Tackling the issues.
Think fast. Take action. And keep your eyes on the goalpost. Whether he's playing football, taking a company public or, now, leading FEI into the new millennium, that's Phil Livingston's philosophy. Oh, and one more thing: "Keep it simple, stupid."
Livingston, 41, an MBA, CPA and onetime pro football player, officially succeeds retiring FEI President P. Norman Roy on April 1. But he's been watching, listening and learning the plays and the players since January 1. And planning some strategy.
"I think it's wrong for me to walk in and say, 'Here's what we're going to do and here's our agenda,'" Livingston says. "FEI belongs to the members - I need to hear from as many of them as possible - and I've got to draw information out and distill the objectives. I'm going on the road this spring, to get in contact with as many members as I can through chapter meetings, technical committees and informal get-togethers. Out of that will emerge a clear plan. However, five years from now, FEI should be the first resource all senior financial executives think of when they need peer-level access to the best and brightest in the profession, personal development and financial advocacy. To be in that 'first thought' position, we need to raise awareness of FEI and increase the breadth and quality of FEI's member services."
One priority he's already sure about, though, is the need to make FEI more technologically responsive to member needs, especially through electronic communication like Internet community forums, e-mail, teleconferencing and DVD technology. "Our increasingly complex and fast-changing world puts many demands on our members' time. FEI must reinvent itself to deliver more effective and more efficient services in this environment," he explains. "The Internet is the perfect platform for that. Member networking, sharing best practices and professional development all lend themselves to that format. Our web site should be the first place finance professionals go when they have a problem or a question. It should be active, two-way and vibrant, not a roadside signboard."
Expanding membership and services are also high on his to-do list. "We need to reach out to more finance professionals and get them involved in our activities," Livingston notes. As he travels around the country, he adds, "I want to hear from the mouths of our members exactly what they want FEI to do better and what additional services FEI can provide. The FEI brand is so strong, the image that it conjures in our consumers' minds is so good, that we've got to be able to leverage it into other products and services."
In addition to addressing FEI's positioning issues, he knows there are pressing, external financial topics FEI must consider. "The SEC is concerned about earnings management brought on by the highly volatile bull market and a pressure for results," he notes. "The Social Security system may be restructured to address the system deficit expected around 2030, and may include some investment of funds in corporate equities and possibly personal accounts. The accounting standard setters are considering abolishing pooling for business combinations. And the International Accounting Standards Committee is issuing its core group of standards and will want SEC approval."
He will serve on FASAC, the advisory council to the FASB, and focus on practical issues and problems. He says, "I want the regulators and standard setters to address the questions, 'What problem, if any, are we trying to solve? How will the proposed change really improve the financial information for either the sophisticated or the small investor? Will he or she understand it? Is the disclosure readable? Will it change a rational investor's valuation perspective?'"
Put it all together and it's a tall order, but that's okay. Phil Livingston stands 6[feet]7[inches]. And, he says, "I like to make things happen."
Life Imitates Football
Livingston thinks football provides a good foundation for playing in the business big leagues. And he should know, having first stepped out onto the gridiron in high school in Gaithersburg, Md., then playing for the University of Maryland and eventually making it all the way to the Oakland Raiders. But he also realized he needed more.
"I knew early in my college career that I wanted to go into finance," he remembers. "Somebody told me the real ticket to success in finance is a combination MBA and CPA. I got focused on that like a missile and, from the time I was 20, set out on a course to get my graduate degree. I knew I was going to go the CPA route, but knew I didn't want to be in public accounting forever."
His grueling undergraduate schedule was a lesson in time management. "Being a college athlete is like having a full-time job and trying to go to school at the same time. On top of it, the full-time job is physically exhausting," remembers Livingston, Class of '79. "I went to summer school every year, finished 150 credits in the time you normally do one degree, did two degrees and was red-shirted as a football player, which means you play five seasons. But in my fifth season, I was already graduated, so I was the first Maryland varsity football player to be in graduate school. That was neat."
Then the Raiders called. Former teammate Ted Hendricks, a Hall of Famer who played in eight pro bowls and four Super Bowls, remembers, "Phil was a wide-eyed rookie when I met him. Our team was a wild bunch and Phil was in the middle of it all."
