CXO Partners’ Alejandro Mainetto discusses AI and the Future of Human Interaction.
Cybersecurity Webinar – Video Clips
CXO Partners recently held a 1-hour live webinar on Cybersecurity Trends in Energy.
Experts Dennis Gilbert, Jr., (Fmr. CISO of Duke Energy, Exelon); Betsy Soehren Jones (Critical Infrastructure Security Consortium); Alex Santos (CEO, Fortess Information Security); and Steve Swick (CXO Partners; fmr. Chief Security Officer) joined moderator John Allen of CXO Partners to discuss issues keeping CISOs up at night, including:
- The Impact of the CrowdStrike Outage
- How we can do Cyber Resiliency Better
- Legacy architecture concerns
- Security and the C-Suite
Here are 8 clips from the topics covered.
Case Study: AP Networks
AP Networks established aggressive revenue growth and new market entry objectives for their products and solutions.
Challenges
- Achieve new organic growth for multiple products and services
- Structure and scale the organization for rapid software revenue growth
- Optimize sales and business development efforts, targeting new customers and markets.
CXO Partners Launches New Supply Chain Practice; Dan Marous to Lead Group
CXO Partners, a professional services firm providing interim executives and transformative consulting services, is excited to announce the launch of its new Supply Chain Leadership and Services practice. This new group will be led by accomplished supply chain executive Dan Marous who will serve as Managing Partner.
“We’re thrilled to have a professional of Dan’s caliber running this new practice,” said Mike Casey, Managing Partner of CXO Partners. “His deep expertise in supply chain operations and demand generation will be invaluable in helping our clients transform their supply chains for success.”
Dan Marous has extensive supply chain operations and demand generation experience. He assists clients in the retail, furniture, apparel, and direct-to-consumer (DTC) industries as an interim Chief Supply Chain Officer and Chief Operating Officer.
The Supply Chain Leadership and Services practice will focus on three key areas:
Strategy Leadership and Development – This includes developing an overall supply chain strategy, omnichannel planning, and risk mitigation strategies, including near-shore alternatives. The firm will also provide interim CSCO services, CEO/Board advisory, fractional supply chain support, and coaching for operations leaders.
Growth – The firm helps clients meet requirements for organic growth, channel expansion, and scaling through acquisition, by creating strategies and plans for facility expansion, automation, co-manufacturing partnerships, due diligence, and post-acquisition integration.
New Capabilities and Transformation – The firm’s key solutions include process transformational initiatives like SIOP, Lean Six Sigma, and assortment and inventory strategies. CXO Partners will also provide supply chain systems implementation support for ERP, WMS, and DOM.
“My charge is to drive results and to lead change in supply chain performance by improving leadership, developing supply chain strategies, supporting demand growth, and building transformational capabilities via new processes, infrastructure expansion, and leveraging supply chain technology,” said Dan Marous. “CXO Partners is a perfect platform for me to help companies “unlock” supply chain capabilities that are critical to building corporate value, improving customer service, strengthening operations, and accelerating revenues and earnings.”
Dan Marous, CXO Partners, Managing Partner – Supply Chain Leadership & Services. More about Dan>>
The Hardest Job in Finance
Why PE Company CFOs Don’t Last
Nearly 80% Wash Out …and the Job Just Got Harder
One of the most difficult jobs in Finance is to be the CFO of a PE firm or a PE-backed company. According to a Big 4 firm’s survey, turnover of CFOs in PE and PE-backed companies is notoriously high, reaching 80% in less than five years; half of whom are gone within three years. The reasons range from tough, refined overseers to general breakdowns in fundamentals, such as timely reporting, to CFOs who don’t move with actionable, strategic insights, and operational Impact.
That’s the bad news. The worse news is the job just got harder due to shifts in PE activity.
Short Timelines, Big Expectations
By design, things move quickly in private equity. About a third of CFOs expect an exit for their company within 1-2 years, and a plurality for all concerned — investors and operators — is to complete a successful exit before 5 years.
Chief among the CFO’s goals is to drive up the valuation of a company at the exit. Industry valuations can fluctuate but expectations are generally for an EBITDA multiple above 10 with higher multiples for software and technology. Much of that burden falls on the leadership and implemented programs of the CFO.
