When the CFO Is Tasked With Driving International Growth

International business and global strategy are on the minds of the CFOs I’ve talked to recently. They are being tasked by their CEOs with taking a greater hand in driving growth, and, in many instances, that means looking to other countries for new market opportunities.

Based on my experiences, leading an international growth effort both stretches and challenges a CFO.

It means operating on a different level and learning how to tailor the capabilities CFOs need to operate effectively in a domestic market to the unique aspects of operating in a global environment. These capabilities include understanding the business, thinking strategically, being transparent, honest and candid, influencing others through effective communications, and recruiting and developing great talent.

Following are six practices that I have found helpful in leading international growth from the CFO’s seat.

As CFO, I found that what might seem like a sound decision or a small financial investment at the local operating level can carry outsized risks to an entire company and its global brand

Be a balanced risk taker

Particularly in a low-growth environment, CFOs have to be willing to make some bets, weighing where to take risks and where not, while making sure the company keeps within the strategic rails and boundaries that have been set.

At times, CFOs may have to play the role of the realist and truth-teller for international growth plans, using objective financial analysis, planning and risk assessment to balance what can sometimes be excessive optimism from those involved in M&A and business development, as well as from management at the operating level.

During my career as CFO, I found it helpful to use a framework to understand the potential risks of operating in particular countries and to assess how they might impact the business case for global expansion.

The framework included the financial, business and political risks involved in entering or expanding in new overseas markets. In an international setting, risk assessment requires understanding not only the different hurdle rates and how currency volatility could impact profits in each country.

It also has to take into account risks such as how regulators might react to a proposed merger or acquisition.

Understand the international businesses and markets

To help the CEO develop and execute an effective global strategy, CFOs need both a broad and deep understanding of the international businesses and the overseas markets their company already plays in and is looking to enter. And this level of understanding is needed in order for CFOs to be effective influencers, not just across the organization, but across the globe.

As CFO, I found that what might seem like a sound decision or a small financial investment at the local operating level can carry outsized risks to an entire company and its global brand. So weighing in on business decisions being made at a micro level in relatively small overseas subsidiaries or joint-venture operations can be critical in the long run.

It’s also important to give the organization time to learn how to be successful in a new international market. Operating under joint ventures for four or five years rather than going all-in at once by establishing a subsidiary or becoming a majority owner can provide an opportunity to put a stake in the ground while learning the culture of the new market and how to operate in it effectively.

Recruit and develop global talent

When it comes to standing up an international business in a new market, nothing beats getting out of the office to visit the global operations, but as corporate CFO of a very large company, time constraints meant I could visit overseas operations only two or three times a year.

This is where the importance of having strong global recruiting, talent assessment and development came to the fore. I was able to place people as my international segment CFOs who knew their business and whom I could rely on to act as my surrogates and keep me informed.

CFOs leading an international expansion should consider focusing on understanding the customer in that foreign market, how their expectations and behaviors might be different, and what that means for the organization’s business model

I also extended my top-down finance talent development and assessment process to the various international finance organizations and structured the CFO organization around the world to report in centrally.

My global finance leadership council, including the segment CFOs, spent a significant amount of time each year evaluating global talent and deciding who to develop for global roles.

Communicate to the global finance organization

Being a strong communicator is critical to building a truly global finance organization. I made it a priority to ensure that the finance functions and staff across the world felt just as much a part of the company as those at corporate headquarters.

People want access to leadership, and they want to understand what’s going on in their company. They also want to understand how they contribute to the company’s strategy and performance.

To meet that need, I held quarterly finance manager meetings, conducted via worldwide video conference, to talk to our far-flung finance groups as one global team. I would highlight different international operations and invite finance leaders across the globe to present.

I always finished with at least ten minutes of Q&A because I wanted to make time for people to have the opportunity to have personal contact with me.

Get on-the-ground international experience

When I’m asked how best to prepare for the challenges of growing an international business as a CFO, I often find myself talking about my experiences abroad, first in Indonesia and then later in Western Europe.

When I went overseas for the first time, to Indonesia, I was overwhelmed. I had to figure out how to be successful in such a completely different culture and business environment and be confident that I would figure things out.

Throughout my career, when I hit an obstacle that was really difficult, I often look back to my experiences overseas and what I learned from those times, including the importance of living—not just working—in a foreign country.

Learn to adapt

One of the most valuable lessons I learned working overseas was the importance of not falling back on doing what you know. It’s human nature to do what is most comfortable, especially when operating in a new environment.

CFOs leading an international expansion should consider focusing on understanding the customer in that foreign market, how their expectations and behaviors might be different, and what that means for the organization’s business model. 

If an organization isn’t prepared to adapt to other countries’ cultural norms, or to adjust its products or services to fit different consumer tastes, behaviors, and what motivates them, its global aspirations could turn into costly lessons learned.

About the Author

Charles Holley, retired CFO of Walmart, serves as an independent senior advisor to Deloitte LLP and as CFO-in-Residence of the CFO Program. For more information about Deloitte’s CFO Program, visit www.deloitte.com/us/cfocenter.

Copyright© 2017 Deloitte Development LLC. All rights reserved.

 

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