1 00:00:00,000 --> 00:00:05,710 < Intro > 2 00:00:05,710 --> 00:00:07,290 – Welcome back to Count Me In. 3 00:00:07,290 --> 00:00:11,667 Today we are joined by Ashish Gupta, CFO, North America at Reckitt. 4 00:00:11,809 --> 00:00:14,040 Ashish has worked across various continents, 5 00:00:14,040 --> 00:00:16,834 and his international experience has greatly influenced 6 00:00:16,834 --> 00:00:19,834 his approach to developing a sustainable earnings model. 7 00:00:19,834 --> 00:00:24,859 Ashish shares valuable insights on the importance of sustainable leadership. 8 00:00:24,859 --> 00:00:27,870 The link between strategy, transformation and execution, 9 00:00:27,870 --> 00:00:31,000 and the need for clear communication and business transformations. 10 00:00:31,000 --> 00:00:33,620 Join us as we delve into the CFO's role, 11 00:00:33,620 --> 00:00:36,500 in driving sustainable growth and empowering teams. 12 00:00:36,500 --> 00:00:42,667 < Music > 13 00:00:42,667 --> 00:00:46,340 Ashish, we're so excited to have you on the podcast, today. 14 00:00:46,340 --> 00:00:50,667 And you've had extensive leadership experience, across various continents. 15 00:00:50,667 --> 00:00:52,930 And maybe you could share with our audience, 16 00:00:52,930 --> 00:00:55,980 how has this international experience influenced your approach 17 00:00:55,980 --> 00:00:58,167 to a sustainable earnings model? 18 00:00:58,667 --> 00:01:02,833 – Hi, Adam, I am actually privileged to be talking to you today. 19 00:01:02,833 --> 00:01:07,333 Yes, I've been lucky to have experience in various continents. 20 00:01:07,333 --> 00:01:12,329 But I must say that it has also been one of the challenges that I have faced. 21 00:01:12,329 --> 00:01:17,500 It has not been easy, but it's also been quite enriching and rewarding. 22 00:01:17,610 --> 00:01:22,500 It has taught me that there is no one-size-fits-all approach, 23 00:01:22,500 --> 00:01:25,700 either to leadership, or to developing 24 00:01:25,700 --> 00:01:28,720 a sustainable earnings model, or managing teams. 25 00:01:28,720 --> 00:01:33,740 Well, my greatest learnings have been two, in this situation. 26 00:01:33,740 --> 00:01:38,833 The first one, has been that leadership must be situational, 27 00:01:38,833 --> 00:01:43,640 and it must be relevant to the place and the situation you are in. 28 00:01:43,640 --> 00:01:46,333 And there could be different leadership styles that you could adopt. 29 00:01:46,333 --> 00:01:51,166 For example, you could be empathetic, but at the same time be decisive. 30 00:01:51,189 --> 00:01:55,979 You could be collaborative, but be very unambiguous. 31 00:01:55,979 --> 00:02:01,160 You could come across as vulnerable, but still be authentic about it. 32 00:02:01,160 --> 00:02:02,649 And that's what people appreciate, 33 00:02:02,649 --> 00:02:06,960 and that's what brings your whole self to work, really. 34 00:02:06,960 --> 00:02:09,420 The second one is you also need to know, 35 00:02:09,420 --> 00:02:13,640 and as I said, that there's no one-size-fits all approach. 36 00:02:13,640 --> 00:02:19,499 You also need to know when to make a switch from one style to another, 37 00:02:19,499 --> 00:02:23,530 depending on how your team is reacting to it. 38 00:02:23,530 --> 00:02:28,666 For example, sometimes, we say that it's best to give feedback to people, 39 00:02:28,666 --> 00:02:29,710 at that moment. 40 00:02:29,710 --> 00:02:33,320 But that may not be the right approach every time. 41 00:02:33,320 --> 00:02:38,333 Because, sometimes, we just want people to get over the emotions 42 00:02:38,333 --> 00:02:39,830 and have a calmer head. 43 00:02:39,830 --> 00:02:43,666 Before you go back and say, "Hey, look, in this instance, 44 00:02:43,666 --> 00:02:45,999 we could have done it a little bit differently." 45 00:02:45,999 --> 00:02:50,166 And, maybe, the people are more receptive, at that point of time, 46 00:02:50,166 --> 00:02:54,666 when that heat has settled down and they are more calm. 47 00:02:54,666 --> 00:02:58,499 So I would say that, it has taught me, also, 48 00:02:58,499 --> 00:03:01,260 because I've worked in different countries, different cultures. 49 00:03:01,260 --> 00:03:03,799 But people are people, so people are the same. 50 00:03:03,799 --> 00:03:08,499 They've got emotions, they like to be heard, they like to be respected, 51 00:03:08,499 --> 00:03:10,999 and that is universal, that does not change. 