Day to day, CFOs are expected to deliver the table stakes of good corporate stewardship via accurate numbers, timely financial reporting, solid internal controls, and compliance. On-point budgeting, smooth audit preparation, cash flow forecasting, and working capital management are all presumed to be standard.
The audience to whom this information is provided is a coterie of sophisticated general partners, limited partners, management committees, and portfolio companies who are all finance data-centric. It is difficult to present one version of the truth to audiences of varying agendas. Add to that the pace and pressure of the PE environment, which is the stuff of legend. Expectations are to deliver 110%. When that standard is met, work is ratcheted up to deliver 120%.
PE is Hard and Getting Harder
Those pressures are standard in normal business cycles. The increased difficulty comes as the number of private equity deals has slowed. If there are no deals, there are no returns for investors, the raison d’etre of private equity firms.
As a result, global private equity dry powder has rocketed to a record two and a half trillion dollars. The pile up of capital sitting on the sidelines and the scarcity of deals is creating pressure internally to put money to work.
A tougher lending climate combined with higher interest rates means leverage is not as easy to come by as it was a few years ago. In addition, global uncertainty about where interest rates are headed, the specter of inflation, wars, supply chain challenges, a wildcard US presidential election, and stubbornly wide distances between where buyers and sellers are on valuations, volatility reigns.
CFOs as Stewards, Strategists, or Prognosticators?
The multitask art of wringing out costs, driving margins, and operating leverage, while juggling working capital in an uncertain business climate, and now, providing an accounting perspective to the analysis of investment opportunities, some of which may be outside the normal parameters of historic investment objectives and criteria, is a new requirement of CFOs.
CFOs suffer from a myriad of competing priorities, some of which can be influenced by the CFOs training and background. Those who are more accounting infrastructure, process, controls and stewardship-oriented, perhaps due to their legacy as auditors tend to focus on financial and operational reporting. Those with a background a finance, investment banking, or FP&A background, may be more comfortable pursuing new opportunities, dealmaking, and strategy and less enamored with financial reporting, budgets, and compliance needs.
However the CFO is professionally oriented, they may retreat to more familiar tasks, despite good intentions to stretch into new areas.
Future Proofing
The finance chiefs are ultimately being asked to optimize the current business while developing the financial strategy to future proof organizations.
Ostensibly this would be achieved by closely overseeing existing assets, collecting and tracking KPIs, managing capital allocation initiatives, optimizing working capital, and then informing investors on the health and performance of the company/portfolio companies.
In addition, PE CFOs will contribute insights to investment models, the overall structure and intrinsic value of potential targets, optimize management and operational effectiveness post-investment all while delivering higher shareholder value with lower volatility.
All these elements, while also convincing PE firms to make the requisite investments in people, processes and systems, make this the toughest job in finance.
Mike Casey is the Managing Partner of CXO Partners, which provides interim CFOs for PE and PE-backed companies. He also serves as Managing Partner of TechCXO’s CFO practice and brings more than 30 years of financial and operational leadership with a proven track record of execution as a growth and turnaround CFO (more).
mike.casey@cxo.partners
How CISOs Can Leverage AI in Cybersecurity Plans
AI-powered security systems can ID and respond to threats at speeds that were once unimaginable. But there are risks.
Artificial intelligence is a game-changer in the world of cybersecurity. Its ability to analyze vast datasets, detect anomalies, and predict potential threats has revolutionized the way we protect our digital assets. AI-powered security systems can identify and respond to threats at speeds that were once unimaginable, making them a crucial component in our defense against cyberattacks.
However, with great power comes great responsibility. The deployment of AI in cybersecurity isn’t without its risks.
The challenge for CISOs is to walk the tightrope between mitigating AI risks while embracing innovation.
As a technology executive with over a decade of experience in the highly regulated fintech industry, I’ve witnessed firsthand the critical role that Chief Information Security Officers (CISOs) play in safeguarding sensitive data and ensuring the compliance of Fortune 10 companies.
