Matthias Vogt: The effort of my people makes me a successful leader
Leaders must be conscious of the impact they have on other people, says Afrox FD.
Matthias Vogt was called to South Africa from the Linde Group in Germany by Afrox's board to support a necessary turnaround. The Linde Group is a major shareholder of Afrox. He held the role of acting CFO since July 2015, and became a member of the Afrox executive board as FD in August 2017.
He shares his successes, challenges and strategies with CFO South Africa.
What has your time in the role been like and what achievement during this time are you most proud of and why?
“The last year for Afrox was a good year. We won the countrywide contract to supply state hospitals with our medical gases. We worked hard for that success and required resources, such as investments, tech, and the right management skills, to make that happen. Last year was also about reshaping our operating model. We are making the company fit for future challenges and this is reflected in our regional strategy, which we updated in a lengthy process, including improving controls and putting in place the right risk management structure.
“I believe that in the environment in which we operate, there are significant headwinds on a regular basics, such as impacts from currency fluctuations, supply constraints and various regulatory changes, and we must develop the skills to respond to such events. Based on our core values, including agility, we’ve been able to mitigate and fix such issues and minimise the financial impact thereof.
“In the beginning of our journey, there was a strong focus to deliver a successful turnaround of the company – Afrox was struggling at the time, and the share price was at an all-time low. We implemented a comprehensive strategy and delivered it successfully in 2016 and 2017. That was a great achievement because to turn around an industrial gases company is not necessarily easy. It took a lot of attention and energy from my side, our CEO Schalk Venter, and the management team’s side. After that, it was about uplifting the organisation towards a higher level of performance.
“In a turnaround you come in and change things quite rapidly; you make cost cuts and focus on execution to make the programme successful. After that you rebuild trust and need to rebuild understanding – what is the purpose of the organisation and how do you deliver better levels of performance going forward? This applies to the investment process too – how do you link current investments to future performance, or how do you ensure you recover the inflationary pressure on your costs and can you deliver efficiencies on an ongoing basis? Those discussions hadn’t happened here in a long time. So, putting all of that in the place was quite a project and an exciting one at that. Over the last three years, we’ve grown our earnings by more than 20 percent on a compound average rate. I think the people here at Afrox can be very proud of what they’ve achieved.”
Tell us about your current role and what it entails. Is your role focused more on strategy or day-to-day finance? Which do you prefer and why?
“Nowadays as a CFO you are in charge of a broad spectrum of financial responsibilities, which is exciting. Moreover, there will always be a need to look at how to reduce costs and improve company productivity and consider how best to respond to changes in the macro environment in which you are working. For me, aside from being a business partner to the CEO, I’m here to guide the entire organisation, to give direction and explain stakeholder expectations, as well as to create an understanding of the relationship between business performance and financial performance, and to communicate this all the time. I prefer a broad, leadership-based CFO role, with acumen across finance functions, and excellent commercial skills, as opposed to either being a financial CFO or an operational CFO. I don’t believe it’s about having one or the other.”
What are you currently working on? What occupies the most of your time?
“I’m currently focusing on how Afrox will operate in the next three to five years and what resources we need to allocate to ensure the continuation of what we’ve shown in the last year is profitable growth. This goes across functions. The core work happens with the CEO and how we translate that into operational models. It’s also about establishing how we are going to report to the capital markets in future, what’s required, what resources and investments are needed to deliver, and to pin that down on an items.”
In your opinion, what is the most exciting thing currently happening at the company, or the most exciting part of the company’s strategy?
“What’s exciting is how we are going to manage the LPG segment and how we are going to manage that in the future in sub-Saharan Africa. We already made fundamental changes in the operations – it’s currently our second-largest segment and its growing the most. We made changes in 2016 but now it’s about how we are going to continue the growth while maintaining our competitiveness in the market.
