faster. And that gave us a little bit of a leg up.
And and that’s why you do the transformation. It’s sometimes needed for what your problem is now. But it’s helping you eliminate risk down the line. And great organizations and successful organizations take hits all the time. And whether you go back to the Tylenol scares of many years ago, to to any other sort of disaster going on, tanker, you know springs a leak, and everybody hates that organization. The ones that are prepared for those type of emergencies, gets to survive it. And we fortunately, have had the vision and the backing and the support of many people.
I’m not taking credit for this, I find I I may have led away to get there. But they had the foresight to come get me they had and I had the foresight of a lot of people working in MDA to help me make this change. And it became it actually helped us survive. Yeah, I’d say nothing short of that.
CW: I’m assuming I’m assuming contributions have fallen off the floor. Right? I mean, fallen through the floor, right?
MK: Yeah, exactly. Most of most nonprofits are down 60%. From where they are. And then saw a quote the other day, 33% of nonprofits won’t make it. And, and we were able to keep that flow going a little bit because we switch quickly to virtual events. And that’s keeping the blood blood flow going.
But it’s not enough. I mean, we need to, um, you know, we’re still doing more and more creative things, and, but we need events to come back, we need the country to open up a little bit. And then, you know, it’s not so much that it funds dried up. But even when funds released, you know, neuromuscular diseases was not on the top of everybody mind, it was food. It was emergency workers. It was that.
CW: To wrap up, I asked Mike how a finance guy gets so focused on vision. That’s not usually something you see in a CFO. Did that come from his dad who worked for an organization with a crystal clear vision? Or was it from having to translate visions to other cultures? Where did that come from?
MK: I mean, I would attribute it a little bit of all that, I mean, think of Sesame Street at its time, how visionary that was. And, and so, you know, you’re where you’re seeing and learning some of that even though you don’t know it as younger.
Some of it is personal as I do get a lot of satisfaction at creating a visionary or a process flow that makes that changes dramatically what what they’re trying to achieve, and is well connected to strategy.
So I just find that just fun. I find working with people from I find the leadership part of it fun. But I do find fun breaking things down and rebuilding them in a way that hasn’t been built before.
And I’ve been fortunate that I’ve been put in roles and I could do that. You don’t always get the chance to do that. This is the way we do things. But I’ve been fortunate. I was given the leeway to do it. You know, proud of what I’ve done.
CW: Mike has clearly made a difference in a number of organizations and is now helping one of the country’s most prominent nonprofits to stay viable in the most trying of times. I want to thank him for his time and for sharing his insights.
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That’s it for this episode. The next episode returns to the studio where we’ll look at the allure and trap of the executive suite. I hope you’ll listen. Until then, please remember that each of the several dozen decisions you make today are part of Leading Smart.