Livingston wore Number 76, playing offensive tackle with the Raiders in their world championship 1980 season. "One great thing about sports is the hierarchy," he says. "It's hard to play good high school football. It's harder to play good college football. And it's unbelievably hard to play professionally. I thought I'd go to the Raiders, spend two weeks there and get cut, go home. I'm very happy with what I got. You have to be in it to understand. You have to see so many great athletes get cut and go by the wayside to even appreciate it."
He believes the skills he acquired as a player correlate to those one needs in business. "Coach Jerry Claiborne ran the University of Maryland team with management by objectives," Livingston says. "It was, 'What do we want to do and how are we going to get there?' It was a great lesson: organized and objective-driven, results-driven, with incredibly high feedback. I often tell people they ought to have the experience of being filmed for two hours, then have to sit and watch the tape over and over. Think about having a video camera focusing on you for the workday. At the end of the day, you and your boss sit with the VCR and, working the fast forward and the replay buttons, your boss says, 'You know, when you said that to this person, that was really dumb. Let's look at it again ... and again ... and again.' Football is brutally honest. Either you did your job or you didn't."
Thus, in sports as in business and as in life, Livingston thinks the devil is in the details. "It's the little things that make a difference," he says. "You can't run a winning organization without caring about the little things, a lot of feedback and a lot of openness. You're going to hear me talk about clear objectives and priorities. I think great CEOs like GE's Jack Welch distill their messages to a few things, and hammer them over anti over and over again."
Down to Business
Upon finishing his MBA at the University of California at Berkeley in 1983, Livingston's first job was with Arthur Young and Company. Little did he know that his first boss - the senior accountant on the audit to which he was newly assigned - would, some years and some jobs later, become his wife. However, it's to technologic aptitude - and a bit of serendipity - that he credits his success.
"When I was still in graduate school, I took a job as a microcomputer intern," he explains. "I taught people how to use microcomputers and spreadsheets and build microcomputer-oriented databases. I learned how to write in one of the early database languages and learned one of the early spreadsheet programs. It was key to my career because I got to spend all my time with microcomputers just as they were emerging as a hot tool for finance professionals. While I was at Arthur Young, I was the only guy who knew how to do complicated spreadsheets and databases."
In contrast to the palm-sized personal computer he's now tethered to, Livingston says, "In 1983 I bought a portable computer that was like a suitcase, and I carried it around on audits. Then I moved to Genentech in 1985 and was the only guy in the finance department who really knew how to use spreadsheets and microcomputers to do financial analysis. So I was pulled into all kinds of projects with the CEO, CFO and the marketing people. I was the young, wet-behind-the-ears kid analyst who sat with the CEO, looking at mergers and major investments. It wasn't a calculated career move at all. It was just that I was capable of doing it and few others were at the time. And it accelerated the early part of my career. I still like to do spreadsheets and build databases."
At the same time, Livingston learned that senior managers have to be visionaries; he calls it "living in the future." That's because, he says, "You have to work on issues today that will impact issues two years from now, because if you're not working on them today, what you'll be doing two years from now will be outdated. People think they're solving today's problems, but really they're working on the future. The big challenges are where you invest, what you bet on. Every company has limited resources - whether it's time or money - and you have to be smart about what you pick to work on. Pick wrong and you're behind the eight-ball a couple of years down the road."
He thinks time determines whether your choices are the right ones, thoroughness is critical and memory is what prevents chronic mistakes. "If you're patient, if you pay attention, you remember why you started on the path you're on," he explains. "The CFO has a unique balancing act. He or she has an obligation to the board, shareholders and the management team and has to be true to them all, so it's hard. But time tells all. Doing the right thing now will keep you from getting burned. Bite the bullet when you have to."
In 1993, Livingston went on to become CFO of Celestial Seasonings, a leader in specialty teas, and managed its initial public offering. He then became senior vice president and CFO of Catalina Marketing Corp., a $250-million supplier of electronic marketing services to the consumer packaged goods industry. "I've been a CFO for almost 10 years," he says, "and have done most of the things I could do as a CFO in a small- to medium-sized company. CFOs today are increasingly becoming general managers, not technicians or accountants." Thus, he thinks his transition to a CEO-mindset won't be hard.
So what's the biggest part of the CEO's job? "It's identifying the things that can make a difference within the organization, prioritizing those and working on them," he explains. For FEI, he says that means action: "I don't want FEI to be in a maintenance mode. I want us to work on the things that can make a difference." And that's one of the reasons he came to FEI. "I think the Institute is such a great organization, and commands such respect in the financial community, we can make a difference in a lot of areas," he adds. "I want to bring attention to quality, responsiveness to members and set clear objectives and priorities."
