Ep. 188: John Greene - Financial Transformation at Discover
Today we go inside the financial transformation process at Discover Financial Services (NYSE: DFS) with CFO John Greene. John joins Adam Larson to discuss how Discover’s focus on innovation and corporate culture has empowered the finance team to be better business partners to the entire organization.
Today we go inside the financial transformation process at Discover Financial Services (NYSE: DFS) with CFO John Greene. John joins Adam Larson to discuss how Discover’s focus on innovation and corporate culture has empowered the finance team to be better business partners to the entire organization.
Connect with John: https://www.linkedin.com/in/john-greene-/
Full Episode Transcript:
Adam: (00:05)
Welcome back to Count Me In, the podcast that looks at business issues and trends from the management accountant's perspective. Today, we are speaking with John Greene, the CFO of Discover Financial Services, the company behind the Discover credit card and the television ads with the catchy tagline, "We Treat You Like You'd Treat You". I'm sure you've heard the term financial transformation before, which is basically the process of bringing digital tools and technology to the finance team inside organizations. Today, we are gonna look at how that process actually works at Discover and why it's critical to strike the right balance between driving innovation and making sure team members feel empowered along the way. Let's get started.
Adam: (00:51)
So, John, I just really want to thank you for coming on the podcast today. It's, really a pleasure to have you on and today our focus is gonna be around finance and innovation and how those two connect together. And so as we start off, I just want to ask what are your guiding principles when it comes to finance and innovation and how they connect.
John: (01:08)
Great. Adam, great to be here. So, you know, my guiding principles are first, we want to make sure we have the right people and the right sort of jobs. So by that, I mean, people with the right skillset, the right values, high level of integrity that are working towards a common mission, which would be to going to benefit our customers and the organization and the financial outcomes that we're seeking. So that's really, really important. And being able to connect the organization mission to individual objective's really, really important, both from an innovation standpoint, as well as from a team building standpoint. And then the second guiding principle would be to ensure we have the right organization design and the right structure to make people successful. So that includes having the right level of technology, the right commission, the right focus on innovation in order to have people feel like they're empowered to be able to make the changes that we're seeking to drive within the organization.
Adam: (02:19)
But then when you look at innovation from an organizational perspective, is there like a definition of what counts as innovation? And then what does that look like for each employee?
John: (02:29)
Yeah, so for me, innovation is a really, really broad concept. It can be as simple as changing the way we do do something on a day to day basis, which would be innovative, or it can be leveraging technology in entirely different way or leveraging new technology to drive innovation. So, you know, a couple examples of kind of changing the way we've done things here at Discover, without the benefit of technology would be, you know, our journal entry process. So we were doing almost two, 2000 journal entries a month. Every time we closed the books and through some process redesign some change of policies, as well as taking a different look at how we focused on certain accounts, we reduced the number of journal entries we did on a monthly basis by about 40%.
John: (03:33)
So, think about it. That is, that is 400 entries that, you know, someone doesn't have to kind of put together, get the backup file, and then review. So, you know, without technology, a high degree of innovation there in terms of process redesign, we did the same. We did the same sort of thing with our FPNA, processes. So think budgeting and forecasting. We, took a look at what was important for the organization, how timely we needed updates on, where the company was going financially. And we eliminated, one third of the forecast we were doing. So what went down from six to four, what it did is it freed up capacity to spend time on analytics. Now, there are two examples that involved process redesign, not necessarily technology.
Adam: (04:34)
Now we've deployed RPA, so we call them bots here in Discover and, you know, that has also enabled us to further reduce journal entries. It has also taken manual work out of a number of different areas within the finance organization. So, that that's been a win. And on top of it, we switched out from an old McCormick and Dodge, general ledger system, and just implemented, Oracle cloud, here. We put it in about, a year and a half. It went in, frankly, in a really, really smooth way on time under budget, but what that's enabled us to do is take out nearly half the cost centers we have here. So, the combination of kind of process redesign and leveraging technology and new technology we've really changed the way we work. And we freed up significant amount of time to analyze the business rather than tell the business or report on what has happened in the business.
Adam: (05:46)
So as you've freed up that time to analyze, have you seen, have you already been seeing the benefits from even team morale being able to change their job description of, Hey, I'm going to stop these 400 extra journal entries to analyzing something else, has that improved even just employees as they get to do new things?
John: (06:09)
Yes. Actually, so, you know, change can be, you know, harder on some people than others. And so what, what we've tried to do here is focus on a culture of, of creating positive change that will improve analytics and efficiency without the risk of job loss. So in the situation we're in right now, we have a level of normalized turnover, just like every organization does. And we've been able to absorb that turnover redesign, you know, people's kind of responsibilities or organizations without impacting kind of employment in a negative way by that. I mean, you know, we haven't had wholesale layoffs or reductions. What we've done is enrich people's jobs by taking out what I'll say is more transactional or non-value work. And, you know, that's translated into some positive results on our engagement surveys. And I feel like it's really been beneficial in terms of motivating some folks as we've been able to expand job responsibilities.
