Giannessi CFO Dolce & Gabbana: the CFO as a business partner

EMF - Executive Master in Finance CFO Series

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The role of the CFO is constantly changing and can now be described in terms of a partnership with the business, moving beyond the traditional view of vertical technical-administrative expertise. The head of finance must clarify the boundaries within which one can move from a financial resources perspective to corporate decision-makers, but must also communicate both inside and outside the company by interpreting results through the lens of business. This is one of the important messages that emerged from the CFO Series by Giuliano Giannessi, CFO of the Dolce&Gabbana Group, who met with participants of EMF - Executive Master in Finance, led by Andrea Beltratti, EMF Academic Director and Alessia Bezzecchi, EMF Program Director at the EMF CFO Series.

 

 

Professional background. "What are the highlights of your professional career?" the Academic Director asks. "After graduating in Economics and taking the exam as an accountant, I started at Banca Commerciale Italiana. I left after a few years, however, to bet on an interesting position as head of Treasury, which gave me the opportunity, from the very beginning of my career, to manage resources in an international environment at Piaggio when the Chairman was Giovanni Agnelli. I then landed in Prada in 1999 where I stayed for 15 years following various M&A activities and also the listing in Hong Kong, and since 2014 I have been in the Dolce&Gabbana Group. In summary, it has been a cross-sector career but always within the realm of Finance. A multi-sector experience that has taken place in parallel with the evolution of the CFO role, which we will return to in the final part."

 

D&G. “What are Dolce&Gabbana's figures and what makes the company so distinctive?" After watching an evocative video of the corporate identity, it is easier to understand the answer: "The company includes about 5,000 people and produces 1.8 billion in sales with about 40 companies. The evolution of products started with clothing and now extends to goods such as footwear, home, beauty, and real estate. Lifestyle is the common denominator, as well as the corporate DNA. The goal is to present a lifestyle approach that is then embodied across various product categories and social and economic initiatives. Lifestyle that has its roots and draws continuous inspiration from Italian beauty and culture in general and Sicily in particular. I would say that for Dolce&Gabbana the concept of Made in Italy goes further because not only are the products made in Italy, but they are inspired by a deeply Mediterranean and Italian style. Italianness, craftsmanship, love, and passion are values in Dolce&Gabbana's DNA that we apply both in our in-house activities and also through collaboration with local artisans." "But how do you combine economies of scale with the production of goods that buyers perceive as custom-made?" asks Beltratti. "Our business model tends toward the 'integration of the value chain, not only downstream to improve customer-centricity and be able to react in real time to our customers' needs by giving them better service, but also upstream as know-how is our differentiating element, the one that allows the development of artisanal expertise through skills while respecting the elements of flexibility needed to be able to innovate continuously. In the luxury production process, the prototype is a crucial element precisely because of the possibility of putting the creative idea into action through craftsmanship."

 

Sustainability and stakeholders: "Is environmental and social sustainability still an important element today, in light of what is taking place since the start of the wars and a better understanding of the cost of pursuing it?" "Despite the extensive debate that has developed in recent years, environmental and social sustainability remains a major issue for corporations in general and for us, also in light of growing consumer awareness. When we set out to analyze sustainability, we realized that much of what was being analyzed reflected what we were already doing, for example, with regard to attention to the quality of materials, the approach toward the circular economy through recycling and reuse, occupational protection, attention to territories, diversity and inclusion. However, our sustainability plan sets ambitious goals that push us to do better and better, from the perspective of a broad list of features such as reducing CO2 emissions, using renewable energy, recycling, and training with our Trades Workshops. A very important element for us involves the entire supply chain, which in our case consists of a large number of small businesses and artisans, who need to be helped and supported in terms of implementing the most sustainable practices. The attention of investors and lenders to these issues is so high that it becomes an exclusion clause for those companies that are unable to respond convincingly to the many expectations of the stakeholders."

 

The role of technology: "How important is technological innovation for the industry and the group?" "Of fundamental importance. The metaverse offers new opportunities for customer interaction, demonstrating a dramatic cultural shift that has taken place in recent decades: for the first time, it is the younger generation that is influencing the consumption patterns of the older generation. Dolce&Gabbana was among the first companies to be active on the metaverse, with an auction of NFTs (non-fungible tokens)." In response to a question from EMF participants about the complementary relationship between the various channels, the CFO's answer is stark: "We continue to experiment with all channels, increasingly with a view to the convergence of physical and digital, allowing those who access virtual spaces benefits in terms of goods and services that can be enjoyed in the physical world. Therefore, it is a relationship of interaction between channels, allowing the company to have a more stable business model that can be robust to shifts in demand from one channel to another."

 

Corporate real estate: “We have been active in the real estate sector for some time now, with three initiatives already presented in the residential and hotellerie sectors. The consistency of the lifestyle communicated by the company with the real estate sector is of paramount importance to us, and it also extends to household items such as furniture, dishes, and glasses. However, corporate real estate management is cross-cutting, and is not limited to specific initiatives in which we offer products directly in the sphere of real estate. For us, real estate is a cross-cutting asset and fundamental to conveying our brand. A luxury company has to have stores in certain iconic streets around the world and cannot simply place stores everywhere."

 

The stock market: "There have always been many debates about the costs and benefits to corporations associated with listing on the stock market. What is your view on this?" "The stock market is not in itself good or bad for a company, but a tool that must be considered at the right time to enable corporate growth. Among the benefits of listing we often forget the discipline that is imposed on companies by being in the investor spotlight on a daily basis. Discipline that helps improve processes even though it naturally requires resources dedicated specifically to meeting regulatory and legal requirements as well as people who deal with the market full time. It is also important to highlight another little-discussed element: real value for the company and the market is created if investors turn the lights on aspects that are really important for growth instead of aspects that are more relevant for the short term instead of the long term."

 

The role of the chief financial officer: "The figure of the CFO has changed over time. The modern CFO is no longer just the person of financial statements and numbers, their role has become more strategic rather than being primarily technical. The CFO is the person who together with the CEO has the overall vision and can help determine corporate strategy. But to do this effectively they must speak the language of the business, understand the market and processes, as well as all business processes, including compliance and regulatory aspects, which are increasingly important for companies in all industries." "What are the most important skills?" "This is difficult to answer: in my career I have experienced that all skills are useful, including understanding and evaluating employees, which is a more difficult endeavor in an international company that has to combine sometimes very diverse cultural settings into a single corporate culture." "How easy is it to communicate with investors and lenders?” “Of course, investors continue to be interested in performance in economic terms, although some of them may assign significant weight to the achievement of sustainability goals. One job of the CFO is to communicate with such stakeholders by conveying the importance of long-term brand value and reading data through the lens of business."

 

 Tips for EMF participants: the EMF CFO Series closes with the customary question, which while very general has a fairly precise answer in this case: "Start by building a technical background with a solid foundation, such as what this Executive Master's in Finance can give you. But I suggest maintaining a high level of curiosity at all times. I also suggest being very careful about the way you make decisions to avoid being somewhat biased in your judgments. This risk is paradoxically higher for experienced managers, who read data and evaluate choice options based on their past behaviors and achievements, sometimes imparting an implicit bias to decisions. Finally, passion: it is crucial not only to passionately perform one's job, but also to convey it to others in order to engage them all in choices and results."  

  

SDA Bocconi School of Management

 

 

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