Strategy of Finance

EP 032 - Building Procurement at Tech Companies with Michiel de Bruijn, Procurement Lead at Bloomreach

In this episode, Michiel de Bruijn, a procurement lead at Bloomreach, shares his journey in the field of procurement and discusses the challenges and strategies involved in software procurement. He highlights the importance of understanding the specific needs of the business and aligning procurement objectives with overall business goals. Michiel also emphasizes the significance of cost reduction, turnaround time, and compliance in procurement. Additionally, he explains the complexities of cloud procurement and the need for benchmarking and understanding the metrics and criteria of different cloud providers. Michiel also highlights the need for compliance and privacy considerations when dealing with AI applications. The future of procurement, according to Michiel, lies in direct access to data, community platforms for sharing experiences, and aggregator platforms for standardized pricing and contract terms. He advises aspiring procurement professionals to gain experience through internships and to reach out to industry experts for guidance. Takeaways - Align procurement objectives with overall business goals - Focus on cost reduction, turnaround time, and compliance - Understand the complexities of cloud procurement and the need for benchmarking - Software procurement requires Apple-to-Apple comparisons and benchmarking - Benchmarking is crucial in procurement to ensure fair pricing and transparency - Compliance and privacy considerations are essential when dealing with AI applications. - Managing a multifunctional procurement process requires prioritizing risks and customizing the process accordingly. - Optimizing software contracts involves understanding the scope, documenting requirements, and tracking savings. - The future of procurement includes direct access to data, community platforms for sharing experiences, and aggregator platforms for standardized pricing and contract terms. - Aspiring procurement professionals should gain experience through internships and seek guidance from industry experts. - Success in procurement is defined by making small daily impacts, enjoying the work, and continuously learning and adapting to new challenges. --- Quotes “Procurement is still such an undersold profession.” “The great thing about the profession is that everything I do is with people, for people, and yeah, so it's very people-oriented.” “Ironically… every crisis for procurement is a good one because like suddenly procurement gets a voice.” “[Cloud spend is] way more about utilization, and optimizing utilization and infrastructure versus the actual negotiation.”  “Without benchmarks, you're just kind of standing out in the street naked.” “[As a negotiator] don't change too far away from your personality.” “You're not negotiating with another company, you're negotiating with a person.” --- Where to find Michiel de Bruijn: LinkedIn:  https://www.linkedin.com/in/meldebruijn/ [https://www.linkedin.com/in/meldebruijn/] --- Where to find Bloomreach: Website:  https://www.bloomreach.com/en [https://www.bloomreach.com/en] LinkedIn:  https://www.linkedin.com/company/bloomreach/ [https://www.linkedin.com/company/bloomreach/] X:  https://x.com/bloomreach_tm [https://x.com/bloomreach_tm] --- Where to find Rohit: LinkedIn: https://www.linkedin.com/in/rohitagarwal001/ [https://www.linkedin.com/in/rohitagarwal001/] X: https://x.com/podcast_SoF [https://x.com/podcast_SoF] Email: rohit@strategyoffinance.com [rohit@strategyoffinance.com] --- Sponsor: This show is brought to you by Krayo - the Unified Operating System for Corporate Spend.  Krayo is bringing together the whole journey of Corp Spend - Buy > Pay > Manage - into one single platform in an intelligence-first and automated design.  We promise to make you more profitable. Visit at https://www.krayo.io/ [https://www.krayo.io/]

EP 031 - How to Run a Fortune 500 Company with Srini Phatak, Deputy CFO of Unilever