Adam: (07:23)
That's amazing to hear that that's the initiative you've taken. I know that I'm sure the employees appreciate it, but it's also an innovative way of, looking at the human capital and investing in them as opposed to just slashing them and saying, well, we need to get rid of them.
John: (07:39)
Yeah. And you know, lot of credit for that is to the organization, in the entirety. So Discover spent, you know, decades trying to create the right balance of financial performance and culture. And, you know, the folks that come here, I think have enjoyed that aspect of the culture in terms of trying to create an atmosphere that, you know, operates with as little bias as possible, that values innovation, that if values change, but also respects kind of human capital and tries to create the best experience for our teams.
Adam: (08:22)
So you've been talking about the great improvements and innovations that have happened through technology and other ways that, you know, have helped the journal ledgers and using RPAs and bots. But what changes have you noticed in your responsibilities, and expectations, especially during these last two years with COVID?
John: (08:41)
Yeah, so great question. So, you know, the core responsibilities haven't changed really. But what has changed as is the, focus points, right? So when the pandemic hit, you know, our responsibility collectively here as leaders was to first ensure people were safe. The second was to make sure that we created a remote work environment that allowed us to get our core responsibilities done, and then it, certainly evolved to, okay, can we close the books? Can we execute on our public disclosures and earnings calls? And, while doing that, also making sure we have plenty of capital liquidity and our credit. So we're a lender. So, you know, when we lend money, we want to make sure, we collect it or are within our risk tolerances. So we spent a lot of time focusing on that.
John: (09:44)
And our finance organization was instrumental in terms of the value helping the business evaluate kind of the trajectory of the credit portfolio, the trajectory of our liquidity and capital. And then also really importantly, focusing on, at that point, controlling expenses, given there was so much uncertainty. Then as we came out of the pandemic, really the focus changed. So the focus turned to, okay, how can we, how can we grow profitably? Where can we invest? Where can we allocate expense dollars in order to get the best return for our shareholders and that evolution, the ability to pivot from kind of one focus area to another at the right time, really, really important. So, so there, there's a saying you want to go to where the puck will be, not where the puck is. And so, for hockey fans, they'll appreciate that comment, but certainly being able to anticipate and get to the right spot timely so that we make good decisions. And we execute strongly really, really has been a focus point for, you know, our leadership team and the finance organization as a whole.
Adam: (11:12)
And it seems like the innovative changes that you've discussed earlier, have a big effect on being able to meet those needs. Right?
John: (11:20)
Yeah, absolutely. And, you know, we've become much more effective as a finance organization, leveraging technology and innovation. I feel like we've become a improved business partner to the organization that was, you know, a key contributor to Discover delivering record results in 2021. Now 2022 looks to be a, you know, really positive year as well. And, you know, my hope is that we'll continue that strong execution to allow the business to, continue to grow profitably.
Adam: (12:00)
Definitely. So just before we close, I was just thinking about, you know, as you're working through process improvements and, you know, innovation within finance, helping the team, see the big picture can be difficult. Can you maybe give some insight of what it was like as you were going through these innovative process improvements, what it was like to help the team stay on task and get on board as change is difficult as we've mentioned.
John: (12:30)
Yeah. So, really good question. So, you know, for me, the first bit is to make sure that the organization's strategy is well communicated so that we can connect it to some aspect of every single person's job within the finance organization. So we spend a lot of time in terms of communicating kind of what's important for the organization and the aggregate. And then how does that translate into people's jobs? We also, as a finance leadership team launched what we call our, the Discover Finance and Corporate Services Success Traits, and, that, that launch of that, which I'll explain and a minute was to give our teams the tools to be able to continue to execute and support the business. So, the success trait, as we define them are critical thinking. So analytical thinking and an honest approach to analysis.
John: (13:33)
And by that, we mean, you know, looking at the facts, not necessarily judgments, but lay out the facts and then using those facts to make judgments really, really important. The second aspect, which I touched on briefly was communication. So being able to communicate with influence in order to ensure that when decisions are made, they're made free of bias and based on actions that will help us deliver on our strategic objectives. There's also an element which is coaching and providing feedback with the right level of empathy and specificity. So that our teams learn from what they've done well and what they can do better. And then a core component also is driving digital ambitions. So embracing technology, embracing concepts of continued improvement, improving insights and analytics through leveraging technology and proposed solutions, that'll help deliver kind of new tools and new capabilities to the organization. And then the last two, I won't go into detail on these, relationship and team building, really, really important, so that we're effective as an organization. And then lastly execution. So being clear on what you're trying to do, and then execute in a way that, is skilled to, to get the best outcomes.