52 00:03:11,332 --> 00:03:14,240 – Yes, the human experience is universal, 53 00:03:14,240 --> 00:03:16,666 no matter where you go and, I think, people forget that. 54 00:03:16,666 --> 00:03:19,999 Because they want to divide each other because of this or that, 55 00:03:19,999 --> 00:03:24,499 and the human experience is so universal, like you just said. 56 00:03:24,499 --> 00:03:26,590 And as you're going out through your career, 57 00:03:26,590 --> 00:03:30,430 I'm sure you've hit different things like transformation, strategy, execution. 58 00:03:30,430 --> 00:03:33,499 You've had to hit all these different things in your different leadership roles. 59 00:03:33,500 --> 00:03:35,730 How has that set of skills supported you, 60 00:03:35,730 --> 00:03:39,165 in driving success in the different organizations you've been a part of? 61 00:03:39,165 --> 00:03:43,640 – Well, Adam, you've just hit on three magic words in that. 62 00:03:43,640 --> 00:03:46,999 Which is strategy, transformation, and execution. 63 00:03:46,999 --> 00:03:51,832 And I think most of the organizations struggle with the relationship 64 00:03:51,832 --> 00:03:54,590 between these three to their teams. 65 00:03:54,590 --> 00:03:57,999 Because you cannot have a transformation 66 00:03:57,999 --> 00:04:02,665 before you have got a clear strategy, about how do you want to drive the business. 67 00:04:02,665 --> 00:04:06,999 And transformation is an outcome of your strategy, 68 00:04:06,999 --> 00:04:12,165 and execution is implementing that strategy and transformation. 69 00:04:12,165 --> 00:04:15,019 So, very often, teams, in the business, 70 00:04:15,019 --> 00:04:17,998 fail to see the link of the transformation 71 00:04:17,998 --> 00:04:22,665 that is, sometimes, being led by global teams, to the company's strategy. 72 00:04:22,665 --> 00:04:27,332 And, then, it becomes even more muddy when it comes to execution. 73 00:04:27,332 --> 00:04:33,332 And I love this quote from Einstein, I'm not a science buff, but I love what he said. 74 00:04:33,332 --> 00:04:38,665 He said that, "If you can't explain to a six-year-old, then you don't understand it." 75 00:04:38,665 --> 00:04:39,820 And I think it's very true. 76 00:04:39,820 --> 00:04:43,580 And it may sound complex strategy, transformation, execution, 77 00:04:43,580 --> 00:04:47,498 but organizations need to keep it very simple. 78 00:04:47,498 --> 00:04:51,332 Because if people don't get it, then it doesn't reflect in teams 79 00:04:51,340 --> 00:04:54,949 not interested in executing a project or program. 80 00:04:54,949 --> 00:04:59,169 And it may sound something similar to Silent Resignation, 81 00:04:59,169 --> 00:05:02,665 that we talked about today, so people are not just interested. 82 00:05:02,665 --> 00:05:05,430 With my experience, I have had experience, 83 00:05:05,430 --> 00:05:07,510 and I'm lucky to have experience on both sides. 84 00:05:07,510 --> 00:05:11,030 I've led global transformation programs from the corporate side, 85 00:05:11,030 --> 00:05:13,580 and I've been at the receiving end, 86 00:05:13,580 --> 00:05:16,831 and large markets of those transformation programs. 87 00:05:16,831 --> 00:05:20,831 I've always wanted to understand the strategy behind a transformation. 88 00:05:20,831 --> 00:05:22,970 Why are we implementing a project? 89 00:05:22,970 --> 00:05:24,740 What's the corporate strategy in it? 90 00:05:24,740 --> 00:05:28,165 What do we get out of it? What do I get out of it? 91 00:05:28,229 --> 00:05:33,498 And that helps me put in the right execution force and resources behind it. 92 00:05:33,498 --> 00:05:37,750 – So, you're speaking about leading transformation into the finance function. 93 00:05:37,750 --> 00:05:40,770 One of the times, I was reading about in a recent article you wrote, 94 00:05:40,770 --> 00:05:44,331 was the Group Transformation Finance Director at Reckitt 95 00:05:44,331 --> 00:05:45,440 How is that experience? 96 00:05:45,440 --> 00:05:48,164 What things did you learn from that particular experience, 97 00:05:48,164 --> 00:05:51,331 that helped translate into what you're currently working on? 98 00:05:51,331 --> 00:05:55,498 – Well, it has been immensely useful to my learning, really, Adam. 99 00:05:55,498 --> 00:05:57,998 And, normally, if you see in any organization, 100 00:05:57,998 --> 00:06:02,830 there are about two to three centers of gravity, in an organization. 101 00:06:02,830 --> 00:06:05,331 The first one really is the corporate headquarters; 102 00:06:05,331 --> 00:06:08,910 that drives the vision, purpose, and strategy for the company. 