Accelerating Growth
Strategies for the Modern CFO

David Spong, a speaker at the marcus evans CFO Summit 2010 shares his opinion on some of the challenges CFOs in Australia and New Zealand are facing today. Interview with: David Spong, Chief Financial Officer (CFO) and Finance Director, Australia, New Zealand and Pacific Islands, Ericsson

FOR IMMEDIATE RELEASE

With economies fluctuating worldwide, the role of the CFO has become even more critical to the survival and success of an organisation. It is no longer just about the numbers or mitigating financial risks. The modern CFO needs to be a dynamic and visionary leader who can revive and accelerate organisational growth, in a fast paced and competitive marketplace. David Spong, CFO and Finance Director of Australia, New Zealand and the Pacific Islands at Ericsson, a speaker at the marcus evans CFO Summit 2010 taking place in Queensland, Australia, 10 – 12 March, discusses the challenges facing CFOs in Australia and New Zealand, his recommendations for long-term strategies for finance directors and his outlook for 2010.

What are some of the challenges facing CFOs in Australia and New Zealand at the moment?

David Spong: Australia is in a better economic position compared with New Zealand, however both markets are facing different economic challenges. In Australia, they revolve around securing access to highly skilled and capable people, as well as the slowly improving capital markets. Given that Australia is a market that relies pretty heavily on cash from abroad, making sure there is sufficient working capital and cash around the business is more of a challenge for CFOs today than it was 12 to 18 months ago. Another issue is how quickly companies will be able to handle expansion and growth as the world recovers from the economic downturn. New Zealand on the other hand has had a tougher time with the global financial crisis, with issues similar to many Western European countries and the US. The government in New Zealand is doing a lot of work protecting and promoting local jobs, and making sure the country remains internationally competitive. 

My biggest challenge today is centred around getting access to the right competencies and ensuring we have the right resources and skills in order to grow. A lot of companies have used the financial crisis as an opportunity to downsize their organisational structure; however, it still remains extremely difficult to get access to highly competent resources in Australia, as the high calibre people are sitting tight during the crisis.

What long-term strategies would you recommend to CFOs?

David Spong: To be a successful CFO, having the right mindset is extremely important. Finance directors need to understand their business, both from within their organisation and from an industry standpoint. It is absolutely critical to know your industry, with its associated risks and opportunities. Secondly, CFOs need to be proactive in working with their organisation in securing a solid understanding of the business drivers and ensuring their stakeholders are on board. And thirdly, CFOs need to understand who their stakeholders are really, and how to manage their expectations. The current recession has seen many CEOs and CFOs have their stakeholder maps completely revised given the challenging capital markets; people who were not perceived as being relevant stakeholders two years ago are now very much “front and centre”.

These are all absolutely critical in ensuring you are successful in truly understanding the organisation and knowing what and when to advise shareholders, the CEO and your management team. If you are successful in doing this, you can be extremely successful in driving the organisation and making sure the CFO role remains, and continues to be, relevant. The CFO role is very much about mitigating and managing risks, understanding what is actually happening in the business. It is not just about numbers. CFOs need to understand the underlying business fundamentals and keep an eye out for the signals when the market or their industry is about to change, either positively or negatively. 

The big challenge for CFOs in the forthcoming period is how one can spot key market signals and ensure that their organisation does not become financially compromised, that it does not restrict or prohibit growth or hold the business back from stepping out of the current recession. The last thing you want is to be the last company jumping on the positive up swing, otherwise you will be playing catch-up for the next economic cycle. This means being very aware of trending market conditions and being a little more risk prone as opposed to risk averse. This however is a real balancing act and in some ways at odds with the CFO’s DNA.

How can the CFO revive or accelerate organisational growth?

David Spong: The CFO plays many roles. Their traditional role has been very much one of financial risk management. Although that is very critical, I would like to think of a CFO as a business enabler. Where CFOs can really add value is by taking a situation that may, on face value, have some issues, and re-crafting and re-shaping it to make it an attractive business opportunity. 

To me confirmation that we are adding value and driving organisational growth is when the business proactively seeks out the finance function beyond that of merely stakeholder management. We have people approaching the finance function and the CFO’s office for support, advice and help on a regular basis as we do not say “No”. But how can we take this business opportunity and make it stronger whilst mitigating the business risk? This greatly aids our governance process as we are being presented with potential issues before they become issues and we are able to steer the organisation away from risk, as opposed to picking up the pieces after the event. I strongly believe that this results in the finance function acting as an enabler of organisational growth whilst doing so in a controlled fashion.

What is your outlook for 2010? What developments that could affect CFOs do you expect or predict?

David Spong: I think that the real issue is how quickly the world will be able to step out of the current global financial crisis. Whilst in Australia we have had a rather easy ride, the rest of the world is struggling and that does have an impact upon Australia. The impact is very much secondary and tertiary, as the decision making of offshore parties (i.e. shareholders, suppliers, customers, etc.) happens in a global and or regional context whereby Australia is in reality a small dimension.