Bright Ideas for Fostering Innovation in Treasury

Microsoft has long been recognized as having a remarkably innovative treasury team. The company won the 2021 Alexander Hamilton Overall Excellence Award from Treasury & Risk, as a result of submitting more than a dozen entries describing a wide range of projects—all of which were both highly successful and very creative. Some won awards, while others were bumped off the podium when our judges deemed another Microsoft initiative in the same category to be a bit more leading-edge.

To learn more about how Microsoft fosters such extreme innovation, Treasury & Risk invited Tahreem Kampton, who at the time was Microsoft’s new corporate treasurer, and Jayna Bundy, general manager of Microsoft’s Global Treasury & Financial Services group, to participate in a roundtable discussion. We were joined by three of the 2021 award winners—Vinni Dang, senior treasury manager; Fanny Niu, senior finance manager in the Global Treasury & Financial Services group; and Andrey Naumiuk, senior finance manager for the Azure Data group—as well as Peter Klein, CTO of treasury app vendor FinLync.

You can view the full conversation about building a culture that emphasizes continuous improvement in our on-demand webcast. Following are excerpts from the event.

Meg Waters, editor in chief, Treasury & Risk:  Treasury teams are often seen as bean counters who spend their time in the weeds of financial management and analysis, but it seems that Microsoft treasury has long emphasized continuous improvement and taking a big-picture view of what treasury could or should be. Where does this emphasis by Microsoft’s treasury leadership come from?

Tahreem Kampton, corporate treasurer, Microsoft:  At a high level, the innovation you’re talking about comes from the top. Microsoft’s mission statement is to empower every person and every organization on the planet to achieve more. By definition, then, it’s important that we are empowering everybody on our team to achieve more. So, we intentionally encourage innovation and creativity.

In addition, Microsoft management is very focused on the ‘growth mindset.’ That’s something Satya [Nadella], our CEO, has pushed ever since joining the leadership at Microsoft. That means we are all lifelong learners, always pushing the envelope on doing new things. That is part of our company’s DNA.

One example of how this plays out is what we call the ‘hackathon.’ That’s an annual event where individuals partner with other people throughout the company to work on ideas and projects they are passionate about. They’re excused from their day jobs for about a week so they can participate. Those sessions foster a culture of innovation and a growth mindset where we all want to learn more.

Jayna Bundy, general manager, Microsoft Global Treasury & Financial Services:  On top of the broader Microsoft culture, we have an initiative within the finance organization that we call ‘modern finance.’ The goal is to drive digital transformation within the finance org by reimagining how we bring together people, data, and processes. And for the modern finance solutions we develop, we do a lot of sharing and evangelizing to help our customers and partners solve similar challenges in their businesses.

Like our CFO says, ‘By adopting innovative technologies, finance will strengthen its business leadership through compliance, accuracy, and efficiency.’ I think this common vision of modern finance helps us all think about best practices and how to foster innovation in a more strategic way.

T&R:  Interesting! So, what does that ‘modern finance’ approach look like on the ground in the treasury and finance organization?

Fanny Niu, senior finance manager, Global Treasury & Financial Services:  As Tahreem said, growth and innovation are in Microsoft’s DNA, so they’re critical to our daily work. Microsoft rewards people based not only on their individual accomplishments, but also on their contributions to others, on collaborating and exchanging ideas.

I was involved in building a solution around A/R [accounts receivable] and A/P [accounts payable] netting. I had the idea that we should be able to come up with a system that would minimize the cash flows from both sides. I got support from the treasury leadership team and worked with other internal functions—including HR, legal, accounts payable, tax, and the finance organization—to make it happen.

Now that the project is finished, I talk about it with some of our retail partners. They have a lot of pay in / pay out with their resellers, so they are passionate to understand how we are doing A/R and A/P netting. A partner from Japan, for example, recently asked me to look at their plan for A/R and A/P netting in their company so that I could advise them on potential issues to avoid. I helped them, and they implemented their own solution last month. The innovation journey happening at Microsoft really does impact our partners and customers in positive ways, as well.

