The secret to lasting companies: innovative CFOs
Credit to Author: The Manila Times| Date: Sun, 01 Sep 2019 16:16:55 +0000
What do Ayala Corporation, San Miguel Corporation, Pilipinas Shell, and SM have in common, aside from being among the most enduring conglomerates in the country, steeped in nearly a century or even more in corporate history?
These companies are also home to some of the country’s exemplary chief finance officers (CFOs) recognized by Dutch financial giant ING Bank and the Financial Executives Institute of the Philippines (Finex) in the annual search for the “ING Finex CFO of the Year Award.”
In this rapidly changing world where risks and volatility are constantly on the rise, CFOs, as “co-captain” of the CEO in steering the organization, are seen to play a vital role in their companies’ endurance. Recent research from the Yale School of Management shows that the average lifespan of an S&P 500 company in the U.S. has been shrinking — from 67 years in the 1920s to just 15 years today. It also predicted that 75 percent of firms in the S&P 500 will disappear by the year 2027.
“Companies are under pressure to innovate and grow and to do so in a sustainable, value-creating way. CFOs nowadays must possess the ability to make the connection between company strategy, investments in innovation, and how these will create future value,” said Jose Teodoro Limcaoco, CFO and managing director of Ayala Corporation and 2017 ING Finex CFO of the Year awardee.
Ayala Corporation recently announced a massive digital transformation across the group, including exploring new business models and leveraging data analytics. The group has already established a foothold in fintech, e-commerce, logistics, industrial tech, and health tech, aiming to invest more in tech innovations in digital businesses it deems “disruptive” and designed to complement its traditional brick-and-mortar operations. Among these are its more than P18.5-billion investment in the fintech initiatives of banking arm Bank of the Philippine Islands and Globe Telecom’s GCash for greater financial inclusion, and healthcare technology such as electronic medical records (EMR) to make FamilyDOC, its chain of community-based primary care clinics, more affordable and accessible.
Limcaoco, however, cautioned that innovation is not always just about technology. “CFOs should be aware of anything that might challenge their current business model, may it be technology, public opinion, sentiment, or political change,” he stressed.
One example is the hot-button topic on artificial intelligence and Big Data. “The misconception is that AI or Big Data will tell you what to do. Wrong! The (data) pattern doesn’t come out unless you have a question. So it’s critical that the business units know how to ask the hard and impossible questions, the ones they cannot answer. That’s the only time that Big Data can be truly groundbreaking,” Limcaoco said.