Ep. 126: Bob Kolodgy - Building Organizations Ready for the Future

Contact Bob Kolodgy: https://www.linkedin.com/in/bob-kolodgy-a5849214/
About Bob Kolodgy: https://www.bcbs.com/about-us/leadership/robert-kolodgy

Bob's Interview for Forbes CFO Network with IMA's Jeff Thomson: https://www.forbes.com/sites/jeffthomson/2020/02/07/the-finance-leader-in-health-care-an-interview-with-the-cfo-of-blue-cross-blue-shield-association/?sh=418e829169ac

BCBS: https://www.bcbs.com/

FULL EPISODE TRANSCRIPT
Adam: (00:00)
Welcome to episode 126 of Count Me In. Thanks for coming back and listening to IMA's podcast. I'm your host, Adam Larson and today's expert guest is Bob Kolodgy. Bob is Executive Vice President and Chief Financial Officer for Blue Cross Blue Shield Association, a national Federation of 35 independent community-based and locally operated Blue Cross Blue Shield companies. In his role, he is responsible for the blue's federal employee program, oversees the national employee benefits administration, and has overall accountability for Blue Cross Blue Shield brand management, and the associations finance, licenser, enterprise information technology, and information security areas. During his conversation with my co-host Mitch, Bob discusses the role of the CFO in building organizations ready for the future. Keep listening to hear his perspective on innovation, data, and value.

Mitch: (01:02)
So for our conversation today, we really want to emphasize the role of the CFO and making sure that they are capable of building organizations ready for the future. Now, innovation certainly is a term we use often in accounting and finance as organizations seek to create and increase value. So to start off, I would really like to know what innovation means to you.

Bob: (01:31)
Yeah, thanks Mitch and thanks for the opportunity to address IMA today, it's a great group and I love to be part of your events, so thank you for that. You know, with respect to innovation and accounting, let's put it in perspective and I've always said this at the beginning of innovation conversations with finance people. It's like, well, we don't want you all to be all that innovative, I mean, your accountants after all. And you need to be careful, right? So there's all kinds of, accounting principles and things like that. And we don't want you to be creative with that now, maybe be creative about how you do what you do, right? And so how can you as an accountant, or a finance person in an organization, actually innovate in a way that creates value. And so, when we try to take that apart, I look at value as the sum of three things, cost or efficiency, quality, and service. And so anyone can apply those principles to what they do I think, and add value. And so for me, innovation, particularly in accounting and finance in those disciplines really is focused more on those things and keeping them in balance, right? So innovation can accelerate any one of those things and as long as it does that without detracting from the other two, it's adding value. So for me, it's kind of that simple. And, when you look at what we've been in for the last, 14 or 15 months with the pandemic, it really sort of dots the eye on the need for innovation, right? We had to pivot in so many ways that we never would have expected so quickly and, you know, true innovations have come out of that in many forms and now its a matter of advancing those and in some cases bringing them to scale. There were certain things that came out of the pandemic that were really innovative and they're going to stick whether we expected that to happen or not. The time after the pandemic will be, not like anything we expected or planned on our prior trajectory.

Mitch: (03:37)
Yeah, I completely agree, among these different conversations that I have, I've certainly seen many organizations who have explained that they will be adapting some of these ongoing principles moving forward and making it part of their business, because of how they had to pivot and adapt in the last year plus. My next question, continuing on this topic, as far as innovation goes and the different components that you spoke about, what is specifically the CFO's role when it comes to initiating this change, enabling innovation and driving the anticipated results, evaluating those results, where does the CFO really make an impact?

Bob: (04:16)
Yeah, I think innovation and enabling new thinking and so forth is really an area where the modern CFO can differentiate themselves from the more traditional financially focused leader, and if it's done well, the CFO can become the corporation's architect for business value. I saw an article recently from Accenture on this, and I found it very, very interesting and poignant. CFOs are uniquely positioned if they apply certain levers that they have access to, to be able to create this differentiation and be the architect of business value. And just to list off the levers quickly, visibility of the whole enterprise, the CFO typically because they deal with all parts of the company has a view into what is going on in all those parts and the ability to see where synergies exist across those verticals, the ability to do analytics and have access to data across the enterprise is really critical. CFOs, not only have access to financial data, but now more and more operational and market data and, a variety of things that they can bring together to bring insights that are actionable to the organization. Understanding enterprise risk is a critical role that the CFO or critical conversation, or are part of the conversation the CFO can bring, because they can measure risk and they know that you may be able to take risks in one area of the company and balance that off with some protection and hedge and the other areas of the company. The CFO can and should have a strong relationship with all the C-level executives in the company, right? So there should be good working relationships there and the CFO's ability to mentor and discuss things with his or her peers in a way that brings to life this greater business value. And finally the financial authorities, I mean the CFO obviously has a financial authority within the organization and can reinforce the economic basis for investment decisions, right? So the CFO can bring voice to somebody else's idea, in a way that that person may or may not be able to do. And so, these things can really be exploited by better collaboration with C-level peers, by leading in with unique insights, whether it's based on data, unique analytics, perspective on risk, or what have you, and then taking ownership for ensuring that value is extracted from all of the new technology and data platforms. These things are proliferating coming up all over the place. And I think it's the CFO's responsibility to make sure there's a value equation attached to each of those, or if not, make sure everybody else understands that and make sure that expectations are aligned along those vectors and CFO needs to be able to cultivate a good commercial awareness and stay ahead of the curve of the industry, right? So whether it's regulatory change, federal policy changes, the business environment, changing the competitive landscape, changing or just trends and particularly important, I think is understanding what the potential disruptors are. You know, I'm in healthcare, there are disruptors all around our industry, whether you're talking about health plans, providers, pharmaceut...