Carol Tomé didn’t always know how to make the numbers sing. The first time she gave a presentation to investors as Chief Financial Officer of The Home Depot, an analyst went to sleep.
“He fell out of his chair into the aisle and his glasses flew off,” she recalls. “I jumped down off the dais to make sure he was OK. It was awful. The presentation was boring. I was lousy.”
Of course, that was a long time ago. Ms. Tomé has been the CFO at the Home Depot since 2001. When she speaks today, she no longer fits the stereotype of the bean counter that puts people to sleep.
Big data drives big business today, and Ms. Tomé is recognized worldwide for delivering clear and compelling messages about the financial complexities of business. She has been named to numerous “best CFO lists”. The Wall Street Journal has her as number two on its list of best CFO’s in the country. Forbes ranks her among the 50 most powerful women in business.
Indeed she has worked hard for many years, learning how to connect with audiences about complex business topics. “Numbers aren’t for everyone,” she says. “Some people don’t care to understand them. You have to make those numbers come to life for your audience.”
For Ms. Tomé, that means making sure that she reports more than just numbers. Instead, she uses the data to tell a bigger business story. “I’m a businessperson first and a finance person second,” she says.
To that end, the Home Depot CFO still spends many days a year wearing an orange apron, helping customers in stores. That connection with the core of the business helps her communicate the true meaning of the numbers.
Ms. Tomé agreed to talk recently about what she has learned about how to keep audiences paying attention to data and financial information.
“Tell the Story Behind the Data”
What is the biggest challenge that people face when they present data?
You’ve got to appreciate that as a presenter you’re up against a pretty tough challenge. You have to make those numbers come to life for the audience. If you tell stories, then all of a sudden the audience starts to care. They think, “Oh! I get it.”
In other words, the numbers themselves aren’t as important as what is behind the numbers.
That’s right. An example would be when someone presents data to me on assortments of products in our stores. Let’s say that the data shows that we are over-assorted in ladders in one store and under-assorted in ladders in another store. Many people stop with that observation: too many ladders here, too few ladders there. But that’s where it stops. They don’t reach a conclusion or a hypothesis. That’s not good.
What should they say?
They should start by telling me the data. But then give me the meaning. Tell me the full story. They might say, “We’ve identified weather patterns that are creating demand at this particular store. So that accounts for the over-assortment. And we’ve had other issues that have suppressed demand for the under-assorted store. So that explains it.” You need to do a deeper dive. Talking about the numbers alone is meaningless. I say get out of my office unless you can tell the story behind the data.
Can you give another example of what you mean by telling the story behind the data?
The idea is to give more than just the numbers. You need to connect actions to the numbers. So let’s use an example of workers’ compensation liability expense. That’s a complicated accounting number to explain. But if you start by saying that in our store we’ve had ten accidents this year, and each accident on average is costing our company $5,000, that is translating into an expense of $50,000. Then go a step further. Tell me about how if we just reduce the accidents by one, our expense would reduce. Then you might go on to discuss the nature of the accidents. So that’s what I mean by telling a story. Too often someone will simply say that the expense is $50,000. Then they stop there. But that doesn’t tell me much.
“Count what Counts”
Any other important issues around presenting data?
You need to count what counts. It’s easy in this era of big data to fall in love with the numbers. We all have tools like Tableau and other software tools. And you can get enamored with the detailed data you can uncover. You can drill down to the next level, and the next level, and the next level. Eventually it becomes nothing more than a data dump. And that’s not helpful. We need to focus on what counts. The 80/20 rule really does matter.
How do you decide which are the important numbers?
The data itself will help reach that conclusion. If you know that the top 40 categories that we sell in our stores drive 80 percent of our sales volume, that’s where we spend our time. At The Home Depot, we don’t spend our time talking about fasteners. Don’t get me wrong: fasteners are important to complete a job. But they’re a pretty small item in the great scheme of The Home Depot. Instead, we talk about what matters, and the data informs that.
“It’s About a Call to Action”
So finance leaders aren’t just bean counters?
Absolutely not. It’s all about a call to action. Finance leaders have an incredibly important role in that call to action. We analyze the data, interpret the data, inform decisions, and call to action. If we sit back and say nothing more than this went up and that went down, we are not doing are jobs. We need to say here’s what happens if we don’t do this. We have to look ahead, look around corners, predict, and sometimes scare. We have to drive action. We should be business people first and finance people second.
“I believe in transparency”
You’re widely recognized by Wall Street as one of the best CFOs in the country. Can you talk about your philosophy around presenting to investors?
I believe in transparency. And I believe in answering the question. So if you ask a question, I answer it. Too many CFOs will dance around the question. They give ranges. They’re cagey. I find that very frustrating. It doesn’t work. It’s best to tell the truth because it’s the easiest thing to remember. If you don’t know the answer, that’s one thing. But if you know the answer, answer the question. That approach has paid enormous dividends for us.
Did you always do it that way?
When I first started, I spent a lot of time listening and watching others. I noticed everyone would dance around the questions. So I did the same. I was following what everybody else did. And I was good. But I wasn’t great. I wanted to be a great CFO. So I decided to be transparent. I answer the questions and do my best to be authentic.
How do you prepare your messages to investors?
I spend a lot of time thinking about the questions that are going to be asked, and anticipating the questions, developing the answers, rehearsing the answers, and then working that back into the script. So what I really like — really, really like — is when I get done and there aren’t any questions. I think that’s awesome, because I’ve anticipated all the questions.
Do you bring a team in and bat around ideas?
I’ve done a number of things over the years. I used to do “Stump the CFO.” I’d have everybody come in and ask me the hardest questions they could. Now, I’m so close to the team that we really don’t need to have that kind of discussion.
“You’ve got to have a little bit of levity”
You’ve often talked about how your early presentations as a CFO weren’t particularly successful. What did you do to improve?
I worked at it. I got training. I was videotaped. I learned that it’s about energy. It’s about passion. It’s about smiling a lot. It’s about laughter. We will be on an earnings call, and we are talking about very serious things. And sometimes I’ll turn it into something humorous. You’ve got to have a little bit of levity in these presentations. Of course, there’s a time when you wouldn’t do that. But levity can be helpful because people think, “She’s real. She’s genuine.”
Joey Asher
Joey Asher has worked with thousands of business people helping them learn how to communicate in a way that connects with clients. His new book 15 Minutes Including Q&A: a Plan to Save the World from Lousy Presentations” is available now. He is also the author three previous books including “How to Win a Pitch: The Five Fundamentals That Will Distinguish You from the Competition”, “Selling and Communication Skills for Lawyers” and “Even A Geek Can Speak.”