103 00:06:08,910 --> 00:06:16,164 The second one, in many instances, is the geography or business unit headquarter, 104 00:06:16,164 --> 00:06:18,498 depending on how the organization is set up. 105 00:06:18,498 --> 00:06:21,998 And the third one, which I believe is the most important one, 106 00:06:21,998 --> 00:06:25,497 are the markets where the business actually gets delivered. 107 00:06:25,497 --> 00:06:27,530 And, sometimes, there's a confusion, 108 00:06:27,530 --> 00:06:33,664 but it's so true, that the transformation office always works for the markets 109 00:06:33,664 --> 00:06:36,880 to bring in that change and shift. 110 00:06:36,880 --> 00:06:42,997 In my transformation roles, I was leading the selection and implementation 111 00:06:43,060 --> 00:06:47,664 of certain cutting-edge projects and tools, in various areas. 112 00:06:47,664 --> 00:06:52,164 Planning, forecasting, controllership and compliance, productivity. 113 00:06:52,164 --> 00:06:56,759 And, then, I'm currently working in the biggest market, which is U.S. 114 00:06:56,759 --> 00:06:59,331 So it has helped me to understand 115 00:06:59,331 --> 00:07:03,819 that once you understand the strategy behind those projects, 116 00:07:03,819 --> 00:07:05,849 you also need a proof of concept. 117 00:07:05,849 --> 00:07:08,110 And there's no better proof of concept 118 00:07:08,110 --> 00:07:11,889 than to pilot it in one of your biggest markets. 119 00:07:11,889 --> 00:07:18,420 Because then you not only build sponsorship behind these projects, 120 00:07:18,420 --> 00:07:22,860 but you also are able to prove the business' case, 121 00:07:22,860 --> 00:07:27,419 and the return on investment on these projects, really. 122 00:07:27,419 --> 00:07:29,830 And once you've done it for some of your bigger markets, 123 00:07:29,830 --> 00:07:32,139 and you've built that sponsorship, 124 00:07:32,139 --> 00:07:36,830 it helps you to globally scale these programs much faster, 125 00:07:36,830 --> 00:07:40,830 and with much less change resistance. 126 00:07:40,830 --> 00:07:45,140 So this combination of being in the global transformation roles, 127 00:07:45,140 --> 00:07:50,150 being in the market, really helps me to see both sides of the coin 128 00:07:50,150 --> 00:07:55,330 and understand strategy, the transformation linked to it, 129 00:07:55,330 --> 00:08:01,330 and how the execution can support the strategy and transformation. 130 00:08:01,509 --> 00:08:04,497 – It makes me think of that quote you mentioned, from Albert Einstein, 131 00:08:04,497 --> 00:08:06,730 about how when you need to say something, 132 00:08:06,730 --> 00:08:08,350 say it like a six-year-old can understand it. 133 00:08:08,350 --> 00:08:11,497 A lot of times, when you're in transformations; business transformation, 134 00:08:11,497 --> 00:08:16,330 strategy sessions, the C-level people are all talking these lofty terms, 135 00:08:16,360 --> 00:08:18,663 that nobody can really understand. 136 00:08:18,663 --> 00:08:22,090 But you said your goal is to make sure that everybody can understand. 137 00:08:22,090 --> 00:08:27,289 And, so, doing these large scale restructurings programs, 138 00:08:27,289 --> 00:08:29,919 these enterprise system-wide thing, changes. 139 00:08:29,919 --> 00:08:32,830 How has your experience shaped your strategies for achieving 140 00:08:32,830 --> 00:08:37,330 things like sustainable growth, and helping your employees understand 141 00:08:37,360 --> 00:08:39,996 how we're going to go about doing this? 142 00:08:40,330 --> 00:08:43,330 – Adam, it changes from time to time. 143 00:08:43,330 --> 00:08:48,330 I must say that the markets and the environment today, is very different 144 00:08:48,330 --> 00:08:52,496 to what it was a few years back. 145 00:08:52,496 --> 00:08:57,790 Today, we are in a world where macroeconomic conditions are tough, 146 00:08:57,790 --> 00:09:02,496 and the stock market is very unforgiving for publicly listed companies. 147 00:09:02,496 --> 00:09:07,830 So, sometimes, there could be a tendency to maximize short term gains, especially, 148 00:09:07,910 --> 00:09:11,830 when you have to declare your results quarter after quarter. 149 00:09:11,830 --> 00:09:14,260 And then there are shareholders, and there are analysts, 150 00:09:14,260 --> 00:09:19,163 looking for whatever you improved versus the last quarter, versus last year. 151 00:09:19,163 --> 00:09:22,329 So there could be companies who could look at maximizing the short-term gains, 152 00:09:22,360 --> 00:09:27,329 at the cost of building long-term capabilities, or competencies, 153 00:09:27,329 --> 00:09:31,460 or what we call as taking a squeeze and trim approach, 154 00:09:31,460 --> 00:09:32,829 which is not sustainable. 