In his long career spanning decades, Vinu Venkatesh, a seasoned CFO has ridden several winds of change. While some of them were arduous from a decision-making standpoint, others have strengthened his belief in long-term planning. But if there’s one thing that he has always been certain of, it is the power of planning ahead. During his more than two decade-long stint at Cognizant, he was honored with an Award of Excellence for his innovative approach to financial and operational controls that have led to margin improvement. An oracle on forecasting, strategic deal pricing, and acquisitions, Venkatesh is now the Chief Financial Officer at Apexon where he is responsible for driving financial actions that impact more than 6,000 employees across 13 workplaces worldwide.
In a recent interview with CLEAR, he talks about new-age phenomena like the Great Resignation, the worrisome stride of the ongoing inflation in the global economy, best practices in strategic planning, and much more…
Question: You come with an extensive span of experience as a CFO. In your tenure, you have had the economy witness several volatile crises including the early 2000s recession, Covid-19 pandemic and the Russia-Ukraine war. Not just well-established companies but VC-backed start-ups have also bore the brunt. How did you navigate through these?
Answer: Having been a part of the IT sector which is largely people and skill-set driven, I can say that the last couple of years have been the best we have seen. Fortunately, we had the cushion of advance planning. We ensured that we calculate the effect of low demand on our growth. We were confident that we weren’t going to face a degrowth. Having said that, the present day scene is vastly different from what the world has previously endured. During the times around the Great Depression of 1929 to 1939, around 9/11, and such, demand had shrunken massively. But now, we are witnessing a new phenomenon: The Great Resignation.
Question: How has the Great Resignation affected the work environment and the broader economy?
Answer: What makes The Great Resignation a strong detriment is that the economy has never witnessed anything similar in the past. There is no data, no analysis, no theories or regression tests that we can refer to to derive solutions. On the other hand, the numbers of resignations are swelling in the western countries, China and India. So, to get a hold on the situation, we will need to constantly be in touch with our employees. The need of the hour is transparent communication.
Question: In recent times, what would you say is the one thing that has challenged you as a CFO?
Answer: In my professional lifetime, I had not seen western economies battle such a high rate of inflation. It has challenged the process of planning for CFOs across the world. The focus is on advance planning. For instance, we had begun planning for 2023 by the second quarter of 2022. Finance leaders across the globe have always prepared for brief economic turbulences. But times are different at the moment. We need to ensure that the leadership in the organization is prudent while spending each penny.
Question: Hard times demand hard calls. With the ongoing inflation and previously, during Covid, layoffs across industries have been common. As a leader, how do you take care of the morale of your employees and keep them motivated?
Answer: Layoffs are never an easy call to take but they are essential in order to cut down costs. They are one of the biggest indicators of an economic turmoil. I believe in being transparent with the employees. It’s important to let them know about the situation. They should be made aware that the situation demands them to buckle up. That the organization would need them to come together and perform better so that everybody can come out of the situation victorious. In my opinion, youngsters today are much more well-informed. They are also great at networking. I have witnessed people shift sectors once they are laid off and do even better in their new careers.
Furthermore, sometimes, layoffs are carried out to bring in new ideas in an old place. If a management is looking to clean up behavioral gaps in the system, they are bound to let some people go.
Question: What, in your opinion, is that one strategic cost-cutting measure that every company can rely on irrespective of its financial foothold?
Answer: One of the most important strategic cost-cutting measures is to look at redundant investments. If there are investments that are costing the company a steady flow of money but are not yielding significant returns, those investments should be relooked at immediately irrespective of how small or big they are. Instead, they should plan and make smaller investments that will certainly pay off in the future. For instance, for an organization in the IT sector, cloud-based skills are going to be in demand for years to come. So, investing in the right kind of manpower with an excellent cloud-based skill set will reap long-term benefits for such an organization. Now that’s something they can invest more in.
Question: In your career so far, have you ever had to make a strategic investment decision without the support of your CEOs or investors?
Answer: Fortunately, it has never come to that. Yes, I might have had to convince them because I strongly believe that CEOs and investors should reach a common ground while taking important strategic decisions. Around the year 2008, if one had to expand their company’s operations, the best move was to get into real estate. During that time, the companies I had worked with were not cash-constrained. So, they could make significant investments in India while the value of the rupee was falling. We negotiated with Indian builders and bought certain prime assets at great prices. It was a great move from the standpoint of investors also because they were able to see the financial benefits clearly.
Question: Now the obvious question is, how do you convince the CEOs and the investors to take a bet?
Answer: The secret is to draw pictures of all the possible outcomes clearly so that the stakeholders are prepared for most of the consequences. Having said this, one has to always keep room for some amount of uncertainty. And in current economic conditions, the room for uncertainty has to be bigger. While planning, you make assumptions and try to predict profits and losses. But there is no way to ensure that your forecast is accurate. You can only get close to being accurate simply because most of these inputs are assumptive. So I think it is important for leaders and investors to be accommodative of such risks while being aware of their consequences.
Question: While it’s admissible that expecting accurate budgetary forecasts from CFOs is utopian, how do you ensure that your forecast is closest to being accurate?
Answer: We’ve been employing a two-fold approach. First is by having increased conversations with people in the company who are the closest to the customers like the sales employees, client partners, vendors and consultants. Second is by having more conversations with the customers. The latter helps you in understanding the pulse of the market and in identifying consumer behavior patterns. The intel we gather from our conversations with these groups helps us in coming up with better business ideas which in return drives conversations around our financial ambitions and forecasts. So, the bottom line is once you understand the people involved in your operations better, comprehend their needs and their buying patterns, it becomes easier for you to create products and services that will keep you close to your financial forecast.
Question: You have tackled a recession in the past. Chances of another are rising with inflation. As a financial leader, what is that one piece of advice that you’d want to leave budding CFOs with that will prepare them for the upcoming times?
Answer: During such times of crisis, the role of Financial Planning and Analysis (FP&A) diversifies. Responsibilities widen and the team participates actively in taking pricing-related decisions. It becomes important for finance leaders to instill confidence in folks who deal directly with the customers. Since during these times, businesses have to relay difficult financial decisions to the customers, CFOs play a major role in ensuring that people from the sales team become better equipped to handle customer expectations and accommodate their requests. In the past, my team has spent a major chunk of time collaborating effectively with other teams in the organization to ensure that each one of them understands the situation and the financial calls being taken by the organization. And from my experience, I always advise young CFOs to foster a culture of collaboration that leads to an environment in which every individual feels heard and valued.
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