Work Hard, Play Hard
Phil and Karen Livingston were married in April, 1989. Both are CPAs, although Karen, a graduate of the University of Texas, says they don't talk shop. Even so, Phil Livingston brings a finance analogy to his thoughts on marriage. "Its like a bank account; you have to invest," he says. "You have to make deposits because you will make withdrawals, and you have to have enough assets built up to keep it going." So the two try to go out on a date every Saturday night. Karen also introduced him to golf and says they enjoy playing it together, although he admits to being a bad golfer. "I have a 19 handicap," he laughs. "That's bad golf." And he likes watching and attending sporting events.
The Livingstons, who moved from California to Colorado to Florida as Phil changed jobs, are house-hunting in the area around FEI's New Jersey headquarters as we go to press. "Every move we've made has been good," Karen says. "It just takes a little adjustment." Phil, says Karen, is "very smart. He requires a lot of stimulation. He has an unbelievable amount of energy and likes to have his agenda filled up, so the rest of us are always running to keep up with him. And he's lots of fun."
Former teammate Ted Hendricks agrees. "Phil has a playful tone to his personality," he says. "He always laughed at the jokes teammates would play on each other, and he took it very well when the joke was on him." Hendricks also says Livingston is loyal, noting, "I basically took him under my wing and he's never forgotten that. He's more than a friend."
A photography buff whose father involved him in the hobby, Livingston papers his office with pictures of the couple's three children - Sarah, 7; Scott, 4; and Cindy, 1. A devoted dad, he sits on the board of the Carrollwood Day School, where Sarah and Scott are students, reads to his children and helps put them to bed. Karen says, "He's a great dad with a lot of patience. He's a great teacher and he talks to his kids a lot."
And as he focuses on his new role at FEI, Livingston is sure to keep one eye on the future and the other on the details.
RELATED ARTICLE: What Phil Thinks
On investor relations: "I believe the average investor today has 10 times the information available to him as compared to 10 years ago. The number of analyst reports, Internet-based information, news articles and research databases has increased dramatically and been democratized. With all this, the footnotes to financial statements are becoming obsolete. I want the regulators to have more dialogue with practicing CFOs and investor relations professionals, to understand how the footnote complexity explosion has led to the opposite of the intended consequence: Today even the most sophisticated investors and analysts rarely read the footnotes. So I think traditional financial statements are close to being obsolete."
On the CFO's relationship to the board: "You'd be surprised how many board members call on the CFO, especially if the question is a financial matter. Therefore, it's important that good CFOs build a strong rapport with board members so they can feel comfortable calling you. Just remember, the CEO also has to feel comfortable with board members coming to you. That's a big trick when you're CFO."
On CFOs and technology: "Technology is increasingly important because the pace of change is faster. And more and more, CFOs have to know the guts [of a computer or program]. The day and age when the CFO can rely on others to interpret is passing. You need to understand how databases work, how the Internet works, the power of linking information to create products and access knowledge."
On preparing for a finance career: "College finance majors still need to understand accounting. It's the language of business. It puts a framework around how businesses make a profit. That clarifies a lot as you go through your career. I still think it's useful to learn to write in a programming language, too. Doing that forces you to understand computers. Even if you never write another program, you always have in your mind how databases are constructed, how loops operate within programs, how programs call other programs. And, of course, communication is so important. It's vital to learn how to write."
On friendship: "Throughout your life, you really have only a small group of friends. Keeping one friend is more important than making four new ones, and I've tried to stay tight with my good friends, although it's not easy when you move around the country a lot. It seems the new ones come and go, and you fall back on the old ones. I try to teach my kids that."
On objectives: "In college, each football game, each week, we had a set of objectives written on a white board on the wall, one set for the offense and one for the defense. For instance, the offense would have to gain 150 yards rushing and the defense would have to block one kick. When we met on Sundays after the game, before we reviewed the film, we reviewed how we did. We got a check in the box for the goal we achieved. It was amazing: You got enough checks in the boxes, you won the game!"
On taking action: "I don't like to tread water. I'm not a maintainer. If things aren't happening, I'm going to make them happen."
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|Title Annotation:||interview with incoming Financial Executives Institute CEO Phil Livingston on his game plan for FEI; includes related article on Livingstone's personal views|
|Author:||Gray, Carol Lippert|
|Article Type:||Cover Story|
|Date:||Mar 1, 1999|
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