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24

Feb

100 accountants, two days, one room...

Recently I attended the NZ CFO Symposium in Auckland*, a conference which attracted about 100 CFOs and financial controllers from around the country. A room full of accountants discussing accounting – most readers could probably not imagine a worse way to spend two days.

Thankfully we weren’t discussing accounting in terms of debits and credits and international financial reporting standards (even I find that stuff boring); rather we were focusing on the big picture stuff – global economy, local economy, financing, leadership and strategy. There was an impressive list of speakers: the CFOs from Air New Zealand and Nuplex, Bill English (Minister of Finance), the country’s top corporate recovery accountants and lawyers, leading business academics, Chris Quin (Gen-i’s CEO), and investment bankers.

Apart from Hon. Bill English, whose speech was particularly disturbing (he talked about 15 years of the government running a cash deficit, New Zealand being black listed because of high household and government debts and that 60% of GDP would be needed to service future debt levels) most speakers, while not being upbeat, were not suicidal either.

The BNZ economist, like all good economists, had a bob each way as to whether we were going into a deep long lasting recession or we would recover in 12 months.

All other speakers had consistent themes which were:

  • Cash is King. Lending to businesses and households is getting tougher and tighter. To survive companies must control their spending and collect cash fast from clients.
  • Stick to your core business. Now is not the time to enter new markets. Continue to do what you do (at Intergen we call this the hedgehog theory).
  • Unless you are a low-cost producer do not compete on price – it will ruin you. You must continue to differentiate in the market with your current unique selling proposition. Continue to be known as the leader in your field, known as the best for service or, for example, the best for Dynamics. If you have never competed on price, now is not the time.
  • Align your business with your clients’ needs. Make sure your business model fits your clients’ needs. It may need some tweaking but, with reference to the above, major changes in your business model will kill your business.
  • The strong and the smart will get stronger. There will be opportunity to increase market share and reputation when other organisations struggle.
  • Now is a good time to right size. If some staff don’t get what you are about, or have been cruising, now is a good time to free up their time.
  • Be open in your communication with staff.
  • Business leaders need to be brave and decisive.

One can never be smug in business because there is always a curve ball around the corner, but it was reassuring to have unsolicited third party affirmation of Intergen’s business strategy. Due to the extensive work we have done with DY Consulting over the last 18 months, we know our core business and strategy and we are sticking with it. Our cash position has improved over recent months, unlike many other organisations. And almost everything else mentioned (except right sizing) we are doing.

Author’s footnote:
*To reassure those of you worried about the CFO spending up to attend a conference in Auckland, in true Accountant style, I flew on cheap flights, got the $1600 conference ticket for free and crashed the night on a mate’s floor rather than stay in a hotel.

Posted by: Murray Newman, Chief Financial Officer | 24 February 2009

Tags: Economy, NZ CFO Symposium


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