CISOs can expect 70% of organizations to explore generative AI driven by the use of ChatGPT. Nearly all business leaders say their company is prioritizing at least one initiative related to AI systems in the near term, according to a recent PricewaterhouseCoopers’ report. Quoting Gartner analyst Frances Karamouzis, “Organizations will likely encounter a host of trust, risk, security, privacy, and ethical questions as they start to develop and deploy generative AI.”
The Promise and Perils of AI in Cybersecurity
First, CISOs need to be acutely aware of these risks in deploying AI:
- Complex Attack Vectors: AI can be exploited by cybercriminals to create more sophisticated and targeted attacks. An example of this is the recent data breach at TaskRabbit, where 3.75 million customers had their financial and personal data stolen. Analysts believe that an AI-enabled botnet was used, with the botnet slave machines executing a DDoS attack on TaskRabbit’s servers. This required a multifaceted mitigation approach, including strengthening TaskRabbit’s security infrastructure.
- Biased Data: Biased data from the internet and social media can lead to AI algorithms making prejudiced security decisions, resulting in false positives or negatives in threat detection. Consider the bias introduced by using data from the internet and social media which are limited in terms of coverage of the population. These shortcomings potentially limit the use of data from the internet for developing machine learning models that are applied to the general population and for specific groups. Organizations must rectify this situation by implementing strategies to address biases in their training data, incorporating more diverse and representative sources, and continually monitoring the system’s performance to ensure fair and accurate threat assessments.
- Inadequate Human Oversight: Overreliance on AI can lead to complacency and neglect in human oversight, allowing threats to slip through the cracks. CISOs should invest in the training and upskilling of security personnel to ensure that humans remain in control and have a deep understanding of how these AI systems operate.
- Adversarial Attacks: Cybercriminals can use AI to launch adversarial attacks against security systems, tricking them into misclassifying malicious activities. CISOs need to work closely with AI experts and ethical hackers to uncover and address weaknesses in their AI-powered cybersecurity solutions.
The CISO’s Balancing Act: Mitigating AI Risks While Embracing Innovation
The integration of AI into cybersecurity requires a delicate balancing act for CISOs. On one hand, they must mitigate the risks posed by AI, and on the other, they should embrace its innovative potential to drive business growth. Here’s how CISOs can navigate this challenging terrain:
- Assess and Mitigate Risks: The first step is to thoroughly assess the AI-powered cybersecurity solutions in place and identify potential vulnerabilities. CISOs should work closely with AI experts and white hat or ethical hackers to uncover and address weaknesses.
- Implement Ethical AI Practices: By ensuring that AI models are built on unbiased data and are regularly audited, CISOs can reduce the risk of biased AI making flawed security decisions.
- Promote Continuous Training: CISOs should invest in the training and upskilling of security personnel to better understand and manage AI-powered security systems. This ensures that humans remain in control and have a deep understanding of how these systems operate.
- Encourage Collaboration: CISOs should foster collaboration with AI experts and the wider business community. By working together, they can develop robust cybersecurity strategies that take full advantage of AI’s capabilities while minimizing risks.
- Stay Informed: The rapidly evolving nature of AI and cybersecurity demands constant vigilance. CISOs must stay informed about emerging threats and the latest advances in AI to adapt their strategies accordingly.
A New Era of Cybersecurity
AI is ushering in a new era for cybersecurity, presenting both unprecedented opportunities and intricate risks. CISOs, armed with their in-depth understanding of regulatory requirements and the unique needs of their organizations, are at the forefront of addressing these challenges. By meticulously assessing and mitigating AI risks, championing ethical AI practices, nurturing a culture of collaboration, and staying informed, CISOs can harness AI’s potential while fortifying their organizations against ever-advancing threats. The future of cybersecurity lies in the harmonious synergy of human expertise and artificial intelligence, and it’s the CISO’s responsibility to lead their organizations toward this promising horizon.
Gabriella Poczo
Operating Partner, Technology Strategy Services, Co-leader Financial Services
Gabriella Poczo is a highly accomplished technology executive with extensive experience providing product and technology vision, rapid product launches, and business/digital transformations as CIO and CTO.
Strategic Alignment or Discord?
Design a robust operating model to dramatically improve performance
A study published by Harvard Business Review stated what many under-fire executives intrinsically feel – 60-90% of strategic initiatives never fully launch. While there are many external conditions that obstruct business success (hyper-competition, tech disruption), it is often the business stimuli inside the org that most stifle strategic execution and impede turnarounds.