In this conversation, Srini Phatak, the Deputy CFO and Controller at Unilever, shares his journey and insights as a finance professional. He discusses the importance of experiencing different parts of the world and embracing middle-class values. Srini also highlights the compelling combination of hunger, humility, and the art of the possible that drives Indian executives to succeed. He emphasizes the significance of trust, confidence, and meritocracy in career progression. Srini provides valuable advice on managing multinational companies, including the importance of understanding the business, people, and culture, as well as making choices and simplifying operations. He also discusses the role of the CFO and the finance function in delivering value creation and sustainable cash flows. The conversation with Srini highlights the importance of focusing on key drivers of business success, such as growth, profit, and cash. He emphasizes the need to go beyond just focusing on outcomes and instead focus on the enablers of those outcomes, such as volume growth, penetration, consumption, and premiumization. Further, Srini discusses the importance of managing risk and making winning choices in business strategy. He explains that risk management is not restrictive, but rather a growth enabler. Additionally, Srini shares insights on organizational design, talent management, and the role of finance in driving value creation. Srini also talks about the importance of understanding consumer habits and preferences in the CPG industry and how they influence brand strategy and innovation. He shares insights on building a strong organizational culture and the balance between global and local cultures. Srini defines success as creating an impact in the business and with people, making a difference in external communities, and making suitable work-life choices.   Takeaways - The combination of hunger, humility, and the art of the possible drives Indian executives to succeed. - Trust, confidence, and meritocracy play a crucial role in career progression. - Understanding the business, people, and culture is essential for managing multinational companies. - Making choices, simplifying operations, and delivering value creation and sustainable cash flows are key responsibilities of the CFO and the finance function. Focus on the key drivers of business success: growth, profit, and cash. - Identify and focus on the enablers of the outcomes, such as volume growth, penetration, consumption, and premiumization. - Risk management is not restrictive, but a growth enabler. - Make winning choices in business strategy by considering the opportunities and risks involved. - Finance plays a crucial role in driving value creation by providing a holistic view of the business and being a co-pilot to business partners. - Attract and retain talent by offering challenging opportunities, personalized development plans, and a stimulating work environment. - Use data and trends to inform decision-making and prioritize where to invest time and resources. - Identify and prioritize key risks in your business and develop robust plans to address them. - Understand consumer habits and preferences to inform brand strategy and innovation. - Build a strong organizational culture that aligns with the company's values and purpose. - Define success by the impact you create in the business and with people, making a difference in external communities, and making suitable work-life choices.  --- Quotes   "Strategy - Where to play, how to win?"   "I (am) a product of many Indias."   "I'm a product of education."   "The story of India is the story of Indian executives."   "India has truly arrived, our best is yet to come."   "Running a business, is a team sport."   "What failure and setback teach you. Success doesn't."   "Careers are marathons, careers is not a sprint."   "Not the results. How you go about and what you do is equally and sometimes more important than just the results."   "When you had a new opportunity and it was only two criteria. Is there somewhere which I am going to learn and make any difference? And is that an opportunity to create an impact?"   "If there are the CEO and the CFO for making tons of decisions, then there is an organization which is off-catered."   "There is an element of price and mix because end of the day you also need to make sure that you are able to command the right price premium because you also significantly invest behind your brands."   "Risk management is misunderstood and seen as something restrictive and defensive."   "You can't map all the risks and try and address all of them."   "The relevance of brands, customer choices, consumer choices, preferences, trends, that's really the lifeline of a business."   "In day-to-day business, there isn't a right answer or a wrong answer. There is always what I would call classically an evaluation of the upside and the cost of trying to realize that upside."   "Have the hunger, but also have the humility."   "You can't stretch a brand completely into different functional space, into value space and benefit space indefinitely."   "It's really about the impact that you can create with the business, impact you can create with the people. And if you can go and make a bigger difference to some communities. If you can, I think it's great."   "Be open to experiences, be open to doing different things. Go and seek out and do the difficult jobs early on in your life. Don't take the easy way out."   --- Where to find Srini Phatak: LinkedIn:   https://www.linkedin.com/in/srinivas-phatak-3aa954/ [https://www.linkedin.com/in/srinivas-phatak-3aa954/] --- Where to find Unilever: Website:   https://www.unilever.com/ [https://www.unilever.com/] LinkedIn:   https://www.linkedin.com/company/unilever/ [https://www.linkedin.com/company/unilever/] X:   https://x.com/Unilever [https://x.com/Unilever] --- Where to find Rohit: LinkedIn:  https://www.linkedin.com/in/rohitagarwal001/ [https://www.linkedin.com/in/rohitagarwal001/] X:  https://x.com/podcast_SoF [https://x.com/podcast_SoF] Email: rohit@strategyoffinance.com [rohit@strategyoffinance.com]

SoF CLIPS | Importance of Decisions in Business with Srini Phatak, Deputy CFO of Unilever

