When Indira Nooyi became CEO of Pepsi Inc a few years ago, I silently grinned and said ‘YES’!!
For long I had this hypothesis that CFO’s were naturally suited to becoming CEO’s and Indira Nooyi’s acceleration from Pepsi Inc’s CFO to CEO proved just that point for me.
Honestly, its a quite a role reversal – from being a balance sheet and P&L centric wizard glued to your PC excel sheets to be staring out of Airport Lounges as you travel the Seven Seas in search of global fortunes as CEO!
I have always had a ROLE MODEL CFO in my mind and this is what I would want in her:
– Someone who thinks of Numbers BEFORE – NOT AFTER
CFO’s typically are number crunchers. Give them data as ingredients and they will grind and crush and churn and blend and create the most incredible ‘flavors’ from that data set that best represents the Company and its performance.
Yet, its an exercise that works with HISTORY. It looks at what ‘happened’ not what ‘will happen’
My dream CFO is someone who DREAMS the numbers before they happen. She looks at markets and verticals and Countries and demographics and psychographics and then PLOTS A PLAN to capture value from the ideal combination of matching what the Company can do and does with what the Market needs.
She tells her CEO – ‘DO THIS’ – instead of ‘do what you have to, I will report it diligently later’.
– Someone who can TRADE ON RISK – NOT AVOID RISK
Most CFO’s are conservative. They always act in a way that PRESERVES the fortunes of the Company they work for. Rarely do they allow risk – leave alone PROMOTE it.
Yet a CFO like Indira Nooyi goes beyond that.
Circa a few years back, I can imagine her looking at the unhealthy staple of PEPSI products like cola’s and chips and then juxtaposing that with the stark reality of the market in which consumers were demanding HEALTHY and nutritious stuff – and then making a BOLD DECISION to BUY TROPICANA AND QUAKER OATS.
Most acquisitions do not create ADDITIONAL value. At best they remain neutral in value creation and typically negate the value of the two or more Companies that came together. (my judgement having followed lots of M&A activity on Wall Street).And CFO’s know this fact better than anyone else does.
My dream CFO is able to rise above this fear and be able to TRADE ON RISK rather than avoid it.
Simply said, it means that the super CFO can DIMENSION risk – its cost, its possible negatives and value destruction metrics, its upsides and value creation metrics and THEN PRESENTS the facts to her CEO to TAKE TELL HIM TO TAKE A CALL on the same. She tells him ‘merge-buy-acquire’ – it will turn out fine in all probability.
– Someone who thinks BEYOND QUARTER ON QUARTER
Most publicly listed Companies fight tooth and nail every 90 days to keep up their reputations on the ‘streets’ they are traded on.
The onus of first predicting the financials of the next 90 days and then making sure that that ‘guidance’ is intact lies with the CFO.
On the day of reckoning (results day every quarter), the CFO is usually part of the team with the CEO who takes that tough analyst conference call.
I dream of a CFO who has the guts to tell her CEO that ‘its ok to make a few quarters look bad so that you can focus on new markets or loss making divisions or just spending more time beefing up R&D, coz in the LONG RUN it will create MORE value’. Don’t worry, I will handle the analysts – you take care of the Company’.
In my mind I dream of a CFO who is a CEO in the making – not the best dressed accountant in town 🙂
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