“Also exciting is the role that technology can play, as well as how we can work together with global traders and input facilities to ultimately deliver this type of energy to the people in Africa. That is quite a task. In addition, the market has seen interesting dynamics lately and we believe there is, most certainly, continued potential.”
What are the greatest external factors affecting the company and its profitability, and how do you mitigate these?
“There are three: cost inflation, currency volatility and policymaking. With cost inflation, we need continued efficiencies, cost savings and productivity improvements, which we manage via a dedicated programme and project office, where all projects are consolidated, reviewed, challenged and controlled. We also need proper price cost management. With regards to currency volatility, this is not so much about strength or weakness of for example the South African rand but more about its volatility on an ongoing basis, as this impacts your planning and predictability, and ultimately your results. Also, currency weights into the supply chain, so, better supply chain management is a mitigation to volatility. Policy making is, I think, still an indirect component which a lot of companies are looking at. How you mitigate this is to adapt and be agile.”
What sort of leader are you? How do you get the best out of your team?
“I believe you should lead by example and must be able to inspire your people so that they will follow you. I think my style of leadership is that I provide purpose to my team; I guide and lead them and provide direction. It is important to communicate effectively and you must give consistent messages all the time. Also, you have to become conscious of the impact you have on other people. I’ve had to learn to become more self-reflective. It’s the combined effort of my people that makes the difference in me being successful as a leader or not. Ensuring people have a good understanding of the ultimate purpose of the organisation and what impact they have leads to trust and sustainability, and that the underlying performance of a company translates into financial performance. They need to understand that.”
How different is the work culture in South Africa from Germany and how have you acclimated to this?
“The culture in South Africa is quite different to what I was used to in Germany. Germany has a more consensus-orientated culture where things are clearly discussed and, once something is agreed, it is not discussed again. Also, you can rely on implementation of what has been agreed. There’s a strong belief in walking the talk. You always have transparency in relationships and can rely on the people with whom you work.
“In South Africa I’ve encountered people from very different cultural backgrounds. It’s a much more heterogenous working environment. You need to be flexible and approach people in different ways – you have to appreciate their backgrounds and the environments in which they’ve grown up. As a German you might be quite clear and direct, which people might take offence to, or they really just don’t know what you mean.
“In the end, I realised that people appreciate openness. It’s a lot about trust. Ultimately I appreciate the South African society because I have never seen a society able to manage different cultures in such a smooth way. That’s a real strength. The country’s ability to integrate people is good. It is a competence and should not be underestimated.”
What do you think makes a great CFO?
“Values and having the right value set. Also, mindset, as this can influence the wider organisation – the people directly around you, the other executives and the board. And to strive for excellence in what you are doing. I think this defines whether you’re a great CFO or not.”
How do you see the role of the CFO evolving in the coming years?
“A lot has been written about the transformation of the CFO role. The world has become more complex and there’s a lot of ambiguity out there. You have to translate the surrounding world into your organisation in a clear way. So, you need a broader understanding of your world. I believe that leadership and giving financial purpose to the organisation will always be essential. The leadership you are able to provide to the organisation is also defining the CFO role more and more because of uncertainty and ambiguity. Thus, you have to be able to provide very solid leadership. You can rely on competencies you’ve developed in your career but as for the discussion around whether you are more finance or operations focused, I think we’ve overcome that. CFOs have to be an equal partner to the CEO and at board level, providing all the insight and leadership that is required nowadays.”
How did you get interested in finance? Did you ever consider another career path?
“It was always my plan. I’ve always enjoyed financial and commercial things and I think it fits my personality well. It’s about the ability to create, because I think you can create and guide through finance; you can really shape an organisation and its future. You can work with your models and become very convincing and can achieve a very high level of influence. It has broadened how I see the world; how companies interact and how the financial world works.”
What do you do in your downtime? How do you relax and unwind?
“I love cycling; it provides me with a strong feeling of freedom and it reloads the tank. I also read a lot and I play piano. My wife and I have two sons, twins, who are a year old. I think children give you purpose and peace.”