155 00:09:32,829 --> 00:09:38,329 Sustainable growth is about growing profitably and responsibly, 156 00:09:38,329 --> 00:09:41,496 in not one month, one quarter, or one year. 157 00:09:41,496 --> 00:09:44,663 It is a long-term growth model that you build in. 158 00:09:44,663 --> 00:09:46,959 This is about building the business for the long run, 159 00:09:46,959 --> 00:09:51,496 that can become stronger every year and could be sustainable for years. 160 00:09:51,620 --> 00:09:52,730 So what does that mean? 161 00:09:52,730 --> 00:09:57,496 That means you cannot focus on maximizing short-term gains 162 00:09:57,496 --> 00:09:59,162 because, at some point of time, 163 00:09:59,162 --> 00:10:03,980 it's going to hurt the organization's ability to grow sustainably. 164 00:10:03,980 --> 00:10:07,996 This means replacing your squeeze and trim programs, 165 00:10:07,996 --> 00:10:10,860 where you're just niping out certain costs, 166 00:10:10,860 --> 00:10:16,100 with long-term productivity, or what we call as cost restructuring programs. 167 00:10:16,100 --> 00:10:20,329 Which can give you, sustainably, different ways to look at cost. 168 00:10:20,329 --> 00:10:22,996 Different ways to cut down the waste. 169 00:10:22,996 --> 00:10:24,890 These are the ones that allow you 170 00:10:24,890 --> 00:10:30,500 to reengineer your cost in a way that eliminates waste, structurally, 171 00:10:30,500 --> 00:10:35,496 like harmonizing your product portfolio to remove waste on manufacturing lines. 172 00:10:35,496 --> 00:10:41,495 Using digital or AI tools to drive better ROI, for your marketing spend. 173 00:10:41,495 --> 00:10:44,495 Or, sometimes, we're used to talk about, 174 00:10:44,495 --> 00:10:49,662 when you look at a product package, just make it thinner, lighter. 175 00:10:49,662 --> 00:10:52,190 No, you can redesign your products packaging, today, 176 00:10:52,190 --> 00:10:54,495 to deliver to what the consumer wants. 177 00:10:54,495 --> 00:10:58,162 As just opposed to squeezing some quality out of it. 178 00:10:58,329 --> 00:11:03,162 For example, we've had cases where industry used to believe 179 00:11:03,162 --> 00:11:08,995 in having large bags which were underfilled, but had a lot of empty space. 180 00:11:09,030 --> 00:11:13,450 That just was lot of extra plastic and extra cost. 181 00:11:13,450 --> 00:11:15,662 Consumer is very smart these days, 182 00:11:15,662 --> 00:11:20,495 they're not interested in having large bags because of empty head space. 183 00:11:20,495 --> 00:11:25,662 So if you can cut down that plastic, and give a smaller bag and reduce the plastic 184 00:11:25,662 --> 00:11:30,495 that you generate for the environment, it's better for everybody. 185 00:11:30,495 --> 00:11:34,328 And last one is about keeping your fixed cost fixed. 186 00:11:34,328 --> 00:11:38,328 There's a reason fixed costs are called fixed but, sometimes, we forget that. 187 00:11:38,420 --> 00:11:42,910 And, so, we need to keep our fixed cost fixed in absolute dollar value, really. 188 00:11:42,910 --> 00:11:44,130 And how do you drive this? 189 00:11:44,130 --> 00:11:48,329 Again, as I said, you have to look at different ways of doing it, 190 00:11:48,329 --> 00:11:52,149 instead of cost cutting, it has to be cost reengineering. 191 00:11:52,149 --> 00:11:56,339 It's about building capabilities like SAP, AI, cloud-based tools, 192 00:11:56,339 --> 00:12:00,328 that help you to perform better, and deliver better experience. 193 00:12:00,328 --> 00:12:04,495 Also for your teams and your people, which frees up their time 194 00:12:04,495 --> 00:12:08,579 to focus on delivering insights and transformation. 195 00:12:08,579 --> 00:12:12,661 Rather than focusing on just pulling out some raw data and numbers. 196 00:12:12,828 --> 00:12:15,110 – So it's like you're thinking outside of the box. 197 00:12:15,110 --> 00:12:19,995 Thinking outside of the normal, "Hey, I just want to fix my bottom line, 198 00:12:19,995 --> 00:12:23,949 but I want to actually re-innovate how we're doing it. 199 00:12:23,949 --> 00:12:25,510 So that we can do it in a better way." 200 00:12:25,510 --> 00:12:30,661 Which is not something we always hear, especially, in the world of manufacturing. 