Shameless plug: I gave a presentation two weeks ago for the excellent Media Financial Management group, which featured themes from both this post and our “Playbook of the Modern CFO” post. I posted those slides, which feature far fewer words and far more of our Most Important Memes, here

There are certain points in everyone’s life when they realize they can’t control everything. 

For some people (people who live peacefully, I suppose), that moment comes early. Or they find zen, or god, or something. 

For me, that moment came sometime in 2022. I had just become the CFO of an experiential and content agency. And everywhere I looked, it became clear that I was not in control. 

It was on the sales call, where I heard the latest fluctuations in the sales pipeline from our team of new business and account leads. It was on the production call, where there were hundreds of line items moving up and down. And it was on the resourcing call, where project managers fought over people to cover the ever-moving targets of shifting client deadlines and production timelines.

(yes, it’s a lot of calls. That’s a topic for another time)

At first, I tried to control every decision. Every production fluctuation, every staffing change, every freelance request had to run through finance. But soon I realized - it was too much for me  and my small team to handle without massively slowing down the pace. 

Here’s the reality - in project-based organizations, there are far more decisions happening across the organization than a single person, or finance team, can approve and sign off on. The old school way to handle this was to scale the finance function accordingly, placing junior sentinels in each team. But modern organizations have neither the capacity nor the patience to do that, and those finance teams quickly eat into the margin they’re supposed to protect. Speed, efficiency, and profitability are the name of the game. Leaders now expect, and need, project managers and operators to be capable of handling some level of financial responsibility. So we had to figure out another way to keep control over the big, important picture (project-level margin) while letting teams make the day to day decisions on their own.

This is a theme that keeps coming up in many of our conversations with creative founders and leaders - the concept of distributed decision making (and accountability). But in order for responsibility & accountability to truly be distributed, the organization must do a few things. 

First, set the target. Establish a metric people understand, that they can actually influence. 

Next, give them authority. Authority combines both incentives towards the target and the guardrails to act around it, without permission.

And finally - give them information. Make performance against those targets visible, regularly and clearly, so people can use it to guide their everyday decisions. 

Without these three things, distributed decision making can quickly go off the rails. With them, finance and operations teams can find a better operating harmony, and CFOs can still try to sleep at night.

First - defining the target, in a shared language. This doesn’t mean that every member of your team needs to be able to read a P&L. It means that they need to understand a certain metric (and hopefully, understand why it matters) that is within their power to control. 

We started with our production leaders, since that was already a lane where budgets were integral to the process, we had a source for actuals, and there was literally a line in the budget tool that spit out the margin. This meant we already spoke the same language, the language of margin. 

The message was clear - margins were expected to hit 35%, once markup and a few other factors were taken into account. After that, we wanted flags when we were getting close to the number or if there were changes that would take us below that number. 

Our plan broke down when we tried to implement the same structure with account leads. When I started, we weren't time tracking; we had no way of showing teams where they were trending on a project at any given time. Moreover, we weren’t sure what we needed to be showing them; we had not established a shared language of what we needed them to care about. Was it hours? Was it dollars? Was it the overall margin? Without understanding the language and communicating a clear target in that language, our plan suffered. 

If step one is learning to speak the same language and setting a clear target, step two is giving people both a reason to care about that target and the authority to make decisions against it.

A smart rich man once said, "Show me the incentives, and I'll show you the outcome." Incentives don't necessarily need to be financial, but there needs to be a real reason for people to care. And critically, they need to have the authority to act on that incentive.

In our production example, our teams knew the math. They understood that as long as they were updating their budgets regularly and protecting their overall margin, they could be trusted to go a little higher on camera rentals, as long as they came in lower somewhere else. They didn't need to call finance every time a line item moved. Their margin target was both their incentive and their guardrail.

But as it turns out - designing incentive structures on paper is easy (really easy). Implementing incentive structures is the hard part. And the biggest part of implementing incentive structures is giving people a clear, easy way to judge how to make decisions against their target in real time. Incentives will cease to actually motivate people if they don’t have a way to see how those incentives actually track. Targets without visibility may as well be a manifesting exercise (no shade to my manifesters). 

In my example - the account team already was on an incentive plan that compensated them based on their project margin performance. But we failed at providing them with a system to show how project margins were tracking in real time. 

This resulted in two (bad) outcomes: First, when faced with the day to day pushes and pulls of decision making, they didn’t have a way to clearly test the decisions they were making against the goal (i.e. if I spend $10k more, what’s the impact on project margin). Without that clear tool, finance either had to lord over every decision (impossible) or the goal inevitably got subsumed by the other, louder people who were asking for the incremental spend. 

Second, at the end of the year, they were sometimes surprised by the numbers backing up their bonuses, which resulted in everyone feeling unhappy and even more disincentivized. Because we lacked a system to easily communicate how projects were trending in real time, we had rendered our own (painstakingly designed) incentive structure essentially null. An incentive that someone can only measure retrospectively isn't a particularly effective decision-making tool.

Distributed decision making is a two-way street - what finance gets in exchange for giving up control over individual decisions is visibility into the bigger picture.. 

This requires more than a dashboard showing how KPIs are tracking. Information needs to flow in both directions - down to the operations leads, so they can make informed decisions in real time, and back up to leadership, so they can see the larger picture and step in when necessary. 

And it's not just a piece of SaaS, or a Google Sheet. It's a system of information, workflows, processes, and checks and balances that allows people to operate independently while working toward the same goals. I call this the "shared surface."

Handing margin decisions to account leads and producers might give some of you hives. It gave me hives too (and prompted a lot of questions about the source of my self-worth). The default for a lot of finance and operations leaders tends toward one of two modes: infantilizing the team, or an Atlas complex where you carry every financial decision yourself. I tried both. Neither scales in a business where decisions get made dozens of times a day by people who can’t stop to phone “mom.”

The alternative isn’t giving up control. It’s moving it: from approving every decision to setting the target, drawing the guardrails, and making sure everyone is looking at the same number. Let go of the minutiae, keep your eye on the margin. That’s the “sort of.”

I never fully got there as a CFO. I knew what the system needed to do, but I couldn't give everyone the information they needed to make it work. That gap is ultimately why I started FOL-IO.