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Autodesk CFO Offers Road Map for Aspiring Financial Officers

May 2007

STANFORD GRADUATE SCHOOL OF BUSINESS—Successful chief financial officers are also good politicians, said Al Castino, MBA '77 and CFO of Autodesk, Inc., a desktop design software company with sales that have nearly tripled since he joined the business in 2002.

It isn't enough to be a financial whiz, Castino told students and faculty on May 3 at the Graduate School of Business annual Arjay Miller lecture, which brings a chief financial officer to campus. Adept CFOs are able to convince other people that their ideas are the right ones.

Castino's tenure at Autodesk is a case in point. The company had stagnated for several years by the time he arrived in 2002. Back then, Autodesk lived off its bestselling AutoCAD software, growing just 1.3 percent in five years. Its $825 million in sales were down 13 percent from the previous year, and many within the company believed the design software business had reached maturity.

The CEO didn't think so and brought in new leaders in key positions, including finance, sales, and marketing in order to reinvigorate the company and bring in new ideas. Castino, one of the new leaders, wanted to streamline departments such as accounting, which operated in 60 locations worldwide. The new head of sales wanted teams to sell new products rather than fill orders for AutoCAD, the company's aging blockbuster. He also saw the need to invest in emerging markets, which now account for 15 percent of the company's revenue but at the time were considered wasted effort due to rampant piracy.
The new COO wanted to steer the company back to its core business and buy small companies that could help accomplish this. The new leadership also worked to engage the company's employees, a loyal but generally unadventurous group that had stayed with Autodesk through the online bonanza of the 1990s.

"There was no area that couldn't generate productivity gains," Castino said. "This is not an unusual situation. You will find companies get mired in the mud." Pulling them out is the challenge. The executive team did it by accumulating small, early wins. "I don't believe the big bang approach really works very well," he said.

Instead, the team changed sales incentives to promote new products. This increased revenue pushed the stock price above $12-a barrier the company and investors had come to see as insurmountable. "We started to realize the barriers weren't real," Castino said.

Small victories led to bigger ones. Autodesk opened a research and development lab in Shanghai that is now staffed with 1,000 engineers. Autodesk's presence in China helps it stay connected to the Chinese market, and the creativity of Chinese engineers helped Autodesk move to a yearly product launch schedule.

Autodesk winnowed its 60 accounting offices down to three. The company's finance staff, which numbered 230 in 2002 when sales totaled $825 million, now has 200 people overseeing $2.1 billion in sales.

The company's small victories accumulated, and today Autodesk's stock is worth more than $40 per share. It's an economic reward, yet it wouldn't have been possible without understanding "the levers to influence people," Castino said.

And it wasn't just the rank and file that needed winning over. "Some people on the management team also were skeptical that significant progress could be achieved. In 2002, when Castino recommended a cost control study, another key executive at the time thought the study would do "irreparable harm to the culture of the company."

Shareholders were also skeptical. They'd spent years listening to unrealized promises.. "There were a few people who believed us and made a tremendous amount of money," he said.

Castino also had some advice for aspiring CFOs:

  • Make sure you learn how to lead people. Castino's predecessor at Autodesk knew just as much about finance, but he wasn't able to persuade company leaders and employees to change.
  • Focus on making reality better, not making it look better. Investment bankers will try to sell you complex accounting formulas meant to mask problems, he said. Rather than wasting your time and money on window dressing, focus on fixing things.
  • Build a strong team.
  • Be honest with employees and investors about what you're going to do. Tell them your goals and be honest about the risks.
  • Share the credit for success. If you do, people will want to be on your team.
  • Be suspicious. The bigger the investment banking fees, the more suspicious you should be of the deal. Tech mergers often invite culture clash and conflict. Unlike banking products, software and hardware made by different companies are often incompatible, leading to unhappy marriages.
  • Look to the future. Management must look at least five years ahead while executing "ruthlessly and constantly."
  • Be sure your financial strategy parallels and supports the business strategy. The lines between divisions are blurring, making it essential that they be on the same page.
  • Keep physically fit. Physical fitness is important, so "don't let your career take it away from you." Physically fit people are more creative and engaged in their work.
  • Try your hand at running teams and building companies. If you're good at it, the money will come. Making big money is not much of a life goal. "I typically find rich people boring, to be honest," he said.

—Sarah Ruby