The primary reason businesses fail can be attributed to a single word: alignment
As a recovering strategist and experienced business operator, I maintain that the primary reason most businesses fail can be attributed to a single word – alignment. More than ever, it is the lack of alignment about a business’s goals, operating principles, and desired outcomes that inhibits success. The juxtaposition is ironic. On the one hand, these factors are internal to the org, and therefore should be the easiest for executives to shape and fix. On the other, they are often the primary and principal barriers to goal attainment.
See the free Strategy Evaluation Tool at the end of this article
Certainly, developing a strategic plan – including goals, priorities, timelines, and project sponsors – is an invaluable first step to generating alignment. However, it’s important to note that most strategies don’t detail how the work gets done. Consider a B2B software firm that seeks to improve its Customer Experience. Assigning a CSAT metric to a single functional leader is usually a recipe for disaster. After all, numerous departments interact with clients – Marketing sends them content, Sales sells the work, Operations fulfills the service, and Finance bills them – each of whom has a unique window into their people and organization. Without agreed-upon objectives, decision-making governance, and ways of working, the team will work laboriously – and fruitlessly – to reverse engineer a solution that satisfies all sides. The end of the story is a given: blame, resentment, and a solution that doesn’t fulfill the org’s goals.
Struggling with Execution? Design an Operating Model
Businesses with persistent execution challenges should consider designing an operating model that governs how different functions work with one another to achieve a company’s strategy. Designed purposefully, an operating model can unlock enormous new pockets of business value and dramatically improve productivity. Designed poorly – or worse, not designed at all – companies will likely remain misaligned as they continue to struggle to achieve even the most basic tasks and objectives.
Designing a robust operating model for your business requires the purposeful alignment of the following core elements:
- Strategy & Goals: A company’s strategy governs where its time, investments, and resources should be placed to achieve a set of goals. The CEO – and senior leaders – must be more than simple advocates for the plan. They need to be vocal stewards of the strategy in public and unrelenting champions behind closed doors. Words matter here. So do details. A strategy that is not thorough, well-articulated, or well-understood is a leading cause of business discord.
- Decision Making & Governance: Each discrete function in a company must operate skillfully and collaboratively for a business’s strategy to succeed. Still,many departments work side by side without ever really working together. This is a silent killer for many organizations as they reach scale. Revaluating roles, decision-making, reporting, and accountabilities can ensure that leaders have appropriate and complimentary controls to streamline execution and run the business.
- Ways of Working and Processes: Executing a new strategy usually requires material (and often uncomfortable) changes to the way a company operates. For example, improving a company’s return policy might require new processes and cadences between organizations that don’t typically collaborate closely (e.g., Supply Chain and Support). Using a ‘systems thinking’ approach can help unite different, often competing, functions based on the value they generate so everyone in the org knows their role in the process – and marches to the same beat.
- People and Skills: Many failed strategies can be attributed to leaders spending too much time salivating over new potential markets and products, and far less time on the internal competencies required to execute effectively. Cultivating your people capability should be prioritized based on the strategy being formulated – whether professionalizing a sales org to sell larger deals or optimizing support to better delight customers.
- Data and Technology – Wherever you are on your digital journey, it is critical that orgs align their technology roadmap to their business’ strategy and goals. At the same time, all orgs should consider designing a robust operating model that encourages continuous business disruption and reinvention based on technological innovations.
- Culture and Norms – Every business is a unicorn. Companies should be mindful to incorporate their unique ethos and character directly into their ways of working. At the same time, don’t be afraid to challenge ‘sacred cows’ that no longer have the desired impact they once did. Above all, put your people first when planning your operating model to ensure employees feel respected, appreciated, and protected.
An operating model is the central nervous system of a business. It governs the way organizations operate collectively to achieve a set of goals and fulfill its business strategy. Many companies, large and small, who struggle with business execution have likely grown out of their previous operating model and need to reimagine the way they ‘perform work’ to succeed.
Take our short 10-question diagnostic survey if you’d like to take the first step to designing your own operating model to help you achieve your business goals.
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