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It was back in 2002, Stephen Grist says, when he first punched through a surface of rigid assumptions to grasp the innovative levers that would propel him into the ranks of strategic CFOs.
At the time, Grist was the CFO of Viatel, a technology company whose management and sales teams were eagerly seeking to reestablish the company’s footing along a growth path after having recently emerged from a Chapter 11 bankruptcy.
With its bankruptcy in the rearview mirror, the company advanced with an unbridled appetite for growth—but one that was perhaps lacking in long-term vision.
Says Grist: “The existing business managers were so focused on ‘Take that hill!’ and ‘This is our business, and this is the path that we’re going down!’ They just were not capable of identifying the disruptive risks.”
Having already logged a string of seven-day weeks to hasten Viatel’s exit from bankruptcy, Grist might have found it easy to applaud the sales team’s mounting tactical wins and provide diligent governance. Instead, he engaged the company’s general counsel, and together they approached a number of bankers in order to “add on” some small Internet businesses that could quickly diversify the types of services that Viatel offered to its small to midsize customers.
According to Grist, Viatel at the time was struggling with “The Innovator’s Dilemma”—a phrase referring to disruptive competitors first coined and used as the title of a popular text by Harvard professor Clayton Christensen.
“You’re so caught up in your vision of the company that you’re not really capable of identifying where those disruptive risks are affecting the company as they come in from different, different directions,” says Grist, who looks back at 2002 as a turning point for both Viatel and his CFO career.
Moving forward, Grist has entered new CFO roles as a disruptive risk expert tasked with questioning assumptions.
“Every time I’ve come into a company, it’s been like, ‘Okay, it’s time to do the long-term business plan’—but you’ve got a different view of the world, so you can ask all those questions,” says Grist, who since Viatel has served in a string CFO roles for both founder-led and VC-backed companies.
Says Grist: “As the CFO, you bring your experience to bear and you identify risks as you build the next year’s budget or the long-term model from really being in a position to question assumptions.” –Jack Sweeney
Guest: Stephen Grist
Company: Bohemia Interactive Simulations
Headquarters: Orlando, Fla
CFOTL: Tell us about Bohemia and what sets its offerings apart in the market today?
Grist: Bohemia is in a really interesting space. What I was particularly attracted to was the types of customers that Bohemia serves, which are some of the world’s largest military organizations and prime contractors. We do so in a very disruptive and innovative way, using software to completely change how people might think about training. When I saw government budgets obviously coming under greater pressure, and then the idea of having soldiers running around in a field and all of the costs that this entails when compared with doing it in software, it was clear that this was a very exciting market for a company to be in.
Looking at behavior, we see that many of our relationships with our primary customers have been for an average of 10 or 11 years or so, with, for example, the U.S. Army and the U.S. Marine Corps. We’ve only been in existence for about 15 years, so this spoke to me of a very deep customer engagement. A very successful product makes the customers themselves successful, and in fact that’s been the case. While the government might be the official customer, the real customers are the 500,000 or so military personnel who are trained each year using our software, which helps them to do their job in a safer way and reduces the likelihood of mistakes that could harm themselves, their colleagues, or civilians.