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'We Should Always Be Willing To Test Our Assumptions'

Interview with Michael Kaplan, Former VP of Finance at Activision

25Jan

Michael Kaplan has more than 20 years of senior level finance experience, primarily with publicly traded companies. He has led teams at both corporate and division levels ranging in size from start-up to over $1.5B in revenue. He has also has been involved with over 10 mergers, acquisitions, and divestitures, as well as capital raises including public debt and bank lines. His roles include both domestic and international assignments including Vice President, Finance at Activision Blizzard and Vivendi Universal as well as Treasury while at THQ Inc. 

We sat down with him ahead of his presentation at the FP&A for High-Tech Summit, taking place in San Francisco this April 18–19.

Can you tell us a bit about how you got started in finance and what first sparked your interest?

I got started in finance as an undergrad, where I did an internship doing investment research. I enjoyed using the skills I had learned in Math and Economics classes to help analyze and value a company. What I discovered from that role was that while I liked doing the analysis, I wanted to work inside a company where I could add value by affecting change within the company. As a result of this early exposure, I have ended up leading domestic and international corporate finance initiatives for the past 20+ years in global publicly traded companies.

How has the role of the finance function changed over the last decade? What do you see as having been the main drivers behind this?

The finance function has become much more than the traditional reporting and accounting role that we were all familiar with a decade ago. Leading global businesses now recognize the finance function as a strategic partner that adds value to management by bringing analysis and a unique perspective to allocation of resources and long-term strategic decisions.

One of the main drivers for this has been that businesses are now reaping the benefits of investments in automation. This has freed up time and resources, allowing the finance function to focus on the areas of planning and analysis, rather than the classic accounting function of reporting and control.

Do you think executives' perceptions of finance leaders as accountants still prevent them taking up a role as a strategic partner in their organizations? If so, how can they overcome this?

Executives’ perceptions of finance leaders I have worked with vary, but most expected me to be both their strategic partner as well as the driver of the accounting function of the organization.

When I have been in the situation where the executive sees only the accountant, I have inserted myself into the organization as deep as possible to learn about the business. This included going on account calls, visiting vendors, or acting as a thought partner. By doing this, I gained the ability to ask the right questions and add value not just on the accounting side, but also as a strategic partner, or when necessary as a business operator.

What do you see as being the most important thing to consider when forecasting during a period of sustained growth? What else can finance leaders do to drive growth?

When forecasting sustained growth, finance leaders need to resist the natural inclination to believe that historical assumptions will continue to hold true in the future. We should always be willing to stress test assumptions. Great finance leaders simultaneously look at both upside and downside scenarios and are not shy to invest to continue to fuel growth.

In terms of helping to drive this growth, we finance leaders need to focus on ways to determine efficient allocation of capital and resources, and not just focus on cost reductions. We should also ask questions that push the business leaders to not just think incrementally, but rather think of creating new products or bringing the product to a new market. One other way to help to drive growth is to focus on flawless execution of a strategy.

What do you see as the finance function’s role in innovation of new products?

There are several ways that the finance function contributes to the innovation of new products. In forward-thinking organizations, finance helps to determine how resources are allocated and to create a product strategy by being embedded directly in the product development team. The key to this type of effective partnering is to use our analytical skillset to bring a level of rigor to the decision making. One that focuses on not just creativity or market size, but one that balances those with the understanding of the costs associated with driving profitability.

What do you see as the biggest challenge facing the High-Tech industry?

Not taking decisions to make changes to investment plans when there are disruptive technologies is one of the biggest challenges facing the High-Tech industry. Because demand can increase so rapidly, the consequences of decisions (or lack of decisions) get magnified in many of these scenarios due to the amplification created by the very large platforms that are prevalent in the High-Tech industry. The challenge is also the greatest opportunity. As a finance person, our responsibility is not just to report on the changing market place, but also to collaborate with the business to create strategies to take advantage of the emerging opportunity.

What will you be discussing in your presentation? 

My presentation will focus on how to manage FP&A in a high growth scenario, using the example of the transition to digital sales in the video game industry.

You can hear more from Mike, along with other finance leaders, at the FP&A for High Tech Summit. You can view the full agenda here.

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