New Responsibilities, Risks & Challenges Await the Finance Leaders
Gary joined Canon in 2017. Prior to this, he donned the hat of VP of Finance, IT, Legal, SCM, Customer Delight
1.What are the key drivers to transform the profitability of any business?
It is imperative for business owners and executives to take the necessary steps to increase the profitability of the company. With the right focus on the growth drivers, increasing the profitability of any business will help in the long run as well as mitigate any future challenges that the business might face. The most important driver according to me is maintaining a balanced sales portfolio. When a business invests in different products and reach out to different target consumers, they can successfully mitigate the negative impact on any one portfolio. One should never put all their eggs in one basket. Not only will this help in monitoring profitability of an individual segment, but also keep a check on the cost.
The second most important driver is keeping a healthy cost structure within the business. For this, the businesses need to reduce the overhead costs so that they can tide through unexpected downturns and necessary actions can be taken in a timely manner. A critical component for maintaining a required cost structure is preserving resources which can fuel growth of all the current segments, as well as new segments that the business is planning to get into.
Last but not the least, minimizing cost of failure is pivotal to ensure that businesses can increase profitability. It is important to keep a check on the health of balance sheet regularly to ensure the quality of assets. Moreover, it is pertinent to monitor inventory regularly so that there is minimum write offs in accounts receivable conditions
A business will lose its growth story and will not be able to identify and reduce the impact of challenges without a proper budget
2.What are the dominant constraints that hold back a company’s growth, and how might one overcome them?
Businesses face challenges and constraints when they move towards growth and profitability. Timely identification of these challenges can help in minimizing its impact. Successful companies plan for these challenges well in advance and learn to adapt quickly. One of the dominant constraints that any business can face includes saturation of the market, where we see the products are getting more homogenous. With competing businesses getting aggressive on prices and aiming to capture the maximum share, it can create a severe dent in your business. Sometimes, there is a drastic change in the market either with the entry of a new player or a new technology, resulting in a transformation in the consumer behavior. This could also have an impact on the existing portfolio of the businesses resulting in degrowth.
While it is possible for organizations to work the way around these constraints, corrections to financial constraints are, often, complicated. An integral part to overcome this, lies in the capability of the business to have a clear market proposition. By understanding the value each business is providing to the customers and be able to differentiate themselves in the industry, businesses can expect to mitigate some of these constraints.
The next step to this is strengthen existing product offering through extensive research and development which enables companies to disrupt the market. Canon, for instance, is the leader in patent registration and through our investment in R&D we are coming up with best in class technology for our customers across segments. It is also very important to keep on evolving and entering new business line that can create synergy with existing businesses. For instance, we at Canon focus on primarily on our imaging business so apart from cameras for photography, we have also expanded into surveillance cameras and camera software. Most importantly, it is very important to understand the needs of our customers and work consistently to evolve in order to meet the requirement of the discerning customers
3.How do the CFOs need to adjust the performance management of a company to take advantage of the opportunities of innovation and market dynamics, within the context of an enterprise’s strengths?
Looking at the business environment CFOs face today, they see the world from a different prism where every business is facing a rapid change, both internally and externally. You will hardly see any business these days that is immune from being disrupted. In times like these when they are experiencing accelerated business changes, it makes sense to look for newer opportunities. Without change, a business cannot be expected to thrive.