201 00:12:30,661 --> 00:12:33,828 – Yes, absolutely, and manufacturing companies, sometimes, 202 00:12:33,828 --> 00:12:40,828 get too focused on getting the product out from the production line. 203 00:12:40,828 --> 00:12:43,230 And, then, there are companies which have got brands, 204 00:12:43,230 --> 00:12:47,328 and they're talking about building the brands in the same old fashioned way. 205 00:12:47,328 --> 00:12:50,661 Whereas, today, the market is all about the consumer. 206 00:12:50,661 --> 00:12:54,940 It's all about exploring different means on digital media. 207 00:12:54,940 --> 00:12:58,500 How much of a conventional TV do you watch today? 208 00:12:58,500 --> 00:12:59,494 Probably very little. 209 00:12:59,494 --> 00:13:01,449 You're either watching streaming, 210 00:13:01,449 --> 00:13:04,828 or you're watching YouTube, or you're watching some apps. 211 00:13:04,828 --> 00:13:09,828 So your way to reach the consumer also has to change, 212 00:13:09,828 --> 00:13:13,330 and there are various ways to go and look at it. 213 00:13:13,330 --> 00:13:17,828 And the KPIs that used to be relevant in the last 10 years, 214 00:13:17,828 --> 00:13:23,161 about what we used to call as media GRPs are no longer relevant anymore. 215 00:13:23,161 --> 00:13:28,494 So there's a huge change that is coming in, and if we don't adapt to these changes 216 00:13:28,494 --> 00:13:32,827 and we don't become more efficient as organizations, we will struggle 217 00:13:32,827 --> 00:13:35,309 to be relevant in today's world. 218 00:13:35,309 --> 00:13:38,370 – Yes, and we've been talking about sustainable business models 219 00:13:38,370 --> 00:13:39,661 and that's hugely important. 220 00:13:39,661 --> 00:13:42,994 Because if you want to continue on, you can't just do things at the status quo, 221 00:13:43,139 --> 00:13:46,860 as you've already been saying. 222 00:13:46,860 --> 00:13:48,980 Maybe you can share, I think about your whole career, 223 00:13:48,980 --> 00:13:53,661 you've had a great career so far, and I'm sure there's many more years to come. 224 00:13:53,661 --> 00:13:57,161 But what are some learning experiences that you've learned, 225 00:13:57,161 --> 00:14:00,994 that have played and helped you walk towards your journey, towards creating 226 00:14:00,994 --> 00:14:04,994 a sustainable business model for the organizations you work with? 227 00:14:05,161 --> 00:14:10,827 – Yes, there have been lots of those, Adam, and it might sound cliché, 228 00:14:10,827 --> 00:14:12,660 but it's like picking your favorite child. 229 00:14:12,660 --> 00:14:16,680 But there have been so many experiences that have shaped me. 230 00:14:16,680 --> 00:14:20,790 But I would say that my last few roles, 231 00:14:20,790 --> 00:14:25,160 which were Global Supply Finance Director, Transformation Director 232 00:14:25,160 --> 00:14:28,910 and my current role as North America Finance Director, 233 00:14:28,910 --> 00:14:34,660 have been pivotal on my journey towards creating sustainable business models. 234 00:14:34,690 --> 00:14:39,009 And that's because you cannot create a sustainable business model, 235 00:14:39,009 --> 00:14:42,269 unless you know how to transform your business. 236 00:14:42,269 --> 00:14:47,370 So that is the part of transformation that has taught me and showed me, 237 00:14:47,370 --> 00:14:49,660 how you can use transformation 238 00:14:49,660 --> 00:14:55,993 as a means to really deliver a business model that is relevant not just for today, 239 00:14:55,993 --> 00:14:58,370 but for next five years, next 10 years. 240 00:14:58,370 --> 00:15:03,290 But also drive, not just incremental improvements in the business, 241 00:15:03,290 --> 00:15:07,160 really drive transformational changes in the business. 242 00:15:07,160 --> 00:15:10,370 And my role as Global Supply Finance Director 243 00:15:10,370 --> 00:15:14,160 meant that I was looking at the biggest cost lines, really. 244 00:15:14,160 --> 00:15:17,993 Which is the manufacturing, procurement, and logistics, 245 00:15:17,993 --> 00:15:22,199 and therefore how much difference you can make on these lines. 246 00:15:22,199 --> 00:15:28,993 Which can really create space in your P$L to invest where you want to invest. 247 00:15:29,130 --> 00:15:34,327 Which is behind your brand equity, behind your product, having the superior product 248 00:15:34,449 --> 00:15:37,190 that you want to have in the market. 249 00:15:37,190 --> 00:15:40,826 Behind the quality of the product, behind your distribution. 250 00:15:40,826 --> 00:15:47,220 Behind creating relationships with your retailers and with your consumers, 251 00:15:47,220 --> 00:15:49,889 so it all needs to be funded from somewhere. 