CFOs are business partners across multiple business functions – an attribute of the role that has evolved the most in the last decade or so, opines Udayan Sen, CFO of BP Southern Africa. He says: “The once maligned bean counters are now businessmen and women, who by the way also happen to be the head of the finance function. Almost to say, if there was a tag line to describe CFOs, it would say: ‘We also have Finance accountability’. In BP, the CFO is the co-pilot, and supports the CEO to run the business."
You've been with BP for 17 years, albeit in different capacities. What is it about the company that keeps you so loyal?
"BP is a good employer and deeply cares about people and values and recognises diversity and meritocracy in everything we do. It is a company that provides the opportunity to experience a variety of businesses and functions. To take my example, I have a broad experience in Finance, but have also worked in Corporate Strategy at BP's Head Office, have business development experience in emerging markets and also have had a short stint in HR. While deep functional expertise is highly valued, the exposure to different roles helps to shape a more rounded finance professional with intrinsic business partnering skills."
How involved are you in strategy and strategic planning? Do you think this should always be a key function of the CFO role?
Strategy development/implementation and strategic planning are activities that form part of the job remit of a CFO in BP, sometimes with a hard line relationship with the Head of Strategy, as is the case in South Africa. The market is dynamic, and therefore the business needs to evolve with the changing external environment, and be able to create differentiation along the way. A CFO's strong business orientation coupled with the financial acumen creates the right mix of knowledge and skill to have an oversight on strategy development. Strategy implementation is often harder, and many would argue that strategies fail due to execution gaps, and not because the strategy itself was wrong. Again, the CFO with a process bias deeply inculcated as part of the Finance 'upbringing' is well placed to take a lead role in strategy implementation, driving interventions if the plot deviates from the script. Strategic planning in a medium time horizon (zero to five years) is really the financial articulation of the strategic shape against the boundaries of the financial framework, and should be a core activity of every CFO."
"I have had an opportunity to work in a Corporate Strategy role focused on the long term (five to 20 years) and the experience has been invaluable to learn and contribute to the Group's thinking on key longer-wave length issues like climate change, carbon pricing, alternatives to fossil fuels, etc., and how international oil companies drive the agenda working closely with governments and in some cases, civil society."
As the CFO, you are also a business partner across multiple business functions. Tell us about how you manage this responsibility.
"This attribute of the CFO role has evolved the most in the last decade or so. The once maligned bean counters are now businessmen and women, who by the way also happen to be the head of the finance function. Almost to say, if there was a tag line to describe CFOs, it would say: 'We also have Finance accountability'."
"In BP, the CFO is the co-pilot. He/she supports the CEO to run the business, and is held accountable for most business decisions - some more than others. To be successful, one needs to be business oriented, and there are examples galore of CFOs who are not accountants in BP. The CFO in BP is an integrator of different functions, and acts as a glue to bring the disparate parts together to create a coherent story that is well understood by the external market (shareholders and analyst community), but equally by the internal organisation at large."
"As I have transitioned roles in quick succession, I have made an extra effort to learn the ropes in order to pull the strings in each new business that I have been associated with. In South Africa, I am learning the refining business, which is new to me. The key in the early days of learning is to surround oneself with the right people - it just buys a bit more time. I am a strong advocate of the business partnership role that Finance leaders have to play, and to enable this, I have created over the years a strong embedded Finance function focused on the business value-add. I have also been a strong advocate of standardisation and simplification. The Global Business Centres (GBS) in BP provide a unique opportunity to drive standardisation across functional towers - Purchase to Pay (P2P), Order to Cash (O2C) and Record to Report (R2R). I have nurtured this concept from 2009, first in Europe and now in South Africa where we have a 200-people-strong GBS. The notion of business partnering remains as relevant to this part of the finance organisation as to the embedded business facing function, and is a strong focus area of the GBS Leadership Team."
BP is a large company. How do you implement change so that it is successful?