T&R:  What are some examples of the ways in which treasury team members receive the message from senior leadership that they need to emphasize innovation?

Vinni Dang, senior treasury manager, Microsoft:  A few years ago, when I joined Microsoft, my first meeting with my leadership was over lunch. The goal was just to get to know one another, but toward the end of the lunch, they left me with one piece of advice: Never accept the status quo; challenge anything if you see a better way. And I realized this was the company culture at its core.

From day one, it’s been clear that every individual—regardless of role or level—is encouraged to practice a growth mindset. In hindsight, I suppose that makes sense, because many business challenges and ideas for solutions are best seen by the people on the ground, the people closest to the problem.

Andrey Naumiuk, senior finance manager, Azure Data:  I agree with Vinni. The treasury leadership team really encourages us to think big, to be bold, and to use an unconventional approach. At the same time, they create a very safe environment where everyone feels comfortable bringing forward innovative ideas, maybe even crazy ideas. I’ll provide you an example from the world of trade finance.

A couple of years ago, I met with some colleagues to think about how we could improve credit management processes. The challenge was that if we want to decrease losses, we should take less risk—but if we take less risk, we will inevitably reduce revenue. On the other hand, if we want to increase revenue, we’ll have to take more risk. And either path we take will probably increase operational costs, because the processes at Microsoft are already so efficient that changing anything is likely to reduce efficiency.

When we discussed all this with the treasury leaders, they asked us a very simple question: What can we do in order to achieve all three? In other words, how can we increase revenue, reduce risk, and reduce operating costs at the same time? Even though incremental changes to one area would negatively impact another area, maybe we could achieve groundbreaking results by harnessing some of the disruptive technologies that are available, like artificial intelligence [AI], machine learning [ML], big data, blockchain, and cloud computing.

With that in mind, we set out to bring machines into the credit management process and let them take some decisions instead of humans. AI is never tired; it’s super consistent; and it takes decisions immediately, which improves the customer experience and supports sales. We had some challenges with this project, but eventually we were able to achieve a positive outcome in each of the three areas—risk, revenue, and costs.

I think our success demonstrates that to achieve really groundbreaking results, managers and leaders should encourage teams to be brave, to bring forward crazy ideas and new technologies.

T&R:  Are there specific incentives or structures that Microsoft leadership has put in place to encourage treasury and finance professionals to take those types of big risks?

Jayna Bundy:  Getting people comfortable with taking risks can actually take a lot of coaching—especially in a treasury or finance function, where we’re traditionally a little more risk-averse. So, at Microsoft, we really make a concerted effort to challenge individuals on the team to think outside their comfort zone. The philosophy is: If you aren’t feeling challenged, you aren’t growing.

As we kick off each year, we think about our priorities, objectives, and key results, and discuss how we’re going to accomplish them. How do we simplify? How do we automate? How do we leverage technologies like machine learning or advanced analytics to drive solutions forward?

In addition, as leaders on the team, we have to create an environment where people feel comfortable with failing. You learn from taking risks. If you’re afraid to fail, you’re not going to learn. So, we try to embed into our culture the idea of ‘fail fast.’ We want Microsoft’s treasury and finance teams to know that it’s OK to fail quickly in order to, hopefully, learn what they need to know so that soon they can succeed.

Vinni Dang:  So, when I developed my Alexander Hamilton Award project, I was trying to improve our management of bank account access across all the different financial institutions, countries, and internal business units within Microsoft. I was relatively new to the team at the time, but my leadership saw the potential of what I was proposing. Their confidence, based on all their years of experience knowing the business, the people, the processes, and the culture at Microsoft, gave me the confidence to pursue this innovation.

I didn’t reach the solution on the first go. It was a journey that consisted of brainstorming ideas, experimenting, reflecting, iterating, and learning from my mistakes. When an option didn’t work, leadership encouraged me to fail fast, understand what didn’t work, and try something new. Like any creative process, there was no right or wrong on that journey. I was exploring options. I had ideas and was playing and iterating—and eventually I ended up at the solution that is saving staff about 75 percent of the time they used to spend managing user access for banking portals.