252 00:15:49,889 --> 00:15:56,180 And, therefore, I think looking at your cost, and supply cost, normally, 253 00:15:56,180 --> 00:16:00,326 in any organization are the biggest part of your cost pie. 254 00:16:00,326 --> 00:16:05,290 And looking at, then, how to transform them, really, led me into this role. 255 00:16:05,290 --> 00:16:12,326 Where I can say that I've been using it and leveraging my prior experience, a lot, 256 00:16:12,326 --> 00:16:15,660 to drive a transformational journey in this business. 257 00:16:15,660 --> 00:16:20,390 The other greatest learning that I've had is that change takes time. 258 00:16:20,390 --> 00:16:24,390 Change is uncomfortable, change is uneasy, it drives uncertainty. 259 00:16:24,390 --> 00:16:28,993 But what is important is to have the vision of your end game. 260 00:16:29,589 --> 00:16:34,630 It should be very crisply articulated, what good looks like. 261 00:16:34,630 --> 00:16:39,326 Because this would then help people to understand, where are we heading to? 262 00:16:39,326 --> 00:16:43,659 And that is very powerful, to engage teams towards something that is better. 263 00:16:43,680 --> 00:16:46,279 Do keep in mind, and that's what we need to communicate 264 00:16:46,279 --> 00:16:48,826 to our people, also, that in the interim 265 00:16:48,826 --> 00:16:53,250 this could even mean more pain before it actually gets better. 266 00:16:53,250 --> 00:16:56,493 But if people see where the tunnel ends, then they get it. 267 00:16:56,493 --> 00:16:58,959 – Mh-hmm, yes, that makes a lot of sense, 268 00:16:58,959 --> 00:17:01,540 sometimes, things have to get worse before they get better. 269 00:17:01,540 --> 00:17:06,339 That's part of the ups and downs of business and of life, in general. 270 00:17:06,339 --> 00:17:08,659 Circling back to the sustainable earnings model. 271 00:17:08,659 --> 00:17:10,659 You talk a lot about that in your article, 272 00:17:10,659 --> 00:17:15,459 and you say the secret to it is knowing what works well for your business. 273 00:17:15,459 --> 00:17:18,179 Maybe you can elaborate a little bit on that for our listeners, 274 00:17:18,179 --> 00:17:20,870 to help determine what works best in different business contexts. 275 00:17:20,870 --> 00:17:22,659 Because, maybe, not everybody's in manufacturing. 276 00:17:22,659 --> 00:17:25,159 Maybe not everybody's in the examples that we've been using. 277 00:17:25,159 --> 00:17:27,492 Maybe you can elaborate a little bit on that for us. 278 00:17:27,992 --> 00:17:33,326 – Yes, we live in a complex world, so they say horses for courses, for a reason. 279 00:17:33,470 --> 00:17:36,970 I think, it's important for a business to understand what their strategy is, 280 00:17:36,970 --> 00:17:41,230 and I think it's also important to understand where they are today. 281 00:17:41,230 --> 00:17:44,910 So I like to segment the relevant businesses in consumer goods, 282 00:17:44,910 --> 00:17:47,159 for example, under three main categories. 283 00:17:47,159 --> 00:17:52,659 First of all, they are startups, or relatively new businesses with niche offerings, 284 00:17:52,799 --> 00:17:56,710 or what we call as insurgent brands. 285 00:17:56,710 --> 00:17:59,325 The ones who suddenly come from nowhere 286 00:17:59,325 --> 00:18:02,825 with a completely different offering and they disrupt a category. 287 00:18:02,825 --> 00:18:05,080 We're trying to acquire consumers, 288 00:18:05,080 --> 00:18:09,809 build top line growth and brand awareness with new brands. 289 00:18:09,809 --> 00:18:14,159 The second one are normally what we call as private labels, 290 00:18:14,159 --> 00:18:18,992 that are trying to capitalize on pricing value dynamic cap. 291 00:18:18,992 --> 00:18:22,179 That some of the more trusted brands have left 292 00:18:22,179 --> 00:18:23,850 for more value conscious consumer, 293 00:18:23,850 --> 00:18:27,659 more so in today's environment with high inflation. 294 00:18:27,679 --> 00:18:31,325 Then there are more established businesses, with trusted brands, 295 00:18:31,325 --> 00:18:32,992 with loyal consumer base. 296 00:18:32,992 --> 00:18:36,158 So it's important to know the short and long term strategy, 297 00:18:36,158 --> 00:18:37,770 and have a clear vision of it. 298 00:18:37,770 --> 00:18:41,992 For example, for these startups and new businesses, their focus today 299 00:18:41,992 --> 00:18:45,992 could be to drive top line growth and consumer numbers. 