CFO interview: Finding reason in an unpredictable world

CFO interview

There’s no industry that hasn’t been affected by the impact of Coronavirus. CFOs and CEOs are at the forefront of making decisions that are shaping business. The partnership between CEO and CFO is incredibly valuable, and its strong foundation is fundamental to steering businesses through this unprecedented time.  

As an Executive Search Practice Lead, I’ve spoken to many CFOs about how they are dealing with these impacts, and the common thread among these conversations is their voice of reason. I recently caught up with CFO and Executive Director of Bright Food Global Holdings Peter Gunning. Some of Bright Food’s well-known companies include Manassen Foods, Sunbeam, Mildura Fruit and Juice Companies, Bob and Pete’s and The Calendar Cheese Company    

Peter has spent much of his career working in FMCG, including time with Mars Petcare, Chocolate & Food, and Beam Suntory beverages. His current role has him overseeing ten diverse businesses that span mainland China, Hong Kong, Australia and New Zealand. His unique and informed perspective provided direction and reason during the unpredictability of our current circumstances. 

As a CFO, where does your immediate focus go in times like these?   

  1. Number one priority is to take care of your people (quickly followed by taking action to ensure business continuity). Of course, in the current environment there is  the threat to  physical health, but as was predicted very early the threat to mental health appears to be every bit as damaging as unemployment bites up to 2 million workers, leading to increased financial anxiety compounded by a depressed share market and general uncertainty about the future. We are all now working under different conditions and people are facing a myriad of challenges to balance their daily lives. We’re working from home, people are balancing kids, home schooling, work stress, anxiety about Coronavirus. 
    What we are witnessing for the first time ever is essentially, people having their work and home stress all in their living room. It’s our role as leaders to help lead them through the change, fill in the gaps for them where we can, overcommunicate and do the best you can to get them through it. People are looking for strength and warmth from their leaders in their time of uncertainty. Give it to them. 
  2. Business continuity including the workforce to operate the business and a supply chain that still works and can get your products from factory/supplier to consumer.   
  3. Preserving cash and ensuring financing facilities are adequate to take you through the downturn and back out again. Where business models have taken a big hit, investment may be required to rebirth the business when the world come back to equilibrium, at whatever level that may be.  
  4. Customer Engagement, especially in a food business like ours in a fairly competitive landscape. Even in a global crisis, if you cannot service your customers, someone else will. 
  5. Review all your product SKUs and margin structures to determine if your business model still stacks up. Know where you are exposed and how things like currency fluctuations will affect your business and take action accordingly.   

Our resilience as a society is being tested.  As a senior leader in the organisation, how do you help instil a sense of resilience and calm among the Senior Leadership Team and beyond? 

Hard decisions need to be thought through quickly and then implemented with excellence. Being resilient and calm is definitely needed and something that CEOs and other executive team members usually look for from their CFO, but you must also be able to synthesise all of the critical information happening around you and have urgency in making adjustments.  

Focus on the few key things – make decisions and execute. If you’ve built a good team, they should be able to help the business make the calls and succeed under pressure, knowing how to step up, absorbing the complexity and making good decisions regularly. Be mindful that very few leaders have gone through anything like this in their career. Everyone is digging deep. In the executive team I am part of, we are meeting regularly to share what is happening and where needed use the collective brainpower to solve problems on the fly. A few of the businesses have been devastated by the closure of large parts of their customer base (such as the hospitality industry) and there have been some brilliant responses to ensuring the wellbeing of our people whilst also adjusting the business operations in a matter of days to ensure we live to fight another day when the lockdown measures eventually unwind.   

How do you remain resilient and calm through the chaos?  

Experience helps, I’m also a naturally optimistic person anyway so I always feel that there are opportunities likely to fall out of any breakdown. “Sometimes you have to have a breakdown to make a breakthrough” an old boss of mine used to say.  So, I feel that the pandemic may be a catalyst for our business to accelerate change and drive more innovation if we can respond the right way.  

Over a thirty year career, I have seen a lot of risks come to light, the Asian currency crisis in 1997 when I was Regional Treasurer and all of our Asian businesses at the time were forced to lead price rises in the market in order for whole categories to survive; I was in Japan as CFO of Mars in 2008 when the GFC hit and the yen collapsed creating the need for the whole supply chain to be changed in a matter of weeks; and in a single quarter in 2011 we had a 9.0 earthquake and tsunami in Japan (my previous business unit), an equally devastating earthquake in Christchurch impacting our NZ business, followed quickly by “once in a hundred year” floods in Thailand and Queensland impacting some of our most important markets. Those experiences help remind you that you have seen it before and that you can and will navigate your way out of this crisis too.  

Given the deep people impact that usually coincides with black swan moments, it sometimes helps me to step back, observe what’s happening and what’s in front of the business in the “third person” in order to take some of the emotion out of it. It allows you to focus, think through the detail that matters and then come back up, allowing yourself the space to be objective and see the whole picture.  

