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Jenny Jao, Finance at Sprig — How to Build a Flexible Operating Model

Jenny Jao, the Head of Finance at Sprig, discusses the work she did to build a flexible operating model for the business. She dives into the benefits of model flexibility, the challenges of building the model, and how she collaborates with business leaders to bring strategic value to Sprig.

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Episode Summary

Finance is often perceived as a back office function. But getting out of the back office to collaborate with other departments within an organization is a prerequisite for building effective financial and operational models.

In this episode of The Role Forward, our host Joe Michalowski chats with Jenny Jao, the head of finance at Sprig, to discuss what it takes to build a financial model collaboratively.

Jenny shares what it was like building an operating model from the bottom up and the steps involved in the process. Jenny and Joe also discuss headcount planning, why it’s such a tough part of any operational model, and how Jenny works through it at Sprig.

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Featured Guest

Jenny Jao

Head of Finance, Sprig

Jenny Jao is the Head of Finance at Sprig, a research platform helping companies improve their digital product experience. With over five years of experience at public and private companies, Jenny brings a unique blend of experience to startups looking to improve existing processes and drive better performance. And in 2022, she was recognized as one of Mosaic’s Movers of Strategic Finance

Key Themes from the Episode
  • For startups, blending financial and operating models is key to more strategic decision-making. But the process for building a flexible, all-encompassing operating model is unique to every company.
  • Headcount planning is among the toughest (if not the toughest) parts of the operating model. A regular cadence of communication between finance and department leaders is key.
  • Having a flexible operating model turns finance from back-office number crunchers to go-to partners on all things metrics and strategic decision-making.

Episode Highlights from Jenny Jao

02:49 — Flexibility as the Foundation of an Operating Model

”I was lucky that there was a basic forecast model, so I had something to work with. And the structure of our data in both the accounting and the analytics platform was quite organized.

The piece that was missing was financials, which were separated in different spreadsheets […], and this made it difficult to audit and control errors. So with all the inconsistencies and likely human error from having the financials across different spreadsheets, my number one priority was to bring it together into a consolidated model.

I wanted to introduce maturity and ensure that we had the appropriate level of detail while maintaining a huge degree of flexibility. […] Since things change so quickly, I have built the model to flex in a lot of different ways. And that way, we can put in different assumptions and scenarios and plan. And building in case switches is also helpful to provide that extra level of flexibility.”

11:19 — Dealing with a Lack of Historical Data

”The biggest challenge is the lack of historical data. So we have maybe six months that we can trend off of because we’ve made all these changes. It’s not necessarily a business pivot. It could be the go-to-market motion or the way you staff up your engineering team, whatever it may be — the big changes that make it difficult to trend. So I’ve had to get a bit creative with how I forecast some of these line items.

The other piece, for example, was COVID. Travel and entertainment have been a line item that’s been very different in the last couple of years. And so, how do you think about that in the next 12 to 18 months? And if you want to trend even beyond that, and you want a three- to five-year model, that’s even more challenging.”

22:14 — Getting Granular with Model Creation

”So we get it down to the sourcing team level. So, for example, marketing would be based on a pipeline-to-spend ratio, and there are targets that we set there. So for every dollar of marketing spend, how much of the pipeline are we expecting from that dollar?

That gives you what your marketing pipeline should look like. And we also segment that by enterprise versus mid-market — mainly because our sales cycle is so different, and we want to see how the pipeline’s converting.

And then, SDRs. It is based on a meeting target. […] We set targets and figure out how many meetings they need to create to get to some pipeline level. […] And then you look across a few other sourcing channels. But once you get that next, you can share it and see if that’s the right mix you had in mind, and tweak assumptions as necessary.”

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