300 00:18:45,992 --> 00:18:50,658 While they continue to invest heavily in digital or influencer media 301 00:18:50,658 --> 00:18:52,960 to create a niche consumer market, 302 00:18:52,960 --> 00:18:55,600 but they always have a budget on the cash burn. 303 00:18:55,600 --> 00:18:57,158 And therefore for them, 304 00:18:57,158 --> 00:19:01,158 does the sustainable growth model matter so much today? 305 00:19:01,250 --> 00:19:03,658 Maybe not, because they have a budget 306 00:19:03,658 --> 00:19:09,158 to burn cash and drive up the consumer awareness, and top line. 307 00:19:09,158 --> 00:19:11,658 They might have a target to break down, probably, 308 00:19:11,658 --> 00:19:15,470 at a certain future point of time, but not now. 309 00:19:15,470 --> 00:19:17,158 Then let's talk about private labels. 310 00:19:17,158 --> 00:19:22,390 Private labels are since driving towards value conscious consumers. 311 00:19:22,390 --> 00:19:25,491 They rarely would invest on brand equity 312 00:19:25,491 --> 00:19:30,325 and would rather play on keeping their overheads very thin, 313 00:19:30,325 --> 00:19:33,991 to invest heavily on value creation. 314 00:19:33,991 --> 00:19:41,325 So, for them, the only thing that matters is volumes, really, at very low margins. 315 00:19:41,325 --> 00:19:46,325 But they do make money at any point of time that they play in the market 316 00:19:46,325 --> 00:19:48,991 because they're trying to bridge the gap. 317 00:19:48,991 --> 00:19:52,658 But the first two businesses that I described, these could also be subject 318 00:19:52,658 --> 00:19:55,991 to heavy volatility on their sales and earnings. 319 00:19:55,991 --> 00:20:01,658 And, therefore, their sustainable earnings model could be very different. 320 00:20:01,658 --> 00:20:06,158 Contrary to some of the established businesses, with established brands, 321 00:20:06,158 --> 00:20:09,991 loyal consumer base, and these businesses play to their strengths, 322 00:20:09,991 --> 00:20:14,491 which is product superiority, and trusted brands. 323 00:20:14,491 --> 00:20:18,220 They know they have consumers who trust their products, 324 00:20:18,220 --> 00:20:20,860 and they trust their products to do the job. 325 00:20:20,860 --> 00:20:22,440 And therefore there is a peace of mind 326 00:20:22,440 --> 00:20:26,991 that comes in buying those products, and these businesses continue to invest 327 00:20:27,110 --> 00:20:29,658 behind these brands and products. 328 00:20:29,658 --> 00:20:33,280 So they will make sure that their quality of the products 329 00:20:33,280 --> 00:20:37,440 is clearly far ahead of products of private labels. 330 00:20:37,440 --> 00:20:39,160 But the only way they can do it, 331 00:20:39,160 --> 00:20:42,660 especially, in today's tough macroeconomic environment, 332 00:20:42,660 --> 00:20:48,824 is to continue dialing up on productivity, in all the areas. 333 00:20:48,824 --> 00:20:56,657 It's not just the supply cost, or your product cost, or your fixed cost. 334 00:20:56,657 --> 00:20:59,324 But also in how they invest in the media now. 335 00:20:59,324 --> 00:21:01,930 How they reach out to consumers now. 336 00:21:02,157 --> 00:21:05,419 – Yes, and you keep mentioning our current macroeconomic environment 337 00:21:05,419 --> 00:21:07,200 is not the greatest right now. 338 00:21:07,200 --> 00:21:10,657 There's high inflation, all over the world, there's high interest rates. 339 00:21:10,657 --> 00:21:12,289 We're experiencing a lot of different things. 340 00:21:12,289 --> 00:21:16,820 How can companies maintain these earnings model you've been describing? 341 00:21:16,820 --> 00:21:18,710 How can they maintain that in this environment, 342 00:21:18,710 --> 00:21:21,157 and are there any challenges they should be looking out for? 343 00:21:21,409 --> 00:21:24,630 – It's tough, Adam, for everybody out there. 344 00:21:24,630 --> 00:21:27,330 It's a difficult environment that we're experiencing today. 345 00:21:27,330 --> 00:21:30,010 I think a few years back we used to call it VUCA, 346 00:21:30,010 --> 00:21:34,490 which was Volatile, Uncertain, Complex, and Ambiguous. 347 00:21:34,490 --> 00:21:39,990 But this is the next level now, I mean, all of these factors are still there, 348 00:21:39,990 --> 00:21:43,324 but there is also high inflation with high interest rates. 349 00:21:43,324 --> 00:21:45,990 And that's a situation that consumers and companies 350 00:21:45,990 --> 00:21:48,650 have not experienced in decades, especially, 351 00:21:48,650 --> 00:21:51,760 in some of the western markets, really. 