Sheshadri Savalgi is a seasoned Business and Finance leader (CA, CMA, CGMA) with close to two decades of expertise acquired from esteemed multinational cor- porations such as P&G, J&J, Coty, and General Mills. Throughout his career, Sheshadri has excelled in a diverse array of challenging leadership rol.es, including General Management, Business Strategy, Change Mana- gement, Finance Co-Piloting, Supply Chain Finance, M&A, and Growth Strategy. His wealth of experience empowers him to adeptly navigate intricate and diverse business environments, consistently delivering measurable results and steering organizational success.

In a conversation with Charulatha,a correspondent in Siliconindia magazine. Sheshadri highlighted vital CFO KPIs in a VUCA setting. Foster cross-department collaboration for agility and define the CFO's role in promoting sustainability and ESG practices.

In the capacity of a sponsor, influencer, or decision-maker, the CFO assumes a central role in ensuring the seamless integration of technology to maintain a competitive advantage

What are the key performance indicators (KPIs) you believe are most critical for a CFO to monitor in a VUCA environment, and why?

In our current era, marked by volatility, uncertainty, complexity, and ambiguity (VUCA), the role of a Chief Financial Officer (CFO) has assumed unprecedented significance. As a strategic leader, the CFO is instrumental in guiding organizations through crises and navigating the complexities of turbulent economic conditions. Armed with a holistic perspective that encompasses the entire business value chain and an intricate understanding of internal dynamics and external stakeholder relationships, the CFO stands as a linchpin at the forefront of decision-making.

When delving into the realm of Key Performance Indicators (KPIs), it is imperative to acknowledge the absence of a one-size-fits-all approach. Within the landscape of a large multinational corporation (MNC), navigating a VUCA environment may involve grappling with demand challenges—ranging from a complete lack of demand due to external factors to sudden surges, as witnessed by many organizations during the pandemic. In situations of demand pressure, KPIs centred on supply chain resiliency, fixed cost management, and working capital efficiency take precedence.

Conversely, in scenarios marked by a sudden uptick in demand, KPIs related to supply chain sufficiency, such as Case Fill rate and On-shelf availability, become critical. Navigating operational costs becomes challenging in both scenarios, underscoring the importance of margin related KPIs as strategic tools for managing headwinds.

For startups or organizations operating below scale, a primary challenge lies in maintaining liquidity. Consequently, KPIs associated with liquidity and working capital management assume a central role. Effectively handling receivables, payables, and inventory emerges as the decisive factor determining whether an organization can sustain its operations or faces the risk of financial insolvency. In essence, the CFO's role transcends mere financial oversight; it extends to steering the organization through dynamic and challenging business landscapes, ensuring adaptability and resilience in the face of uncertainty.

How do you prioritize investments in innovation and technology to drive financial trans- formation and efficiency in your role as a CFO? How do you align financial strategies with digital transformation initiatives in the current business landscape?

A CFO serves as the pivotal nexus bridging IT Function and Business functions, adeptly navigating the intricacies of Information Technology within the broader organizational landscape. This role is underpinned by the CFO's distinctive ability to delve into the nuances of business operations, value chains, and specific requirements or opportunities. Empowered with this dual perspective, the CFO not only comprehends the end-state vision but also fluently converses in the language of IT, understanding the capabilities and limitations of available market solutions.

In the capacity of a sponsor, influencer, or decision-maker, the CFO assumes a central role in ensuring the seamless integration of technology to maintain a competitive advantage. The rationale behind adopting innovation and technology must be unequivocally clear, as these initiatives can yield one of three key outcomes: GROWTH, EFFECIENCY, or SIMPLIFICATION. Armed with a keen ability to articulate the tangible business benefits of technological advancements, the CFO also meticulously weighs the cost of ownership and the consequences of not embracing transformative changes.

A decade ago, the focus was on ensuring data availability; however, today's landscape is inundated with data points from every click or swipe. Consequently, the CFO's focus has evolved towards decluttering data, extracting meaningful insights, and identifying early trends. This shift facilitates faster decision-making, course correction, or pivoting, resulting in a substantial impact. In essence, I advocate for three guiding principles: First, a crystal-clear articulation of the 'why.' Second, adopting a long-term perspective and strategic deliberations concerning the cost of ownership. Lastly, prioritizing technology is paramount to maintaining a competitive edge.

