How CFOs Lead Through Risk and Constraint: Adam Kozak on Running Toward the Burning Building

Introduction to Risk and Curiosity

00:00 Adam: It’s important for leaders to recognize that the organization 12 months from the day they’re making a decision will look completely different. And we have to make the best available talent decision for the future of the business as we perceive it based on the construct we know.

00:20 Joe: Hey everyone. Today I’m talking with a friend and a guest who is a CFO, has operated as a COO. And when I look at individuals like this because I meet with so many, there’s a common characteristic of assessing risk and trapping it and making sure that the organization doesn’t devolve or crash. And then there’s a small subset of people that run towards burning buildings. And I feel like that might be Adam Kozak who I’m speaking with today. Welcome Adam.

00:53 Adam: Thank you for having me.

00:58 Joe: So the easiest entry point for a conversation is give people a background on yourself, your origin, where you started and where you find yourself now.

01:05 Adam: I’ve got a very non-traditional career path. CPA, Deloitte and Touche, midsize accounting firm, focus on retail and CPG. Then I move into Loblaws, this giant Rubik’s cube of complex businesses intertwined to ultimately just sell some food. And over an 11-year period, I’ve really focused and come with a sense of heightened curiosity to solve complex business problems in a non-traditional way. So we talk about running into a burning building — how do we design and monetize a retail loyalty program? How do we integrate supply chain for the acquisition of Shoppers Drug Mart? How do we transform back office controllership with really boring functions like accounts payable and customs and global trade? Things that people wouldn’t normally look to say, “Hey, there’s value here.” Post-Loblaws, it drew me into cannabis. How do we help legitimize a nascent industry that has no defined path and a huge opportunity to mindfully and strategically deploy capital. I look at each role as — what is that highlight reel, that hero moment? And that’s brought me to my current role today, which is in a private equity sponsored organization going through a transformation. Incredible opportunity for growth, incredible opportunity to lead people.

03:15 Joe: Okay, so let’s be clear — these are diametrically opposed. Loblaws at 60 billion plus in revenue, and then you go to the nascent industry of cannabis. Which geographies?

03:33 Adam: Initially in Canada and then across about five or six states in the US, which brings a layer of complexity and an undefined data set. No one’s ever done it before. And for me that’s what’s exciting — coming in with that curiosity, taking little Lego pieces from all of my various experiences and saying how can I apply this to retail distribution, direct store delivery, food manufacturing, mass agriculture, environmental services.

04:25 Joe: Your time at Loblaws — you had various roles. Map what you developed there in terms of competencies and skills to the next role. Be specific around what you left there with that allowed you to take on something with complete ambiguity tied into it.

05:03 Adam: Joe, I think the largest skill is the business. Finance professionals have an incredible opportunity to start with the business. What’s happening in the distribution center? What’s happening at the cash register? Seek to understand that construct, that framework, and then work backwards on how finance enables it. I’ve gotten to work in loyalty and marketing, IT, distribution and supply chain, actually running food factories and being an operator. But all of that comes with a muscle, a behavior, and an approach — start with the business, understand what’s happening at the shop floor, and then work backwards to determine how we monetize it and create process, controls, and reporting.

06:29 Joe: Are you looking at problems from first principles, or using comparables? How do you know you can do better and by how much?

06:57 Adam: We always started with what’s best-in-class and what are our competitors doing. My R&D is replicate and duplicate. I would say 90% of business problems out in the world exist and have been solved. What doesn’t exist is how it fits together in a Rubik’s cube. Every time you scramble it, it’s a little bit different, but the colors are all the same — just in a different construct. Being dynamic, curious, inquisitive, not being afraid to fail — saying “we’re going to try this, this is our risk-based best course of action” — and course correcting quickly. Always being mindful of the cost of not acting, because businesses sometimes succumb to analysis paralysis. Our role as leaders is to help the business make a decision, move forward, and then course correct.

09:09 Joe: Tell me about a moment where you took a risk and were wrong. What did you do once you landed there and it was wildly different than expected?

09:41 Adam: For me, going into every role is really understanding how can I make a difference — what’s going to be my hero moment, what’s the mandate. And number two, what is the professional chemistry with the management team, the board of directors, external stakeholders. I have had one opportunity where the mandate was described as growth and transformation. After about a year in, it clearly showed that was not the case. As a financial steward, I’m obligated to leave an entity in a better state than I found it. So I pivoted — can I automate the heck out of this process? Can I look at what our frontline employees are doing and take pressure off their daily work? It was pretty successful. I made a difference in a lot of people’s lives.

11:33 Joe: Do you find yourself feeling sorry for yourself when those opportunities turn out differently, and how do you manage your psychology?

11:52 Adam: For me it’s different. I look at it and go, “Holy crap, did I learn something? Not going to make that mistake again. I’m going to ask six additional questions before I even meet with the CEO.” I very strongly look at failure as learning. I write down the 10 new things I’m going to do. I’ve got a bit of an eidetic memory, so when I learn something it’s journaled. It’s easy to say “woe is me.” It’s a lot harder to say “wow, that was such a learning — not going to forget to ask that question again.”

13:09 Joe: What kept you at Loblaws for almost 11 years when everyone is switching every 3 years?

13:36 Adam: My turning point was starting in a very traditional role — technical accounting and external reporting. My approach compared to my peers was to start with the business: what’s happening at the distribution center, the cash register, in financial services — and then work backwards on how to structure accounting process and policy to be compliant with external reporting requirements. That unlocked my opportunities at Loblaws. The business saw that my approach was different and I started getting tapped. Loblaws brought an environment of safety where you could try different roles because the organization was so large. Almost 11 years, one organization, but a myriad of different roles and assignments. In each one, there was an achievement, a hero moment, a learning.