Closing: (15:01)
This has been Count Me In, IMA's podcast providing you with the latest perspectives of thought leaders from the accounting and finance profession. If you like what you heard and you'd like to be counted in for more relevant accounting and finance education, visit IMA's website at www.imanet.org.
Connect with John: https://www.linkedin.com/in/john-greene-/
Full Episode Transcript:
Adam: (00:05)
Welcome back to Count Me In, the podcast that looks at business issues and trends from the management accountant's perspective. Today, we are speaking with John Greene, the CFO of Discover Financial Services, the company behind the Discover credit card and the television ads with the catchy tagline, "We Treat You Like You'd Treat You". I'm sure you've heard the term financial transformation before, which is basically the process of bringing digital tools and technology to the finance team inside organizations. Today, we are gonna look at how that process actually works at Discover and why it's critical to strike the right balance between driving innovation and making sure team members feel empowered along the way. Let's get started.
Adam: (00:51)
So, John, I just really want to thank you for coming on the podcast today. It's, really a pleasure to have you on and today our focus is gonna be around finance and innovation and how those two connect together. And so as we start off, I just want to ask what are your guiding principles when it comes to finance and innovation and how they connect.
John: (01:08)
Great. Adam, great to be here. So, you know, my guiding principles are first, we want to make sure we have the right people and the right sort of jobs. So by that, I mean, people with the right skillset, the right values, high level of integrity that are working towards a common mission, which would be to going to benefit our customers and the organization and the financial outcomes that we're seeking. So that's really, really important. And being able to connect the organization mission to individual objective's really, really important, both from an innovation standpoint, as well as from a team building standpoint. And then the second guiding principle would be to ensure we have the right organization design and the right structure to make people successful. So that includes having the right level of technology, the right commission, the right focus on innovation in order to have people feel like they're empowered to be able to make the changes that we're seeking to drive within the organization.
Adam: (02:19)
But then when you look at innovation from an organizational perspective, is there like a definition of what counts as innovation? And then what does that look like for each employee?
John: (02:29)
Yeah, so for me, innovation is a really, really broad concept. It can be as simple as changing the way we do do something on a day to day basis, which would be innovative, or it can be leveraging technology in entirely different way or leveraging new technology to drive innovation. So, you know, a couple examples of kind of changing the way we've done things here at Discover, without the benefit of technology would be, you know, our journal entry process. So we were doing almost two, 2000 journal entries a month. Every time we closed the books and through some process redesign some change of policies, as well as taking a different look at how we focused on certain accounts, we reduced the number of journal entries we did on a monthly basis by about 40%.
John: (03:33)
So, think about it. That is, that is 400 entries that, you know, someone doesn't have to kind of put together, get the backup file, and then review. So, you know, without technology, a high degree of innovation there in terms of process redesign, we did the same. We did the same sort of thing with our FPNA, processes. So think budgeting and forecasting. We, took a look at what was important for the organization, how timely we needed updates on, where the company was going financially. And we eliminated, one third of the forecast we were doing. So what went down from six to four, what it did is it freed up capacity to spend time on analytics. Now, there are two examples that involved process redesign, not necessarily technology.
Adam: (04:34)
Now we've deployed RPA, so we call them bots here in Discover and, you know, that has also enabled us to further reduce journal entries. It has also taken manual work out of a number of different areas within the finance organization. So, that that's been a win. And on top of it, we switched out from an old McCormick and Dodge, general ledger system, and just implemented, Oracle cloud, here. We put it in about, a year and a half. It went in, frankly, in a really, really smooth way on time under budget, but what that's enabled us to do is take out nearly half the cost centers we have here. So, the combination of kind of process redesign and leveraging technology and new technology we've really changed the way we work. And we freed up significant amount of time to analyze the business rather than tell the business or report on what has happened in the business.
Adam: (05:46)
So as you've freed up that time to analyze, have you seen, have you already been seeing the benefits from even team morale being able to change their job description of, Hey, I'm going to stop these 400 extra journal entries to analyzing something else, has that improved even just employees as they get to do new things?
John: (06:09)
Yes. Actually, so, you know, change can be, you know, harder on some people than others. And so what, what we've tried to do here is focus on a culture of, of creating positive change that will improve analytics and efficiency without the risk of job loss. So in the situation we're in right now, we have a level of normalized turnover, just like every organization does. And we've been able to absorb that turnover redesign, you know, people's kind of responsibilities or organizations without impacting kind of employment in a negative way by that. I mean, you know, we haven't had wholesale layoffs or reductions. What we've done is enrich people's jobs by taking out what I'll say is more transactional or non-value work. And, you know, that's translated into some positive results on our engagement surveys. And I feel like it's really been beneficial in terms of motivating some folks as we've been able to expand job responsibilities.
