609: Minding Your Financial Ps and Qs | Matt Ellis, CFO, Verizon

Listen to the Episode Below (0:52:55)

It’s a story that Verizon CFO Matt Ellis seems to enjoy telling and one that he has undoubtedly related more than once before. 

One evening while in high school, Ellis was working at the fish counter of a local supermarket when he received some feedback from the store manager.

Earlier in the day, the man had asked Ellis to clean a number of shelves beside the counter, but Ellis had soon become busy with fish patrons and hadn’t been able to complete the task.

More than 30 years later, Ellis easily retrieves the store manager’s words: “I’m not disappointed that you didn’t get it done—I know that you were busy with your normal stuff. What disappoints me is that if you had only told me, I could have arranged to have someone else to do it.”

This is a classic management lesson that many business leaders have communicated before, but when Ellis presents it, the message is endowed with renewed relevance for finance.

It is easy for us to imagine Ellis retrieving the store manager’s lesson to enlighten a young finance analyst—or perhaps even his own approach as he prepares to brief Verizon board members on looming strategy snags.

“This taught me two things: One was the value of communicating bad news as early as possible, and the second lesson was the way in which he gave feedback—ranting and raving is not the way to get through to people,” explains Ellis, who even today seems to muster genuine appreciation for—and perhaps even marvel at—the store manager’s evenhanded demeanor.

It’s not surprising that Ellis shares a lesson that reveals the power of communication in finance. This is a skill that you suspect he acquired early in his career and that has co­­­ntributed to his ongoing ascent in responsibility and reward.

Having worked beside CFOs at Tyson Foods and Verizon for nearly a decade, Ellis arguably understood the CFO role better than most when he eventually became a CFO himself, at Verizon. 

Asked what advice he would have given himself in the first week of his tenure, Ellis responds that the parts of the CFO role about which he was most uncertain turned out to be those that up to that point had not been part of his experience.

“It’s the interactions with the other members of the senior leadership team that become different,” he reports. “It’s the importance of one-on-one communication—not the group meetings to which I had become accustomed before.” Here, too, Ellis’s communication skills have no doubt served him well. –Jack Sweeney

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Guest: Matt Ellis

Company: Verizon

Connect: www.verizon.com

Headquarters: New York, NY

CFOTL: How is finance helping to create greater visibility into Verizon’s business?

Ellis: One of the things that we’ve been spending time on—and that we will continue to do—is to really try to create an increased level of understanding of the relationship between what drives revenue, what drives cost, and how much of the cost is fixed versus variable. Over the past couple of years, we’ve deployed a zero-based budget technique whereby we look at the cost line and try to pull it apart to separate the price and quantity drivers—the “P times Q,” as it’s often called.

As the different teams have looked at the different parts of the business, this has really forced us to think about our spending in a different way. We don’t have a finished product on this by any means, but we’re really trying to continue to provide more transparency on what drives cost, what causes cost to happen, and as you do this, some unexpected things fall out. People say, “I didn’t realize that we did this.”

And then, very quickly, people go out and begin to do the things that they should do to make that thing better. Part of this is asking the questions and getting people to look at something in a different way. When you get to do this, you just look at the same thing through a different lens, and it gives you a different view of the business. So, this is what we’ve been doing and spending some time on over the past couple of years—just trying to dig in and better understand what drives the cost side of our business. jb