It’s a very emotional time for many people and it’s important to be able to step away from it to get clarity and move the business forward. People are looking for you to lead them. There will also be a lot of CFO’s and finance executives out there giving bad news to Boards right now about sales and earnings guidance, cashflow, debt covenants, increased costs, restructuring etc and you have to be balanced about that. No-one could have seen this impact coming so it’s not anyone’s fault per se, but you do have to respond and steer the business to safer waters now that it has happened and work on ways to manage the risk in future, that is our role. 

How are you making critical decisions in a timely way in a new era where the traditional workplace has been so disrupted?   

Communication and quality information is critical, and you can’t be afraid to ask for help or input and show your own vulnerability when the stakes are so high. Decision quality is far more important. Bad news has to travel at the same speed as good news. These fundamentals applied before the pandemic and are still relevant now, except we are increasingly doing this through technology (Microsoft Teams, Skype for Business, Zoom and a plethora of other communication and collaboration platforms). 

I don’t know everything, that’s for sure. But I am part of a team (both the Bright Executive Leadership Team and the Finance Leadership Team ) and I am convinced that with the collective capabilities and experiences of the people around me there are very few problems we could not solve. The key is making sure the lines of communication are open, people feel confident and safe to ask and provide help and there is a clear understanding of the problems you are trying to solve for where help from others is needed. There are people who know more than you or are specialists in their areas and can help you ask the right questions in order to solve even the most complex problems. We have some short, sharp meetings to stay connected and raise key issues and then spend time offline resolving those as required. 

I have worked with some amazing CEOs over my career and all of them have brought unique insights to me which I have learned and carried with me along the journey. My current CEO has been incredibly engaged with all of the businesses during the crisis and we are communicating daily with everyone by phone, video, email and where necessary face to face, particularly the most affected businesses, whilst also reinforcing our core values [Excellence, Diversity, Resilience, Integrity, Creative Thinking and Loyalty) to support our decision making. This has allowed my CEO and I to provide rapid transparency to our Board about where we are at financially and operationally and the decisions required in each business unit to adjust the business models and hopefully come out the other side stronger than when we went in.  

Commercially, we have focused on working capital and preserving cash. We are working closely with customers and suppliers who may be under pressure to support them whilst also balancing our risk. We have assessed our workforce needs and engaged with our employees to quickly determine where resources need to be adjusted or redeployed whilst also accessing the evolving government support packages where we qualify. 

How are you seeing COVID-19 impacting FMCG and what does the supermarket surge and foodservice downturn mean for the future?  

I joined a recent webinar by a friend of mine from a consulting firm and I liked one of the messages they were using for the FMCG industry which talked about a two-pronged response to the pandemic “Act now, plan now”. I took this to mean there are short-term actions you need to take to adjust to the new conditions but don’t forget that there will be opportunities as we get past the current global disruption and senior leaders need to be creating time to think about those opportunities as well.  

Ultimately, the entire supply chain has been disrupted even in a staple industry like food with the surge of panic buying, pantry filling, increased home consumption on one side and whole venue closures and great food businesses collapsing on the other so we are facing a broad spectrum of impacts. People have had nowhere else to go but their own kitchens, takeaway/home delivery and increasingly online to do their shopping and ordering! Many customers are changing their business models and rationalising their offerings, retail customers are also rationalising and adapting to the new conditions. The best businesses across each channel are focusing on operational disciplines to balance swings in supply and demand. I learned a long time ago that having a robust S&OP process or equivalent and good people empowered to make decisions is vital to operational excellence, this is especially so in a crisis.  

We are communicating more than ever with our customers – and being solution oriented for them.  For example, we supply specialty cheese to one of our major customers and due to the surge in store, they were struggling for resources to cut and, wrap it to get ready for display. We gave them the solution and did it for them in store! We had the people available due to lower activity in our foodservice environment. It was about listening carefully to the customer and working together in challenging times to find a mutual solution where we both could win.  

It’s hard to project what things will look like post Covid-19 but there will be some inevitable business model shifts that occur and some parts of the industry will take longer to recover than others. Whilst many businesses, including ours, have had to do take cost out of the business we are also working on how to lock in efficiency and productivity gains that may come from a different way of working and satisfying the customer long term. For now, at least, we are not traveling for business as much and we don’t have the related costs for accommodation, entertainment etc. What do we learn from this and is it possible to improve the business and the lives of our people by reducing some of this activity permanently? Can we find other organisation and cost efficiencies in order to reinvest the time and money into innovation, technology enablers or increased M&A? There could be a lot of benefits in how we work and deploy resources in the future from the learnings we take out of the current global crisis. 

If there’s one lesson you’ve learned so far, what is it? 

“Food and Beverage is still a good place to be and humans are bloody resilient”. That’s two things I know but it makes me feel good about being in food, both FMCG and Foodservice, and reminds me of some of the amazing people I get to work with and support every day who continue to lift and find new ways to create value.  

People need to eat, and they want to eat quality food. We (Bright) have some wonderful brands and businesses in our portfolio and populations continue to grow in our markets which also should allow us to grow if we execute well and continue to innovate, so the macro fundamentals are in our favour and that means our success is in our own hands. On a broader note, humans have been innovating and adapting to change for centuries which gives me hope that we will also overcome the current crisis and can still look forward to a new and exciting future.   

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