Adam: (07:23)
That's amazing to hear that that's the initiative you've taken. I know that I'm sure the employees appreciate it, but it's also an innovative way of, looking at the human capital and investing in them as opposed to just slashing them and saying, well, we need to get rid of them.
John: (07:39)
Yeah. And you know, lot of credit for that is to the organization, in the entirety. So Discover spent, you know, decades trying to create the right balance of financial performance and culture. And, you know, the folks that come here, I think have enjoyed that aspect of the culture in terms of trying to create an atmosphere that, you know, operates with as little bias as possible, that values innovation, that if values change, but also respects kind of human capital and tries to create the best experience for our teams.
Adam: (08:22)
So you've been talking about the great improvements and innovations that have happened through technology and other ways that, you know, have helped the journal ledgers and using RPAs and bots. But what changes have you noticed in your responsibilities, and expectations, especially during these last two years with COVID?
John: (08:41)
Yeah, so great question. So, you know, the core responsibilities haven't changed really. But what has changed as is the, focus points, right? So when the pandemic hit, you know, our responsibility collectively here as leaders was to first ensure people were safe. The second was to make sure that we created a remote work environment that allowed us to get our core responsibilities done, and then it, certainly evolved to, okay, can we close the books? Can we execute on our public disclosures and earnings calls? And, while doing that, also making sure we have plenty of capital liquidity and our credit. So we're a lender. So, you know, when we lend money, we want to make sure, we collect it or are within our risk tolerances. So we spent a lot of time focusing on that.
John: (09:44)
And our finance organization was instrumental in terms of the value helping the business evaluate kind of the trajectory of the credit portfolio, the trajectory of our liquidity and capital. And then also really importantly, focusing on, at that point, controlling expenses, given there was so much uncertainty. Then as we came out of the pandemic, really the focus changed. So the focus turned to, okay, how can we, how can we grow profitably? Where can we invest? Where can we allocate expense dollars in order to get the best return for our shareholders and that evolution, the ability to pivot from kind of one focus area to another at the right time, really, really important. So, so there, there's a saying you want to go to where the puck will be, not where the puck is. And so, for hockey fans, they'll appreciate that comment, but certainly being able to anticipate and get to the right spot timely so that we make good decisions. And we execute strongly really, really has been a focus point for, you know, our leadership team and the finance organization as a whole.
Adam: (11:12)
And it seems like the innovative changes that you've discussed earlier, have a big effect on being able to meet those needs. Right?
John: (11:20)
Yeah, absolutely. And, you know, we've become much more effective as a finance organization, leveraging technology and innovation. I feel like we've become a improved business partner to the organization that was, you know, a key contributor to Discover delivering record results in 2021. Now 2022 looks to be a, you know, really positive year as well. And, you know, my hope is that we'll continue that strong execution to allow the business to, continue to grow profitably.
Adam: (12:00)
Definitely. So just before we close, I was just thinking about, you know, as you're working through process improvements and, you know, innovation within finance, helping the team, see the big picture can be difficult. Can you maybe give some insight of what it was like as you were going through these innovative process improvements, what it was like to help the team stay on task and get on board as change is difficult as we've mentioned.
John: (12:30)
Yeah. So, really good question. So, you know, for me, the first bit is to make sure that the organization's strategy is well communicated so that we can connect it to some aspect of every single person's job within the finance organization. So we spend a lot of time in terms of communicating kind of what's important for the organization and the aggregate. And then how does that translate into people's jobs? We also, as a finance leadership team launched what we call our, the Discover Finance and Corporate Services Success Traits, and, that, that launch of that, which I'll explain and a minute was to give our teams the tools to be able to continue to execute and support the business. So, the success trait, as we define them are critical thinking. So analytical thinking and an honest approach to analysis.
John: (13:33)
And by that, we mean, you know, looking at the facts, not necessarily judgments, but lay out the facts and then using those facts to make judgments really, really important. The second aspect, which I touched on briefly was communication. So being able to communicate with influence in order to ensure that when decisions are made, they're made free of bias and based on actions that will help us deliver on our strategic objectives. There's also an element which is coaching and providing feedback with the right level of empathy and specificity. So that our teams learn from what they've done well and what they can do better. And then a core component also is driving digital ambitions. So embracing technology, embracing concepts of continued improvement, improving insights and analytics through leveraging technology and proposed solutions, that'll help deliver kind of new tools and new capabilities to the organization. And then the last two, I won't go into detail on these, relationship and team building, really, really important, so that we're effective as an organization. And then lastly execution. So being clear on what you're trying to do, and then execute in a way that, is skilled to, to get the best outcomes.
Closing: (15:01)
This has been Count Me In, IMA's podcast providing you with the latest perspectives of thought leaders from the accounting and finance profession. If you like what you heard and you'd like to be counted in for more relevant accounting and finance education, visit IMA's website at www.imanet.org.
