Trading places: Why a change of industry can be the right move

IN TODAY’S rapidly changing business environment, a small, but growing number of forward-looking organisations are boldly looking outside their core industry to find a CFO with the right blend of leadership skills. Increasingly, companies are looking for candidates capable of playing a strategic role to help accelerate growth and improve business performance, in addition to running a strong finance function.

Earlier this year, Experian became the latest in a long line of London-listed companies to appoint a former banker as a CFO. The appointment of Brian Cassin, who joined the credit checking agency from Greenhill & Co, the NYSE-listed investment bank, follows Simon Dingeman’s move to GlaxoSmithKline from Goldman Sachs in 2011.

Cassin previously acted as strategic adviser to the retailer GUS before the Experian de-merger, and it is easy to see why his corporate finance experience will be invaluable to the fast-growing global information services business, which is reinventing itself after a series of acquisitions. But the FTSE 100 also offers other high-profile examples of CFOs who have made a career out of moving between sectors.

Martin Greenslade, incumbent group finance director at Land Securities Group, held a similarly lengthy tenure at Alvis before joining the UK’s largest commercial property company in 2005. Prior to that, he served as managing director of MNB Maizels, the UK investment banking division of MeritaNordbanken.

Graham Hetherington is another case in point: after six years as CFO at spirits company Allied Domecq, and then a shorter sideways move to Bacardi, Graham Hetherington moved to biopharmaceutical company Shire in 2008, where, in addition to his CFO responsibilities, he currently enjoys an influential position as a member of the company’s leadership team.

In the US, Chris Liddell moved from technology giant Microsoft to become CFO at General Motors whose CEO admitted that he and the board were “looking to Liddell’s experience and insights in corporate strategy” to help with that company’s huge restructuring efforts.

A buyer’s market?
All of these companies share some common features: commitment to growth; a willingness to embrace business transformation; and the confidence to make a bold hire to provide the financial leadership they need to meet the challenges of the future.

Of course, not every company is committed to growth or business transformation on quite this scale, but the stark truth is that, in today’s challenging economic environment, every business needs to innovate in order to survive.

And the right CFO hire can be critical in this respect, ultimately being a determining factor in the success or failure of the business – whether it be a brand-new start-up, a fast-growing business making the transition from small to medium-sized business, or a FTSE 100 company.

The tough economic climate has created a buyer’s market, which should mean that entrepreneurial businesses can fish in a bigger talent pool for the financial acumen they need to take the business to the next level; while larger corporations can attract big hitters who would perhaps normally not look beyond the FTSE 100 for their next career move.

Innovative approaches
Yet, time and time again I see companies of every size that are unwilling to look beyond their traditional approach in the search for a new CFO. Typically, the brief we receive will say things like “the successful candidate will have experience of our industry”, or “we want to hire from a competitor”, or perhaps with more justification, “we are looking for a track record with entrepreneurial companies”.

The constraints of a narrow brief such as this often leads to a long, costly and occasionally fruitless search for a suitable candidate; it certainly limits the opportunity to interview a generous selection of high-calibre CFOs with the financial acumen, strategic vision and business leadership skills to steer a company towards a more successful future.

Today, organisations in every sector face tremendous challenges, largely as a result of the unprecedented innovation that the digital age has unleashed. These include: the need to deal with competition from new market entrants with a more innovative approach; adapting business and pricing models to remain competitive in global markets; identifying new revenue opportunities; developing an acquisition strategy to deliver future growth; or even look at attracting a buyer in order to realise the value of the business.

Avoiding costly mistakes
To be fair, CFOs with the skill-set to handle all of these challenges are rare in any industry, but all the more reason, then, to identify the challenges facing your own business and to look beyond the narrow confines of your immediate industry. Surely, it makes sense to invest time in producing a more useful needs assessment by really drilling down into the financial skills your business needs to survive and grow in today’s world?

Those boards with the vision to create a needs assessment that goes beyond the traditional platitudes are most likely to be rewarded by finding a candidate who, in addition to running a tight finance function has the vision and leadership qualities to contribute to their growth aspirations. A needs assessment can also help to avoid costly mistakes.

Time and again I have seen companies pay big fees to recruitment firms to find candidates for a critical position after a one-hour meeting, only to find their new finance hire is completely unsuited to the role. It can make a lot more sense – and save both time and money in the long run – to invest time in a detailed audit to make sure the needs of both employer and employee are matched both in terms of capability but also cultural fit.

Still today, CFOs, even those with exceptional career histories, tend to become more ‘pigeon-holed’ as their career progresses. But arguably, in a buyer’s market, companies should be more, rather than less willing to take risks, when the rewards could be so much greater than during boom times.

Looking for a new challenge?
And finally, some advice for CFOs who are looking for a new challenge. If you have read this far, then you may well have aspirations to emulate the examples we touched on earlier. So where do you start?

Begin by identifying sectors that have similarities to yours, especially if that industry is undergoing transformation. Many traditionally discrete industries are undergoing a period of turbulence and convergence, as is the case with technology companies, mobile network operators, content providers and digital companies – but looking further afield engineering companies, consumer-focused businesses and service organisations are all going through considerable change.

Then start to build and define your value. Have you experience of the target customer base? Do you understand the supply chain, distribution or pricing model? Have you managed a successful acquisition? Have you earned an influential position on the board? Do you contribute to the strategic vision of your organisation? And above all, can you demonstrate the leadership and communication skills necessary to take your own career to the next level?

Adam Bloch is co-founder and managing partner of fdu group