Digital transformations emerge as potent catalysts, propelling organizations toward meaningful business outcomes—nothing more, nothing less."

"Organizations have witnessed the success of having a robust finance function and, conversely, the pitfalls of having a passive one—especially evident in times of crisis or in a VUCA environment"

How do we communicate complex financial information to non-financial stakeholders to facilitate informed decision-making in a VUCA context?

I have seen the role of a CFO evolving from being a Finance leader with business acumen to a Business leader with financial expertise. Here are my three key pieces of advice:

Firstly, it's crucial to communicate in business language rather than drowning non-financial stakeholders in technical finance information. The goal is to ensure clarity and understanding without overwhelming them with excessive data points.

Secondly, when articulating complex financial information, the focus should be on presenting choices and outcomes within the broader business context. It's essential to explain the available choices, their implications, and the resulting outcomes. Only the relevant financial information supporting these choices and outcomes should be shared with non-financial stakeholders to facilitate their understanding.

Lastly, in the volatile, uncertain, complex, and ambiguous (VUCA) context, the mantra is 'progress over perfection.' The CFO must prioritize transparency, ensuring teams comprehend the sensitivity of assumptions and the urgency associated with decision-making. This approach fosters an environment where timely decisions can be made in response to dynamic circumstances. Ultimately, it's about navigating uncertainties with a clear focus on progress rather than waiting for perfect conditions."

How do you foster collaboration and alignment between finance and other departments to adapt to rapid changes in a VUCA world?

I do not believe in the notion of rigid functional boundaries. We are all business leaders with unique areas of expertise, united by a shared objective. The role of a CFO provides the luxury of zooming in on any process, data, or transaction while also maintaining the ability to zoom out and adopt a long-term strategic perspective.

Addressing a stereotype that prevailed a decade ago, the CFO was often perceived as a custodian and controller, known for responding with a 'NO' by default. However, the finance landscape has evolved significantly. CFOs and finance teams, beyond safeguarding resources, have transformed into robust business partners and copilots for the organization. This transformation is recognized by various functions within the business. Finance emerges as a potent ally for any function within the organization.

Being vocal and transparent, sharing perspectives, and highlighting potential challenges that other functions might overlook contribute significantly to gaining alignment. Organizations have witnessed the success of having a robust finance function and, conversely, the pitfalls of having a passive one—especially evident in times of crisis or in a VUCA environment.

What do you believe is the CFO's role in promoting sustainability and ESG (Environmental, Social, and Governance) practices within an organization?

The CFO plays a crucial role in promoting sustainability and ESG practices within an organization. The CFO must integrate sustainability and ESG considerations into financial decision-making processes. This involves assessing the financial implications of environmental and social initiatives and ensuring that sustainable practices align with the organization's long-term financial goals. The CFO can drive sustainability by identifying cost-effective and innovative ways to reduce environmental impact. This may involve exploring energy-efficient technologies, waste reduction initiatives, or other sustainable practices that also contribute to cost savings.

The CFO is the custodian and the face for financial reporting and disclosures. In the context of sustainability and ESG, this involves transparently communicating the organization's performance in these areas to stakeholders. Integrated reporting that combines financial and non-financial metrics is becoming increasingly important. Keeping abreast of evolving ESG regulations and ensuring the organization's compliance is part of the CFO's responsibilities. This includes understanding how regulatory changes may impact financial reporting and disclosure requirements.

Allocating resources to sustainable projects and initiatives is a critical aspect of the CFO's role. This includes budgeting for sustainability efforts, such as energy-efficient technologies, social impact programs, and governance enhancements. Identifying and managing ESG risks is vital for the CFO. This includes assessing the impact of environmental and social factors on the organization's risk profile and ensuring that risk management strategies address these considerations.

Engaging employees and stakeholders in sustainability efforts is critical and the CFO can support initiatives that foster a culture of sustainability within the organization, creating a positive impact on both internal and external perceptions.