It’s perhaps no secret that this podcast can be rather rigid when it comes to our policy for welcoming guests: Invitations are reserved for CFOs and CFOs alone. In fact, we regularly turn away book authors, consultants, and even CEOs. Such was the case for David Pennino, CEO of LogicSource, who recently was “pitched” to us as a potential guest. As always, we issued a templated email reply specially crafted to politely inform a dutiful communication professional of our “CFOs-only” mantra.
This being said, LogicSource’s CEO has arguably nabbed a plus-size supporting role on our latest episode without having recorded a single word. Although unexpected, this was perhaps an eminently understandable development, given the central role that Pennino has played in the career of Niki Heim, LogicSource’s CFO, who easily met our necessary criteria and subsequently accepted our invitation.Read More
Still, when it comes to Pennino, CFO Heim does not serve up the familiar cadence of CEO kudos, any more than she attempts to tell us that Pennino is some kind of all-knowing C-suite Yoda forever imparting career wisdom.
Instead, she swings open the door to a conference room of the past. The year is 2014, and Heim, a newly hired controller, is fielding questions from LogicSource’s private equity investors.
Pennino is confident that she has the makings to be the company’s next CFO, but not all those gathered feel as certain—including Heim, who now tells us that at the time, she felt that she was not yet ready.
“I’m very grateful that I had Dave Pennino, who was honest and open with me—he’d say, ‘Listen, here’s what I’m hearing—I believe in you, but you have to believe in yourself and you have to keep going,’” explains Heim, who adds that the company’s CFO had exited the company only days before her arrival, prompting the company’s investors to scrutinize the firm’s recent finance hire all the more.
“During every single presentation that I gave to the board and to investor meetings, I was on edge—I needed to prove myself but always make sure that I was doing what Dave believed that I could do,” remarks Heim, who would shortly begin serving in an interim CFO role despite having her own misgivings about her CFO readiness.
“Along the way, I would hear people say, ‘The work is going to come before the belief in yourself,’ and that was me—it was almost like my self-confidence wasn’t fully there yet,” comments Heim, who besides receiving confidence-boosting support from her CEO also began to extract feelings of self-worth from each new board encounter.
“The board would be asking me to do something, and I would need to just go and figure out how to do it—I always found a way, and there were a lot of times early on when I was in the office at [6:00] in the morning and left at midnight,” recalls Heim, who tells us that once the work came, her confidence began to arrive soon thereafter.
Says Heim: “More and more people and investors would call me up personally, and I’d be able to answer their questions.” –Jack Sweeney
“The work will come before the self-confidence. Dive in—make discipline and sacrifice habits so that it’s second nature to you to power through even when you’re under pressure and fatigued. At some point, after stacking up each individual accomplishment, you’ll be amazed at how far you’ve come. Lots of strong coffee.” –Niki Heim, CFO, LogicSource
Made Possible By
CFOTL: Tell us about LogicSource … what does this company do, and what are its offerings today?
Heim: To put it simply, at LogicSource, we help companies to buy better. We are an execution-based firm focused exclusively on the sourcing and procurement of indirect expenditures, which are also known as goods not for resale. In the healthcare space, they call these expenditures “nonclinical spend.” These indirect expenses often represent about 20% of an organization’s annual revenues, and we’re finding that they’re typically one of the areas of greatest spending inefficiency.Read More
These include costs that fall in categories like marketing, packaging, store development, FF&E, corporate services, and distribution logistics, to name just a few. Often, these are complex categories for which organizations don’t usually have the scale or expertise to be able to exercise best-in-class buying. They’re found across all industries, from retail and consumer packaged goods to healthcare, publishing, financial services, and more.
The way I explain this to my family when I break it down to try to make it simpler is to take a leading retailer. For example, two of our clients are Lululemon and Tractor Supply, who are leaders in their spaces. They know exactly what to buy, who to buy it from, what process innovations they need to make and when, and how to structure their supplier relationships—but they know how to do these things only for the goods that they ultimately sell to the consumer. For these purchases, they might have a merchandising department of up to 400 people, but on the indirect side of the business, they may have maybe 5 to 10. In a money management context—from a CFO perspective—they’re essentially not managing what could be billions of dollars’ worth of indirect expenditures.
Actually, David Kirshner—a former CFO at Boston Children’s Hospital who has joined LogicSource as a managing partner—recently observed that indirect procurement is like a beer belly: “You don’t notice it, and it slowly adds up over time. The quick fixes and the diets aren’t going to fix it, so you really have to come up with something that’s more sustainable.” I thought that this was a really unique way to describe indirect expenses.
LogicSource | www.logicsource.com | Norwalk, CT