Finance Flash: the TOP-10 articles of week 30
Do you want to keep up to date with the latest developments in finance, but you are short of time? Don’t worry. CFO South Africa weekly collects 10 of the most important articles from international media for your convenience.
Commentators and researchers have focused on the crucial role of the CEO in leading effective corporate action to promote high performance, high integrity, and sound risk management. What receives far less attention is that, more and more in our increasingly complex, volatile and fully-globalised business world, the effectiveness of such action depends on a powerful partnership between the CFO and the General Counsel. This critical alliance needs and deserves much greater analysis and application.
Digital business models are a bit of a misnomer. It's not digital technology that defines them, it's their ability to create exponential value. The music and video industries, for example, weren't redefined by converting analogue to digital formats. Just ask Sony about Minidisc players and Netflix about their DVD business.
Performance measures typically used in annual incentive plans fail to align managers with the long-term interest of investors. News headlines have abounded regarding compensation packages for executives this year. However, investors' anger isn't typically about the compensation levels but rather the misalignment of pay and the underlying corporate performance behind that pay.
Purchasing department employees must spend more face-to-face time with suppliers to drive true value. This is one way to improve financials in the procurement area, especially if budgets are under pressure and forecasts need an added upside.
If CFOs were to be asked what keeps them awake at night, their answer is likely to be "unexpected losses". There can be no worse experience for a CFO than to have to explain to the CEO, the board, the media and, in extreme cases, in congressional or similar governmental hearings, why they only first became aware of the accumulation of excessive exposures to risk after those exposures had turned into losses. Such concern should alert accountants to the possibility that their accounting standards and reporting practices may not have kept pace with the quite dramatic changes that have occurred in the risk landscape in which modern businesses operate.
FinTechs have lit up the global banking landscape over the past few years. But whereas much market and media commentary has emphasised the threat to established banking models, the opportunities for incumbent organisations to develop new partnerships aimed at better cost control, capital allocation and customer acquisition are growing.
Much of the business discussion around cyber-security relates to the protection of key assets such as customer information and intellectual property, often after the news that another company has suffered a large data breach. While strengthening defences against cyber-attackers is important, companies also must be prepared to handle the reputational and financial hits that a cyber incident can produce for years down the road.
Why do some people make life, work and success look so easy? Are they genetically gifted? Do they know something the rest of us don't? Or, have they created certain habits that allow them to push forward while the rest of us get stuck in the muck? These three lifestyle habits are a great place to start.
The nine-to-five grind has created a cult of workaholics. Unfortunately, the eight-hour workday hasn't budged in 100 years. Never mind that the Information Age represents the biggest shift since the Industrial Revolution and that family structures have changed dramatically since the early 1900s. The idea that workers are expected to endure 70% of their week so they can enjoy the other 30% is collective insanity.
Understanding the distinctive "footprints" of four different types of synergy can help improve the way you value and implement corporate strategies. Two researchers developed an approach to thinking about synergies that they call the "Algebra of Value Chains". The premise for their analysis is simple: operational synergies require changing the relationships between the resources underlying the value chains of different businesses.