Workday CFO: Put Employees First

June 20, 2014, 3:56 PM ET

Workday CFO: Put Employees First

NOELLE KNOX

Editor, CFO Journal

Mark Peek is the chief financial officer of Workday Inc., a provider of enterprise cloud applications for finance and human resource departments. Previously, he was CFO of VMware Inc. and the chief accounting officer of Amazon.com Inc.AMZN -0.86% He spoke with CFO Journal Editor Noelle Knox about putting innovation above profits.

Q:  How do you maintain a corporate culture of innovation?

A: The challenge in the finance organization, especially in high-tech companies and high-growth companies, is to bridge the vision – typically of the CEO, who has a product- and broad-market focus that takes you out five to 10 years into the future…[you have to bridge that] with the reality of the business sales organization that has a quarterly number to hit. You have to make sure they don’t err too much on one side or the other.

Q: How do think about profits versus innovation?

A: I am frequently asked the question when will we be profitable? The simple answer is that the greater good is to continue to grow and innovate the business model. That ultimately allows us to become profitable.  We would rather err on the side of investing in future products and in winning a larger market than on trying to be the most efficient cost provider. When growth slows you can become more efficient…but of course you need to have enough cash to stay in business.  It’s more important to make investment decisions that feed future growth rather than be the lowest-cost provider.

Q: How do you create a culture where you can make bold, calculated risks?

A: You never want to choke off the next great idea. It boils down to process, and not just for the CFO. The CFO provides an enabling framework for how you make investments and how you embrace risk, but the leadership needs to be on board.

Always foster the ability for the company to come up with new and innovative ideas and have a mechanism where they put ideas on the table and weigh them against the market opportunity to decide what has the most realistic outcome of truly changing the market. There are a number of teams that have product development [ideas] that have no tie to our future production roadmap. They are working on the next big thing, with a clean sheet of paper, trying to imagine what a competitor trying to disrupt Workday would do.

Q: What role does the finance department play?

A: Companies driving around earnings per share or operating profits have a real tendency to look at how to grow sales and improve margins. The risk the CFO takes is moving too quickly to improve margins.

The most profitable things you have to have for large market share are either disruptive to incumbents – new and fresh [ideas] – or you have to have built some form of significant market share and just look to extend your lead.

I’ve come into different organizations at different life cycles. And a friend of mine at VMware told me,  ”Culture eats strategy for breakfast.”  Culture in a company is formed early on, and it’s difficult to take a bad culture and turn it into good, but it can be easy to take good culture and move it into a company that is not as innovative.

We’ve thought about it very carefully and the employees come first. If you do that, customers will have a wonderful experience. Happy employees create happy customers. And ultimately you will have happy shareholders. We try to tell people not to focus on the stock price. If you continue to innovate and improve performance, the share price will ultimately take care of itself.