The Importance of Decisions in Business In the fast-paced world of business, decision-making is a critical skill that can significantly impact an organization's success. However, contrary to common belief, effective decision-making isn't about making numerous choices daily but rather focusing on making fewer, yet more impactful decisions. Let's explore the nuances of decision-making in business and why it's essential to prioritize and perfect this process. Evaluating Upside and Cost In business, decisions are rarely about finding a single "right" or "wrong" answer. Instead, it's about evaluating the potential upside and the associated costs of realizing that upside. This means that every decision should be weighed carefully, considering both the benefits and the risks involved. For instance, when evaluating a new market entry, the decision isn't just about the potential revenue but also about the costs and risks, such as regulatory challenges, competition, and operational complexities. The key is to balance these factors to make informed decisions that align with the organization's strategic goals. The Paradox of Decision Quantity A common misconception in large organizations is that more decisions equate to better management. However, making too many decisions can stifle innovation and hinder the organization's agility. In reality, successful organizations empower their teams to make decisions at various levels, reducing the burden on top leadership and fostering a culture of autonomy and responsibility. As a leader, it's crucial to focus on fewer, but more significant decisions. These are the strategic choices that have far-reaching implications for the organization's direction and success. By concentrating on the big decisions, leaders can ensure they have the time and resources to make these choices thoughtfully and effectively. The Role of Objectivity Objectivity is a cornerstone of effective decision-making. Leaders must bring a balanced and unbiased perspective to the table, especially when making critical decisions. This involves gathering relevant data, considering diverse viewpoints, and analyzing the situation from multiple angles. Objectivity also means being aware of cognitive biases that can cloud judgment. By fostering an environment where facts and evidence take precedence over personal opinions or preconceived notions, leaders can make more rational and well-informed decisions. Enabling Conversations A significant portion of a leader's role is to facilitate and enable meaningful conversations around important decisions. This involves creating a collaborative environment where team members feel comfortable sharing their insights and concerns. By engaging in open dialogues, leaders can harness the collective intelligence of their teams to arrive at better decisions. Enabling conversations also means breaking down silos within the organization. Cross-functional collaboration can provide a more comprehensive view of the potential impacts of a decision, leading to more holistic and effective outcomes. Making Big Decisions Right Ultimately, the goal is to ensure that the big decisions are made correctly. This requires a deliberate and structured approach to decision-making. Leaders should:    1. Define the Decision: Clearly articulate the decision that needs to be made, including its scope and significance.    2. Gather Information: Collect relevant data and insights from various sources to inform the decision.    3. Evaluate Alternatives: Consider multiple options and weigh their potential upsides and costs.    4. Engage Stakeholders: Involve key stakeholders in the decision-making process to gain diverse perspectives.    5. Make the Decision: Commit to a decision based on a thorough evaluation of the available information.    6. Monitor and Adjust: After implementing the decision, continuously monitor its outcomes and be prepared to make adjustments as necessary. Conclusion In business, the importance of decisions cannot be overstated. Effective decision-making is not about the quantity of decisions but the quality and impact of the ones made. By focusing on fewer, more significant decisions and approaching them with objectivity and collaboration, leaders can guide their organizations towards sustainable success. Remember, making the right big decisions is what truly matters in driving organizational growth and achieving strategic objectives.

SoF CLIPS | Is AI gonna take our jobs? Find out here with JMI, Senior Partner at BCG

