An Executive Conversation hosted by American Express
& produced by Connect Media.

STORIES ARE BEST SHARED

Jack RiisfeldtNovember 13, 2019

The fourth industrial revolution is rapidly outgrowing its adolescence. Technology is advancing at an exponential rate that is simply unprecedented in human history. And consumers are reaping the benefits, with new competitors arising on the back of consequential technologies to cater to hyper-personal requests.

Established enterprises are reflecting earnestly to identify their own vulnerabilities and build resilience moving forward.

Improving working capital efficiencies is a crucial yet often overlooked dilemma within this wider recalibration. Consumer driven change is so entirely pervasive that the most fundamental structures underpinning business operations are feeling an impact.

Pressures and expectations are steadily growing on financial executives to absorb this consumer-driven change. In response, AMEX united CFOs from a wealth of industries to give this dialogue the volume it deserves. This conversation unearthed a number of shared frustrations, as well as shared opportunities – this is their story.

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CHAMPIONING CUSTOMER EXPERIENCE

We are mining the complexities of the world around us in greater detail than ever before. We can track consumer movements with specificity; touchpoints are littered across the online and physical world, digital footprints that map a complex journey. And this new consumer topography reveals that we are in the midst of a shift away from ownership. A new paradigm where content and the consumer are king is emerging, signalling a departure from a world where distribution and cash ruled supreme.

“I WOULD ARGUE NOW THAT CASH IS IMPORTANT, DISTRIBUTION IS IMPORTANT, BUT NOT NEARLY AS IMPORTANT AS PRODUCT AND EXPERIENCE. NO MATTER HOW LOUD YOU GET, ULTIMATELY PRODUCT AND EXPERIENCE ARE GOING TO DETERMINE WHETHER OR NOT YOU WIN OR LOSE.”

Businesses are considering how these structures and mentalities from the service-economy may translate into and disrupt their own industries. Increasingly, CFOs are being asked to adopt a consumer lens for this interrogation. As one attendee noted:

“WHY DO YOU FEEL YOU HAVE INTERNALLY TO BE A CHAMPION OF CUSTOMER EXPERIENCE?”

The dangers of losing sight of the consumer have been made all too clear in the wake of the Financial Services Royal Commission. The belief that the industry herd-mentality offered some semblance of refuge from scrutiny is fading. Financial leaders are now appreciating that honest self-reflection is required for success and security, and are moving to position themselves as internal champions of customer experience.

This is a clear departure from the traditional role of the CFO as a strict financial controller. With a broader mandate to ensure the resiliency of business models, CFOs are balancing the technical, functional pieces of their role with a greater drive to create value for the consumer –

“THE HERE AND NOW, MAKING SURE THE BUSINESS CONTINUES IN ITS EVOLUTION, AND THE EXCITING FUTURE.”

The experience of the consumer is so thoroughly enmeshed in the DNA of an enterprise that financial executives are now championing the cause.

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THE SHARED WORKING CAPITAL EXPERIENCE

With one strategic eye trained on customer experience, CFOs must direct their remaining resources to the stability and resilience of daily operations. Despite inhabiting different commercial environments, a core, shared frustration arose for all in attendance – the difficulty of balancing receivables and stayables. With pressure to grow in a competitive landscape, this relentless balancing act is a structural challenge, a complex dilemma that requires leaders to navigate an entwined web of regulatory, social, ethical and cultural forces.

There is a persistent pressure in Australia to extend payment times beyond industry standards, driving large enterprises and multinationals to improve their working capital efficiencies at the expense of their suppliers. CFOs charged with improving their own working capital position by reducing receivables and increasing stayables are grappling with the social ramifications of this power imbalance and attempting to delineate a fair line of shared advantage.

All in attendance were acutely aware of this asymmetry, and keenly felt that social responsibility was a core part of the equation. The challenge is balancing responsibilities to commercial stakeholders and reconciling directives to be more aggressive with families that may potentially lose their entire business because of the way they are being treated as a supplier.

Here, the value of communication and relationship building cannot be overstated. Organisations are aiming to move beyond transactional relationships, creating long-term partnerships built on compromise and shared advantage. The human element to these partnerships is essential for corporations to thrive and grow in heavily contested industries. As one attendee noted:

“WHEN WE FIND OURSELVES IN MORE CHALLENGING ENCOUNTERS, WE WILL GO TO OUR BIGGEST CUSTOMERS AND HAVE A CONVERSATION.
THESE ARE THE CIRCUMSTANCES, WE’RE NOT UNDER PRESSURE, WE’RE NOT GOING UNDER, WE’RE NOT STRUGGLING, BUT DUE TO THIS, ARE YOU ABLE TO HELP US OUT?
AND IF WE HAVE THAT RELATIONSHIP MOST OF THE TIME THEY WILL. YOU CAN DO IT, AND I THINK A LOT OF THE TIME WE FORGET HOW IMPORTANT THOSE ACTUAL RELATIONSHIPS ARE.”

Nurturing these relationships is time well-spent, assisting CFOs to navigate complex, regulatory environments with a human touch.

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CONCLUSION

The pace of change is so relentless, so rapid, that it is difficult to plan for the future as a local or global brand. The task falls upon CFOs to improve their working capital efficiencies and poise their organisations to seize unexpected opportunities when they arise.

As enterprises the world over recalibrate for a consumer driven world, the structures and relationships around working capital must evolve or risk breaking. As the service economy continue to gain momentum, the importance of engaging in continuous industry dialogue cannot be overstated.

Leaders around Australia are realising that, now more than ever, sharing stories from across industry lines is essential for corporate and personal success.

AMEX will continue this series of executive conversations around Australia, empowering leading organisations to build their resilience in the face of monumental change.