Tahreem Kampton:  It’s also important to mention Microsoft’s ‘impact model,’ which emphasizes leveraging other people’s work in order to collaboratively contribute to the success of Microsoft as a whole. I might be able to do a great job in a certain area, but if someone else has already done that work, why re-create the wheel? It would be wasteful to replicate work that someone else has already done.

T&R:  When do you evaluate whether a project would be reinventing the wheel? Is that during the approval process? How does Microsoft treasury manage that?

Tahreem Kampton:  There are things that we, as managers and leaders, do to look for overlap on projects, but we’ve mostly pushed these discussions farther down into the organization. I’m not going to know every single analysis or spreadsheet or dashboard or ML/AI algorithm that somebody might be building. But folks who are thinking about developing a new algorithm should reach out to their peers and colleagues—the other internal experts—to see whether we already have a model in a different area that they could reuse.

T&R:  So, they’re responsible for doing their own research before getting started with an initiative.

Tahreem Kampton:  Yes, 100 percent.

I also want to talk about the other major component of the impact model, which is doing what you might call a root-cause analysis. It involves sitting back and thinking about the things you did that went really well and the things that maybe didn’t go as well. A lot of times, we finish a project and just keep moving forward to work on the next big thing. But it’s really important to do some self-reflection on the previous project.

And sometimes there may be a project that you’ve taken on, that you’re trying to make work, and you realize that, as much as you want it to be successful, it’s just not likely to work out. That goes back to the fail-fast mindset that Jayna was discussing. When you’re in a growth mindset and you’re learning how to be better, failing is sometimes part of that. You need to realize that so you can cut your losses and move forward.

T&R:  Is that self-reflection something that management just encourages project managers to do, or is there a formal process for that?

Tahreem Kampton:  Sometimes it’s formal, and sometimes it’s informal. When a big technical issue occurs, the process is very formal. For example—I’ll just make something up—maybe a large payment that is supposed to go out doesn’t go out. In that case, the project team would have to really dig into the process and figure out what happened and where the payment process failed.

With a project that is broader, that doesn’t have just one easily quantifiable outcome, you might have to look more holistically and informally at what went well and what could be improved. I always block off time in my day for that kind of self-reflection. It can be difficult to set aside the time when there are many other pressing priorities, but it is super helpful when you are able to do it.

T&R:  That is very interesting. And Peter, does this description of Microsoft’s treasury culture reflect what you see, across your client base, as best practice for making a treasury group more innovative?

Peter Klein, CTO, FinLync:  It does. Innovation is about taking risk. I mean, it’s OK to be afraid of taking risks in the pursuit of something meaningful and empowering. But what we should be more afraid of is doing nothing and maintaining the status quo. Exactly as we heard from the Microsoft representatives.

Taking strides into new territory can be challenging because of the uncertainty and perceived risk, but it’s more risky to stay where you are and not do anything.

T&R:  So, the status quo may pose bigger risks than trying to move forward.

Tahreem Kampton:  I’d like to add that as a technology company, Microsoft has a lot of tools available that we can leverage to push innovation. But you don’t necessarily have to be a tech company to have the fail-fast mindset. There are a lot of ways to innovate, some of which treasury and finance professionals might not even recognize. Getting to best practice is really a process of finding where those tools are.

As an example, most people have a subscription to Microsoft Office, and a lot of them have access to Power BI as part of that. Someone may currently do a lot of work in Excel, but when they realize they have a tool like Power BI—which does a phenomenal job of visualization—they might adopt that technology instead to make their lives easier. Finding those tools might mean talking to the IT department or even partnering with another organization.

T&R:  Do you think that being a tech company makes it easier to have a culture of accepting failure?

