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Corporate Strategy: Growth in the Post-Crisis Era

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Corporate Strategy: Growth in the Post-Crisis Era

by Angie Mak, 04 November 2010
topics:
Management
tags:
Colin Sampson Frederic Laluyaux post-crisis growth risk role of CFO talent management

Put two senior executives with a shared passion for finance, technology and performance optimisation in a room and an interviewer does not really need to do too much. So it was with Colin Sampson (pictured), Senior VP and CFO for Asia Pacific & Japan, and Frederic Laluyaux, Global Vice President for performance optimisation & finance LOB, both of German software maker SAP. 

 
CFO Innovation’s Angie Mak spoke to the two men – or, rather, asked a few leading questions and then let them go at it. Below is Part 1 of this two-part conversation that revolved around the role of the CFO post-crisis, talent management and other issues.
 
How do you think CFOs handled the recent financial crisis?
Colin Sampson: I think CFOs coped pretty well. CFOs are conscious about cost and profitability. When you have a downturn like that, the board usually looks towards the CFO to help guide them. Generally this is where CFOs can take a certain amount of the limelight and take an amount of control. They need to seize the opportunity and I think a lot of CFOs did do that. So they have become much more of a trusted advisor.
 
When you have huge growth, sometimes a CFO role is underplayed a little bit, because the company’s so successful and travelling a thousand miles an hour, that the view of many of the leaders and the businesses is, ‘We don’t really need a CFO. Let’s just go and do what we need to do.’
 
Then you get that reckless behaviour, you get a lot of risk that’s built into the organisation. When you then hit the crisis like we had last year, like we had in 1997 [in the Asian financial crisis], the role of that CFO becomes very prominent. The board then looks to them as this trusted advisor and looks to them to help guide through the organisation.
 
We’ve seen it in our own organisation. Our global CFO became much more prominent in the organisation running the business. Coming out of the downturn, I think you continue with that because the board looks toward returning to growth, but with some caution. Let’s grow, but you look towards the CFO to guide you through that.
 
It’s important now that CFOs can seize this opportunity to rightfully have their place at the board and rightfully have their seat at the table to guide the organisation so that, hopefully, we don’t get a lot of that very risky kind of attitude coming back. But ultimately it will come back. Human beings just don’t learn from the past. We’re very good at analysing what we should do and shouldn’t do, but we just don’t learn from experience.
 
REASON AND INSIGHT
Are we back at that point now here in Asia, which has resumed growth?  
Colin Sampson: It will be awhile before companies take a lot of risk. The customers we talk to are customers that are growing and wanting to hire people, but they’re cautious. [The economic picture] is certainly brighter than it was 12 months ago. From my perspective, talking to customers, I think things are a lot better. The job market has improved. There’s general improvement.
 
Frederic Laluyaux: Controlled growth, that’s what we’ve seen in different crises. Every time there’s a crisis, the board looks to the CFO to make sure we have controlled growth. Every opportunity that comes up for M&A, because the market is now moving there, you look at the CFO. Is it OK? Can you demonstrate to me that this is a valid opportunity in the context of the risk and the opportunity? The keyword I’m hearing a lot now is ‘controlled growth,’ one in which we don’t grow at any cost.
 
The level of expectation from the customers, the suppliers, the public, the regulators, has increased dramatically over the last five years. You could take some risks, and you could manage the risks five years ago much more easily. We’re looking at finance organisations in general to be the voice of reason in that context.
 
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