When Novozymes wanted to hire a new CFO, it took a year to find the right person.
That’s no great surprise, given that finance plays a pivotal role driving innovation at the Danish company that was spun out of pharma giant Novo Nordisk 18 years ago.
The Novo Nordisk Foundation controls just over a quarter of Novozymes share capital and 70.1% of the votes.
It’s a formula that has resulted in Novozymes being named as one of the world’s most sustainable large companies by organisations such as Corporate Knights- owing to the strong position it has developed in enzymes and related markets.
Last year, total sales were Kr 14.6bn (£1.7bn), of which 13% was reinvested in the company for future value generation.
Nearly a third of Novozymes’ business is in household care, while food and beverages and bioenergy makes up 28% and 18% respectively, they are the fast-growing areas of the business- delivering 9% and 11% organic sales growth on 2017. Only the agriculture and feed business slowed last year- down 3% on sales.
What makes the Novozymes model so sustainable is that its products enable various industries to manufacture goods without polluting the atmosphere. As the pressure grows to find solutions for problems such as feeding growing populations while minimising the impact on the environment, the company’s business model looks increasingly attractive.
One long term sustainability target Novozymes has set is to spare the world 100 million tonnes of carbon dioxide in 2020.
Value of purpose
For Havranek-Kosicek, coming to Novozymes was a natural progression in a career that has featured senior finance roles at DSM Pharmaceutical Products, as well as Austrian Airlines and most recently Switzerland’s Kuoni Travel, where she was CFO.
The Austrian says her various roles have equipped her with a skill set across disciplines such as investor relations, treasury, business finance as well as pure accounting. But as well as wanting to develop further her career experience, Novozymes’ mission appealed to her.
“Novozymes is the epitome of a purpose-driven organisation. I can’t think of a product we have that doesn’t create an impact in the world,” she says. “We save energy, waste, consumption of raw materials, CO2.”
To achieve the leading-edge products that are about to deliver on these aims, Novozymes is hugely innovation driven, which requires finance to be very supportive of the people and processes that deliver innovative new products.
“One thing I am involved in is being on top of where the funding goes, making sure it goes to the projects with the best risk reward-return profile, to ensure the we get the best pipeline of products in the portfolio,” says Havranek-Kosicek.
She describes “catalysing the right discussions” on capital allocation, based on good communication between finance and the various parts of the group. In this sense, business partnering plays a key role, “how I would characterise it is you have to have the feeling you are sitting in the same boat, working together to create a solution,” adds Havranek-Kosicek.
“I think finance as a cross-functional discipline actually has the job of bringing together all the different angles- research, commercial, manufacturing, along the stage of a project that can be over three years or five years,” she says. “That will help make the business case and the right decision at the right development stage.
Relating the process to the Silicon Valley mantra of ‘fast fail’, Havranek-Kosicek says: “it’s the same principle because you have a huge funnel of ideas and the trick is how to prioritise them so that the most promising make it to launch, that’s the job. That’s not easy, because you must deal with uncertainty and risk,” she explains.
“You can use advanced technologies, using probability statistics such as Monte Carlo simulations, but the really important thing is the dialogue around the outcome of those tools,” says Havranek-Kosicek, an alumni of Vienna University of Economics and Business, where she received a doctorate in Business Administration.
“It is important to get it right in the beginning, where we critically deselect early on,” says the board member of two subsidiaries of German insurer Allianz. “Technologically there may be ideas that we can make happen, but there might not be a business case, so it’s important to include all the disciplines including finance early on,” asserts Havranek-Kosicek.
She says a variety of technologies are being harnessed across Novozymes to deliver insights that can determine how and where innovation should take place. “You can use predictive modelling to much better understand where your likely needs are.
“Machine learning can accurately predict your needs for maintenance, where they will be, and that will basically help you to decrease the stocks of the tool, spares you have because you know which one will break,” she adds.
In big data, she says data scientists in both the business finance and commercial functions, have started looking at consumption patterns. “They can give us a lot of insight into customer behaviour. It’s a cross-functional exercise, but I think finance has a natural inclination to drive data analytics,” she adds.
All these elements come together in creating strategy, where finance takes an increasingly important role. “I see finance as fully integrated with all lines of business, so that implicitly drives the business strategies of all the businesses,” says the Austrian.
“We can bring in big data analytics to help business functions drive strategy. We are experimenting with scenario modelling and management tools is the second one to enhance that contribution, which we can then apply in a dialogue with the business functions,” she adds.
In the loop
One of the benefits of having a model where parts of the business can communicate effectively with one another is that the company’s business model is clearly understood by all.
“We are an organisation that is still at a size where we can still personally connect with each other. I think that is really helpful in getting the feedback loops quicker. It’s a sizeable organisation but it’s actually well connected.
“We have a global footprint so sometimes it’s not easy to reach out to somebody in China, but I think we are at a size in finance and also across the other functions, where we can get quick feedbacks of the common view on certain topics that we’re working on,” says Havranek-Kosicek.
Through the Novo Nordisk Foundation, Novozymes CAN take a long-termist view of between five and 15 years. “It’s all part of the business model that determines a long view, enabling us to invest into the right projects and industries and ideas. The long-term view is very much ingrained in the company,” she says.
An example given is Novozymes’s bio-agro business, which develops microbes that help plants grow better, that is a slower developing business than other divisions in the company. “The potential for this business is immense,” says the Austrian.
“That justifies a long view because although it’s a nascent business, the incremental steps get bigger and bigger, and therefore from a financial point of view we can quite easily justify looking into that space,” adds Havranek-Kosicek.
Despite arriving at a company that has one of the most resilient business models in the world, thanks to its strong position in the global enzymes market, Havranek-Kosicek is very pre-occupied with disruption.
It may have something to do with having worked for years in the travel space, one of the most disrupted sectors. “It is about preparing for an environment- that links to disruption-that is much more volatile, complex, and where there’s more ambiguity for every company in the world.
“What I try to prepare finance for, but I think it goes for the whole of Novozymes, is to be ready for that world. I think that’s the key for success in my planning horizon, my professional life,” she says.
Key to addressing disruption is being agile in business processes through incremental steps that use trial and error. “The way we manage the company has to be more adaptive, how we operate and go to market, and how we do internal processes, that has to be more adaptive”, urges Havranek-Kosicek.
“What we would have in mind is, what sort of edge do you need to play on that field? How is the balance of the edge that was relevant yesterday to the edge that is relevant today?
“How can you make sure you always have the right balance of discarding what brought you to your success in the past to be open for what is going to drive success in the future. In our business we talk small steps here. It’s more an evolution rather than revolution,” she says.