Tahreem Kampton:  I think it has less to do with being a tech company than with mindset and culture. Whether you’re a tech company or a healthcare company or a traditional consumer-goods company, what you need to drive innovation is that acceptance from the leadership team that it’s OK if a project doesn’t work out like you expect. It’s possible that mindset is more prevalent in tech—it’s hard to know that without any data. But I really think innovation starts with culture.

Jayna Bundy:  I’ll add that this acceptance of risking failure has to come from the top. People have to feel comfortable taking risks. And it’s an evolution getting to that point. They might be worried about their rewards being impacted, or about not being recognized as a high performer. As leaders, we have to make sure that people don’t actually get penalized for failure—we need to focus instead on what they learned from those experiences. Whether or not a particular initiative has been successful, when I meet with my manager or my team, I always focus on: Looking back, what could we have done differently?

T&R:  What happens if a particular staff member makes mistakes continuously?

Jayna Bundy:  From my perspective, it comes back to coaching. Vinni mentioned earlier that we’re encouraging people to take smart risks. We still have structure around the risks that we take, and we ask people to have objectives in terms of what they’re trying to achieve. So, if there were a problem, I think the key would be to understand why that individual is making so many mistakes. Are these risks we should be taking, or are they outside what we should be doing? Coaching would help us understand the failure and see how we, as leaders, can help get things back on track for that individual.

T&R:  When you’re hiring new treasury team members, are there specific characteristics you look for that a treasury function with a more traditional mindset might not consider, that help you move toward having a more creative and innovative culture?

Jayna Bundy:  We actually look at hiring much differently than we did in the past. Now we think a lot about diversity of skills and thoughts and experiences. That’s a bit of a pivot from traditional hiring, where you look at someone’s experience and make sure they check the boxes for specific treasury qualifications. Instead, we now think that if people have a growth mindset, they will be able to learn the things we need them to know.

So, we look at the mindset and skills a candidate has, and whether they are likely to grow within the team. We also look at things like whether someone is comfortable with change. Can they manage through ambiguity—because change is constant, and we don’t always have clarity. And then, of course, innovation. So, I will ask candidates questions like ‘Tell me about a time where you delivered an innovative solution, and what was the impact’—or, even better, ‘Tell me about a time where you failed and how you handled that.’

Tahreem Kampton:  Jayna is absolutely right. The only thing I want to add is that in the hiring process, we don’t always equate ‘innovation’ with technological innovation. We’re really looking more broadly at whether people have innovated within the scope of the environment that they’re working in. Can they connect the dots across multiple areas and be strategic in their thinking? It’s not necessarily a matter of finding new technology solutions, but rather making sure a candidate is holistic in their thought processes.

T&R:  What impact does this emphasis on innovation and improvement have on morale within the treasury team?

Vinni Dang:  With my bank account access initiative, I was able to leverage technology to automate repetitive tasks, which made delivery for me, and many others, much faster and easier. That allowed us to focus on strategy and future initiatives, which is definitely a morale booster.

Since I started here, I’ve been impressed with the solid learning culture at Microsoft—people genuinely want to learn. And this seems to be true throughout the ranks, which creates an atmosphere of empowerment. We have mandatory training time set aside and prioritized as learning days, and we are encouraged to share our learnings and ideas with other teams. I can honestly say that every day, I come home a little bit smarter than when I left for the office. For me, this plays a huge role in the joy of my work.

Andrey Naumiuk:  I agree. Because innovation is embedded in the fabric of Microsoft culture, the company naturally attracts talent who enjoy implementing new technology to solve problems. And applying innovation to the problems that we are trying to solve here at Microsoft makes our jobs more interesting and meaningful.

T&R: What are the first steps a company should take if it wants to move in this direction?

Jayna Bundy:  Moving toward encouraging people to take risks is an evolution, but it’s also important to have a framework around what you’re trying to do. So, I think the first step would be to outline what your treasury group wants to achieve by doing some of these things or stretching on innovation. Consider: What are the goals? How are we going to use data for informed decision-making, or to enable greater efficiency through technology, or to harness new solutions to mitigate risk or achieve cost savings and business value? Using those types of parameters is very helpful.

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