From Italy to the world with passion and method
Jobs change. That seems like an obvious statement. So much so that we rarely ever stop to converge on points for reflection that become topics for debate. Not simply for the sake of discussion, but to evoke perspectives with which to contemplate this role in particular, and to strive to continually raise the professional bar and ensure proficient performance. The new online column from SDA Insight aims to do just this, offering perspectives that will emerge from dialogues between instructors from the Business School and professionals who work in a wide range of corporate contexts.
CFOs can often be found working in privately owned companies that are “Made in Italy” and often have deep roots in their home territory. These enterprises are the tangible expression of an entrepreneurial family (or even a dynasty), and they’ve embarked on a path to internationalization. Just as often, they are hugely successful. A particularly fascinating observatory that gives us a clear view of how the role is evolving.
We’ll talk about this evolution with Matteo Cerchio, CFO at La Sportiva, a leading producer of outdoor footwear. Based in the Trentino region, this company’s products can be found in 70 countries all over the world.
During your ten-plus-year career at your company, you’ve had the chance to empirically verify how the role of CFO has transformed. For example, how much impact does the internationalization process have?
Internationalization has an enormous impact on the role of CFO, for better or for worse. The positive aspects are diversification (in terms of markets and distribution) and better risk management, factors that help guarantee more consistent financial performance over time. The negative aspects, which would be better defined as challenges, consist in a substantial increase in the number of business activities and other to elements to pay attention too. Simply consider fluctuations in exchange rates and cash flow; choosing and managing investments in faraway countries; new contract relationships: and all this in contexts which are geographically distant and culturally diverse from one another.
But generally speaking, a stronger role comes out of all this, both because in decision-making on this front the CFO is naturally sitting at the table with the top management team, and also because it’s an enriching experience that allows you to engage in your work with deeper awareness, and perform your duties providing strategic support.
Around the world, people often put “Made in Italy” on a pedestal when talking about products, design, style and so on, but never when they talk about business processes, such as the span of control. To play the devil’s advocate here, does “Made in Italy” really exist in this sphere too?
I think that we can talk about Italian style as far as corporate processes and finance based on three things: the ability to react, to adapt and to pre-empt. If we think of these elements as a mix that also includes the human touch, which is characteristically Latin, naturally in addition to crunching the numbers and the data, and the ability to interpret them accurately, we actually do have a distinctive style.
A prime example is the Covid experience, when in two months La Sportiva saw annual sales projections cut in half, so we had to tap other sources to meet our cash flow needs. The secret to our success was how we dealt with our partnerships, where the key was the quality of our formal and informal interpersonal relationships. If these relationships are forged while taking a long-term approach, it’s easier to be flexible in the short term, teaming up with long-time customers and suppliers, and find a way to move forward together when unexpected events such as Covid occur.
More than ever before, sustainability is becoming a buzzword in business. What are – or what should be - the ultimate goals of sustainable corporate strategy? What systems for monitoring and evaluating does the CFO also have a hand in, or should be involved in?
Sustainability has to be integrated in the function of the CFO and in our company, it is.
Three are the pillars of corporate sustainability, as I see it. Engendering awareness, a task which the CFO plays a vital role in ensuring that sustainability is accurately measured and integrated into corporate processes; activating a sustainability path that is consistent with the identity and positioning of the company, with actions that align with corporate values, so as to avoid the risk of greenwashing; and taking responsibility, in the sense of having a clear awareness of corporate impact and the need for accountability on results.
An IFAC report from a while back highlighted how the impact of technologies is considered by CFOs to be one of the pressing issues for the profession. But for CEOs, sustainability is higher priority. What do you think?
I think that the data from the report can apply to some extent for listed companies, which are subject to tremendous pressure from investors in the short term with regard to the question of sustainability. In my opinion, in a company that doesn’t have short-term tunnel vision, the CFO can have an outlook that is totally in synch with the CEO’s, thanks to scenario analysis and the ability to translate it into financial, environmental, and social sustainability. Let’s not forget that a unique feature of the CFO role is to support strategic development and scenario planning, using what-if scenarios, for example.