15:43 Joe: I have to ask about territorial behavior in large organizations. Someone from external reporting saying “I want access to the business” — was that real? Did you overcome it?

16:40 Adam: 100% real. My first month on the job in 2007, I was down with the supply chain team and was asked very politely to leave because they were busy. Someone did call my boss. I came with “I’m here to learn, here’s the problem statement I’m trying to solve.” Once you build a bit of trust through the resistance, you can start to articulate the downside to a stakeholder — what this means to the financial statements, to equity analysts. And ultimately, a well-structured set of accounting policies done in partnership with the business can help people meet their targets and get their bonuses. Incentives are magical because they work.

18:44 Joe: I want to talk about two things: loneliness at the top, and building teams under constraints. At senior levels — talk to me about how loneliness changes as you progress.

19:12 Adam: It is very lonely, especially in an enablement or support function. When you’re the CFO, CTO, or chief people officer, you’re enabling an organization — you’re not actually delivering tangible product. Our functions don’t drive a truck, don’t grow a tree, don’t close a deal. Supply chain and sales bond quickly. Finance, HR, IT sit in a silo — and that drives even more loneliness because those support functions have less external support than the true drivers of commercial operations. It starts with your network. Your peers are the individuals that get you through things. In finance, it could be something as easy as FEI — start small, join an association, go to your local CPA chapter. Listen to what other people are going through. And the second pillar: break down the cross-functional silos. Make sure you’re in with your sales team, your operations team. Carve out time to sit and listen — what are their pinch points, their market frustrations? It requires an investment in time.

22:37 Joe: I don’t think anyone networks easily, or fully understands the value of having that group around them. The more I get out of my head with senior people, the better I feel. And internally, getting close to operations — actually doing their job sometimes — that’s when the magic happens. You feel less alone because you feel part of the team. The external network and the internal proximity to operations — both matter. We have to be deliberate about showing up for ourselves the same way we show up for everyone else.

25:29 Joe: Building the team under constraints — how do you approach that?

25:55 Adam: I always start with my ideal state, my utopia. How would I do it with no constraints, unlimited budget, best working conditions? What does the operating model look like under utopia? Then I begin to horse trade. What’s my constraint — office location, technological enablement, manual processes, board perception? Then it’s about finding the right partner. The right recruiting partner can give you a sense of reality — they’ll tell you “this is not available in the market today” or “your constraints require a predatory approach, here’s the cost of that.” That helps me make the right decisions. And leaders need to recognize that the organization 12 months from the day they’re making a decision will look completely different. We have to make the best available talent decision for the future of the business as we perceive it. This is not 1985 — we are not hiring employees for 25 to 30 years. Talent will shift, talent will evolve.

30:20 Joe: In your time as a CFO, have you seen a shift in how much external macro factors weigh on the competitive dynamic?

30:46 Adam: Up until 2020–2021, North America operated under a certain construct. Yes, there were bumps — the financial crisis, the ’90s — but there weren’t pervasive breakages in how the world works. We had a pervasive breakage, and what that taught me is an opportunity to look inward first. If you’re not able to grow a market or export your product because of an external factor, look inward. How do we set the organization up for when this construct no longer exists? Because this too shall pass — the world and businesses operate in cycles. The largest area of opportunity, if it’s not external expansion, is looking at your people, your processes, allowing your teams a different area of focus for development and upskilling — because that next phase will come. Canada in general has a productivity problem, because Canadian business leaders have a challenge making decisions and moving forward under ambiguous and undefined circumstances.

32:43 Joe: Rapid fire. One habit that works in both large complex organizations and startup chaos?

32:55 Adam: Getting out in front of the business as quickly as possible.

32:55 Joe: When you inherit a team that’s entrepreneurial and brilliant but process-immature, what’s the first two-week fix?

33:07 Adam: Ensuring they get buy-in on how I can help make their lives easier. “What are you doing? This really sucks. I’m going to help you remove the suck.”

33:12 Joe: M&A red flag that makes you walk from the deal?

33:20 Adam: The professional chemistry with the CEO, founder, or entrepreneur in the very early discussions of “can we actually make this work together” — because key person risk in a deal transition is number one.

33:39 Joe: If you could give your younger self one question to ask employers when interviewing, what would it be?

33:44 Adam: Be more deliberate in your questioning when you’re younger. I looked at each interview as “I’ve got to go in there and win, I want them to want me when I leave.” For younger candidates, there’s less focus on “do I want them?” Be harder on the employer. Stay away from “what’s your business strategy, how do I add value in 90 days” — and instead ask “what’s really happening here, am I going to get a hero moment out of it, and is this opportunity really for me?” Because any role is you, your partner, your children, your extended family — they’re the individuals that help us be at our best.

35:13 Joe: What’s the worst career cliché you’d ban from a resume or LinkedIn forever?

35:19 Adam: Self-starter. No one’s going to put “aimless wanderer” — so self-starter wins by default.

35:37 Joe: In three words, how do you know if you’re running towards something, not away from something?

35:42 Adam: Sunday scaries versus Monday bounce out of bed and can’t wait to put your shoes on.

35:54 Joe: What is a scrappy, low-cost move that will create value?

36:00 Adam: Communication. Support teams are focused on their processes and execution. Figuring out how to improve how frequently we communicate with our cross-functional stakeholders is the biggest, lowest-cost, scrappiest move. Communicate. It drives engagement, drives buy-in, shows people that you’re invested, shows team members that you’re giving them credit.

36:29 Joe: This has been a blast. I think we’re 45 minutes in and I just want to say thank you.

36:36 Adam: This was fun, Joe.