In a recent podcast episode, Rohit Agarwal and Jean-Manuel Izaret (JMI) dived into a pressing question on many minds today: "Is AI going to take our jobs?" Their conversation illuminated an often-overlooked aspect of AI's impact on employment – pricing models. The Current AI Landscape AI technologies have undeniably transformed various sectors, performing tasks that were once exclusively human domains. With the advent of advanced AI models like ChatGPT-4, which can mimic human conversation and perform numerous functions, the anxiety surrounding job displacement is understandable. However, JMI offers a nuanced perspective by examining how these technologies are priced. Two Primary AI Pricing Models Per Token Model: This model is commonly associated with AI services like ChatGPT, where usage is measured and billed based on the number of tokens (or units of text) processed. This model doesn't directly correlate to replacing human jobs but rather complements human capabilities by offering an efficient way to handle large volumes of data and tasks. Per User Model: Seen in AI tools like Copilot, this model charges based on the number of users. According to JMI, this pricing structure inherently supports human workers rather than replacing them. The rationale is simple: if AI were designed to replace humans entirely, the user base would shrink, leading to reduced revenue for AI companies. Therefore, as long as AI is priced per user, its role is primarily to assist and augment human productivity. The Future: Task-Based Pricing JMI predicts a significant shift in AI's role in the workforce when pricing models evolve to focus on tasks or outcomes rather than users. This change would signal AI's capability to fully replace specific human tasks, charging for the efficiency and productivity achieved without human intervention. In this scenario, AI wouldn't just enhance human work; it would render certain human roles redundant. Implications for the Workforce The current per-user pricing model suggests that AI is not yet at a point where it can entirely replace human labor across the board. However, even with this model, some level of job displacement is inevitable as companies seek efficiencies and cost savings. The key takeaway from JMI's insights is the importance of monitoring AI pricing strategies as indicators of broader shifts in the labor market. Preparing for Change Businesses and employees must stay vigilant and adaptable in this evolving landscape. Understanding AI pricing models can provide a clearer picture of how and when certain job roles might be at risk. Emphasizing continuous learning and skill development will be crucial for workers to remain relevant and competitive. In conclusion, while AI continues to advance and integrate into various sectors, the immediate threat of widespread job displacement may be overstated, given current pricing models. However, as these models evolve, so too will the impact of AI on the workforce. Staying informed and prepared will be essential for navigating this dynamic and ever-changing landscape.

SoF CLIPS | Risk Management is Misunderstood by Srini Phatak, Deputy CFO of Unilever

Rethinking Risk Management: A Strategic Approach Risk management is often misunderstood as a restrictive and defensive practice. Many view it as a hindrance, focusing on the negatives and potential failures. However, this perspective misses the broader, more strategic role that risk management plays in driving success. Let's explore a more integrated and proactive approach to risk management. The Importance of Taking Risks Taking risks is essential for achieving higher returns. In every decision we make, whether it's choosing to act or to abstain, we are inherently taking risks. Avoiding risk entirely is not only impractical but also counterproductive. To succeed and achieve significant growth, it is crucial to embrace risk as an integral part of the decision-making process. Integrating Risk Management Instead of treating risk management as a checklist item at the end of a proposal, it should be viewed as a fundamental aspect of strategic planning. By thinking about risk management from the outset, we can identify and address potential challenges proactively. This approach allows us to balance risk and opportunity effectively, leading to better outcomes. Consider the following reframed approach: 1. Identify Opportunities: Start by clearly defining your goals. For example, if your objective is to attract more consumers, increase prices, or achieve cost savings, articulate these targets upfront. 2. Assess Necessary Risks: Once the goals are set, determine what risks need to be managed to achieve these objectives. Instead of asking, "What if this goes wrong?" focus on "What do we need to do to make this work?" 3. Develop a Risk Management Strategy: With the opportunities and associated risks identified, create a comprehensive strategy to manage these risks. This includes mitigating potential downsides while leveraging opportunities for growth. Reframing the Risk Question The traditional approach to risk management often centers on the fear of failure. This mindset can stifle innovation and progress. Instead, we should reframe our thinking:    Old Question: "If I price up, there is a risk."    New Question: "I want to gain more consumers and increase prices. What does it take to get there, and what risks do we need to manage?" By shifting the focus from fear to opportunity, we create a more positive and proactive environment. This encourages taking calculated risks that drive growth and innovation. The Role of Leadership Effective risk management requires strong leadership. Leaders must foster a culture that embraces risk as a natural and necessary part of achieving success. This involves encouraging open discussions about potential risks and opportunities, promoting a balanced view of risk-taking, and supporting teams in developing robust risk management strategies. Conclusion Risk management should not be seen as a restrictive or defensive practice. Instead, it should be an integral part of strategic planning, focused on balancing risk and opportunity. By taking a proactive and integrated approach to risk management, we can unlock new opportunities for growth and success. Remember, every decision involves risk. The key is to manage these risks effectively to achieve your objectives. Embrace risk, reframe your questions, and lead with a balanced approach to risk management. This strategic mindset will help you navigate challenges and drive your organization forward.