What Sara was thinking was, “Heck, I don’t know. I’ve never
done this before.” What she said, however, was, “Our next earnings
release is in six weeks. I’ll have it done by then.” At the time, she was
unaware that no restatement of this size had ever been completed in
less than six months.
As the work began, Sara couldn’t help but worry about the size of
the problem. Hopefully, it would be small and inconsequential, and
get no negative reaction from Wall Street. Her fear, of course, was
that it would be big, and the share price would suffer.
In a situation like this, there are three ways a leader can respond.
Option one is to ignore the problem. After all, they were using the
proper accounting methods now. It’s possible nobody would ever
find out about the past errors. Option two is to pursue the work on the
restatement, but to stop digging when the size of the problem gets too
big to go unnoticed on Wall Street. For a company the size of D&B,
that number is about $50 million. Option three is to keep digging
until you find everything, without regard to the size of the problem.
Let the chips fall where they may. Sara chose option three.
Working around the clock, the finance team completed the job in
six weeks, as promised. With its next quarterly release, D&B adjusted
its income going back 10 years. The grand total was a $150 million
charge, with no fraud found. And despite the sizable amount, the
stock price held steady. The size of the restatement and the speed with
which it was announced left Wall Street certain there were no more
skeletons in D&B’s closet. Sara and her team received accolades
and even monetary awards for completing the restatement in record
time, and in a manner that left investors confident in the company and
The actions of Sara and her team defined the rules of behavior in
the finance department at Dun & Bradstreet. Accounting policy is
defined in the rule book, written by the U.S. Financial Accounting
Standards Board. But how those policies are followed at D&B
was defined by the CFO, and the story that will live on even after
Today, Sara Mathew is CEO and chairman of Dun & Bradstreet.
She and others continue to tell this story to help employees understand not just the accounting policy but also the rules of behavior.
Doing the right thing is rewarded at D&B. It’s a policy Sara’s confident she won’t need to restate.
The premise of this chapter so far has been that you need stories to
establish policy because nobody reads the policy manuals. But there
is an¬other reason—probably an even more important reason. Rules
often lead to unintended consequences, sometimes causing more
damage than the ill they were designed to prevent. Stories rarely
do that. The following story illustrates the counterproductive nature
Phil Renshaw spent 17 years in banking and corporate finance
before becoming a consultant and coach for finance executives with
Circulus in Buckinghamshire, England. He’s seen the downside
of creating additional rules when the existing ones aren’t working.
One of his favorite examples is having senior managers personally
approve all expenses, thinking it’s a good way to reduce spending.
It may succeed in reducing spending. But that doesn’t mean it was a
In Phil’s experience, here’s how that typically plays out. A com-
pany has just entered the final quarter of the fiscal year and is woe-
fully behind its earnings target. In order to save money, a temporary
rule is put in place for the rest of the year. A senior executive, such
as a vice president, must approve all expenses, no matter how small.
The result is an absurd set of consequences. The first two are a result
of the fact that such a leader might have hundreds, or even thou-
sands, of people under his authority. Personally approving all those
expenses could take several hours a day, distracting the VP from more
important duties. He tries to keep up for a few days or weeks, but his
work suffers because of it. Eventually the VP delegates the task to an
administrator, which is the second absurdity. Expenses approval has
now been delegated to an administrator less qualified to review them
than the original managers who would have done so in the absence
of the new rule.
Lead with a Story: A Guide to Crafting Business Narratives that
Captivate, Convince, and Inspire
by Paul Smith © 2012 Paul Smith
All rights reserved.
Published by AMACOM Books
Division of American Management Association
1601 Broadway, New York, NY 10019
Paul Smith is Director of
Consumer & Communications
Research at The Procter
& Gamble Company in
Cincinnati, OH. Paul is also
a keynote speaker and
trainer in leadership and
storytelling techniques, and
the author of a book about
storytelling as a leadership
tool titled Lead with a Story:
A Guide to Crafting Business
Narratives That Captivate,
Convince, and Inspire.