"Indeed, BP is a large company, however, it is not as slow as one may think, given its size and scale. Historically, BP of today is a company formed from the mergers of late 1990s/early 2000s - Amoco, Arco, Burmah Castrol & Veba. The leadership of BP in the last 15 years has focused on creating a BP culture with Safety, People & Performance as its key building blocks. The entrepreneurial mind-set of the smaller companies it acquired is one of the attributes that it has not lost, and therefore in comparison to some of our peers, we are relatively more agile in response to market imperatives - it shows up in our market shares (#1 or 2 in most markets we choose to operate), some very astute long-term investment bets and leading brands that are liked by our customers and consumers alike, for example, Castrol & BP brand."
"I think the best way to answer BP's receptiveness to change is to compare the organisation today, in the light of the two safety incidents in the last 10 years - Texas City fire and Gulf of Mexico spill. It has led to a metamorphosis in our safety and reliability agenda. Every individual is empowered to stop operations to stop an unsafe act. And the recent more than halving of the oil price has led BP to respond resolutely to the new reality, and leading the market in its response plan as is evident in the 1Q'16 results and stock market reaction to it."
How can or how does finance contribute to agility? Furthermore, what can a CFO in particular do to make a business more agile?
"Finance, as custodians of financial controls and processes, plays a key role in showing agility in its business partnering role. It is easy to say no to most things, and far more difficult to say yes, but I have always inculcated a culture where Finance is looking for solutions, and if the answer is easy, most likely they don't need any finance inputs. Therefore, one of the critical roles a CFO and the wider finance organisation plays is to create an orientation where speed of execution is an important differentiator between the average and the extraordinary individuals in the team."
What do you most enjoy about the CFO role?
"I enjoy people interactions, and that would be true for any role. The CFO role provides the opportunity to create touchpoints vertically and horizontally across functional boundaries, with an ability to intervene and see through the actions more than in any other functional role. The 'co-pilot' role is most exciting, and I enjoy the commercial aspects of the business and how it shows up in output measures. I am a strong advocate of controls and processes and value and recognise everyone who contributes to silent running, a key aspect of the CFO role."
What have you achieved during your tenure as CFO that you are most proud of?
"The achievements in my previous role as the Finance Director - Europe & Africa Lubricants give me immense pride. The business was not growing, impacted by the recession in 2009-10. I and my business head (Regional VP) joined the business at about the same time (mid-2011), and started the journey of re-setting the agenda and creating a winning team, with clarity on the vision/extraordinary intent."
"We changed people, both in the business leadership team and in the Finance leadership team. In my four years, I managed to change the roles of 11 of my 12 direct reports, with half the team replaced with new recruits from other parts of BP, with a focus on securing the best talent available in the company."
"The agenda was simple: return to top-line growth and manage costs-to-grow profits disproportionate to other internal businesses and winning versus competition in the marketplace. To deliver top-line growth, we refreshed the business strategy and from it evolved a new channel of trade and renewed focus on power brands. The focus shifted from volume to value. On costs, we launched a transformation programme to address 'One Europe' as a business model, and it entailed significant reduction in headcount as Route-to-Markets changed to get closer to the customer."
"The peak experience was really working with the team to embark on this journey of transforming the business, and leading it to be the #1 in the Strategic Performance Unit (SPU) while securing scale by delivering nearly $0.5 billion pre-tax profits, gaining market shares in most premium categories.
I had total freedom in driving the financial outcomes of the business and this required working closely with the regional sales directors and the organisation at large with a differentiated performance management culture that rewarded input measures more than the outputs. It was by far the best team I have worked with, where the leadership acted as 'one team' to drive the priorities of the business to deliver sustainable profitable growth."
How do you ensure your own continuous improvement?
"The most important aspect of continuous improvement is self-awareness, and a desire to learn all the time - on the job from day-to-day experiences, from people interactions and formal and informal ways of keeping oneself abreast with the external world, both on the business and technical aspects. So simply said, it is a 70:20:10 rule - 70% on the job, 20% learning from others and 10% from formal/informal training."
What does the CFO of 2030 look like?
"The CFO of 2030 is a business manager who is also accountable for Finance. The evolution of the finance outsourcing model will be complete much earlier than 2030, leaving the CFO to focus on business value add and the embedded function entirely business facing. The regulatory framework will be tighter requiring higher accountability for compliance, integrated systems and automated self-service real time MI will enable the business to focus on insights and interventions. The CFO of 2030 will be more of a business leader than the CFO of today, and will be recognised as such by internal and external stakeholders."