IN JUNE, the world’s largest company by market capitalisation will be getting a new CFO. Peter Oppenheimer, who has navigated Apple’s immense growth from $8bn (£4.8bn) to $171bn in the last decade, will be replaced by the company’s corporate controller, Luca Maestri [pictured].
Maestri has over 25 years’ experience in senior finance roles, and prior to joining Apple was CFO at General Motors, Nokia Siemens and most recently at Xerox. Joining Apple as a controller in March 2013 was seen by many a ‘sideways move’ – yet one that clearly paid off as he prepares to become CFO of one of the biggest global brands.
But what are some of the biggest challenges and lessons for this Italian to take on board?
Big shoes to fill? Tell your own story
Peter Oppenheimer has had a stellar decade in his Cupertino corner office, overseeing the development of a disciplined global financial strategy, robust systems, and a very strong balance sheet. Few CFOs in history have overseen the 2000+% growth of a multibillion dollar enterprise.
Maestri will need to assert his own leadership position, while not be seen in the eyes of his colleagues to be replicating Oppenheimer’s approach. He also needs to show in the crucial first 100 days that he’s willing to listen and support good ideas, and that he’s got a clear plan to help develop the function and its employees over the coming years.
Address Apple’s cash reserves
The issue over what to do with one of corporate history’s largest ever treasure chests is likely to reappear in the future, with many analysts already trumpeting Maestri as a “shareholder friendly” CFO.
CEB research shows that while more than 95% of executives claim that strategy drives cash allocation decisions, market conditions are actually a stronger driver in returning cash to shareholders. Finance executives often make these decisions based on the behaviour of their peers, shareholder pressure, and market sentiment, instead of balance sheet analysis like liquidity planning. Maestri needs to align his financial and strategic policies and make sure that Apple’s investor communications should reflect those long-term goals.
Push back on other parts of the business
Our research shows that 90% of finance departments aim to support every business partner request. In a resource constrained environment, this just isn’t viable. Especially when executives make contradictory requests or demand things that just aren’t possible to provide, Maestri needs to assert the finance department as a profit centre – not a service centre – and act accordingly. He also needs to make sure his team is closely tracking the time and cost of ad-hoc requests.
Capital management for Apple’s long-term growth
It’s hardly news that Apple’s decade of success comes from the elixir of corporate growth that is innovation. However, some Apple commentators foresee a more difficult year in 2014, with many analysts noting lower-than-expected Q1 revenues this year.
Not only will Maestri have to manage complex investor communications (and discussions of that cash pile), he will also face important capital management decisions. It’s unlikely that Apple’s impressive R&D teams will lose their edge overnight but our data shows that above-industry performance in revenue growth doesn’t have to come from product innovation alone. Although innovation plays a key part, we found that many firms generated consistent patterns of outperformance by excellence and innovation in core management disciplines.
Apple will never be a company accused of trying to mimic or replicate others – this must be borne out in Maestri’s approach to leading his finance department. The company will continue to feel pressure from stakeholders to be more aggressive in spending its overflowing cash reserves, including big tech acquisitions to drive innovation – as seen most recently in Facebook’s buyout of Whatsapp. Maestri needs to carefully manage both internal and external expectations from day one, push back on unrealistic demands and set out a long-term plan to keep Apple’s profit margins on the rise.
Paul Dennis is a senior director at CEB