352 00:21:51,760 --> 00:21:53,610 So, probably, some of the people 353 00:21:53,610 --> 00:21:58,490 have not even experienced that phenomena in their lifetime, 354 00:21:58,490 --> 00:22:00,179 some, of the younger people. 355 00:22:00,179 --> 00:22:03,549 So this is putting a lot of pressure on consumer wallets 356 00:22:03,549 --> 00:22:06,039 where the mortgage payments have increased, 357 00:22:06,039 --> 00:22:08,323 their disposable incomes have shrunk. 358 00:22:08,323 --> 00:22:09,570 At, the same time, for companies, 359 00:22:09,570 --> 00:22:14,823 also, they are facing inflation pressure on their input cost and label. 360 00:22:14,823 --> 00:22:17,657 And with the current difficult macroeconomic environment, 361 00:22:17,657 --> 00:22:23,323 there's very little ability for the companies to pass on the pricing to consumers. 362 00:22:23,323 --> 00:22:30,490 Compounding the situation is that there is intense competition from private labels 363 00:22:30,580 --> 00:22:34,760 that are trying to approach the value conscious consumers. 364 00:22:34,760 --> 00:22:36,157 So what does it mean? 365 00:22:36,157 --> 00:22:38,679 It looks all gloom and doom. 366 00:22:38,679 --> 00:22:41,801 No, but I think there are silver linings to it, as well. 367 00:22:41,801 --> 00:22:44,049 I think it's going to be tough, but I think the key 368 00:22:44,049 --> 00:22:46,990 for the companies is to keep focusing on product. 369 00:22:46,990 --> 00:22:50,156 Product is a hero, product is your king. 370 00:22:50,179 --> 00:22:53,823 So keep on investing on product superiority, 371 00:22:53,823 --> 00:22:57,549 that brings the consumers to trust their brands. 372 00:22:57,549 --> 00:23:00,823 But there's only a finite pool of funds that you have. 373 00:23:00,823 --> 00:23:03,656 So you need to continue to dial-up on productivity 374 00:23:03,656 --> 00:23:07,990 and ensure that the inflation impact is, 375 00:23:07,990 --> 00:23:12,490 to a large extent, offset through these productivity measures 376 00:23:12,490 --> 00:23:15,490 without having them to outprice themselves 377 00:23:15,490 --> 00:23:17,500 from the reach of the consumers. 378 00:23:17,500 --> 00:23:20,823 There's even a bigger burning need today for companies. 379 00:23:20,823 --> 00:23:25,750 They have to dial-up productivity to simplify their operations. 380 00:23:25,750 --> 00:23:28,500 Make decision making quick. 381 00:23:28,500 --> 00:23:31,500 Make the organization more nimble and agile, 382 00:23:31,500 --> 00:23:38,489 and that is going to remain relevant and important, in continuing 383 00:23:38,489 --> 00:23:41,823 the sustainable earnings model agenda, in today's environment. 384 00:23:41,823 --> 00:23:44,450 – That makes a lot of sense, and thanks for covering that. 385 00:23:44,450 --> 00:23:47,156 Because it can be really confusing, especially, as you're looking at things 386 00:23:47,156 --> 00:23:48,656 and you're like, "These are great concepts, 387 00:23:48,656 --> 00:23:51,656 but how do I make it fit in the current environment?" 388 00:23:51,656 --> 00:23:56,656 That can be very hard as we're all trying to navigate these things. 389 00:23:56,809 --> 00:23:59,156 As we're wrapping up the conversation, 390 00:23:59,156 --> 00:24:02,656 we can't talk about all of this stuff without talking about the role of AI. 391 00:24:02,656 --> 00:24:05,650 AI and the new data tools that are coming out, 392 00:24:05,650 --> 00:24:09,989 and the advances in technology are just happening so rapidly. 393 00:24:09,989 --> 00:24:13,489 What do you see the role of AI and these new data tools 394 00:24:13,489 --> 00:24:16,020 in achieving sustainable earnings model? 395 00:24:16,020 --> 00:24:18,260 Given the economic climate that you just talked about 396 00:24:18,260 --> 00:24:20,822 and how things are looking toward the future. 397 00:24:20,822 --> 00:24:23,322 – Well, it's a buzzword, isn't it, Adam, now? 398 00:24:23,322 --> 00:24:28,656 AI, machine learning, data tools, and some people consider it 399 00:24:28,656 --> 00:24:34,322 still as something that's going to come in the future but, I think, it's already there. 400 00:24:34,322 --> 00:24:37,822 We have to board the train now or we are going to miss it. 401 00:24:37,822 --> 00:24:41,100 The companies who are not embarking on this journey, today, 402 00:24:41,100 --> 00:24:43,322 will very quickly become outdated. 403 00:24:43,322 --> 00:24:45,989 And I think while there are different approaches 404 00:24:45,989 --> 00:24:50,080 to AI and applications, in the organization. 405 00:24:50,080 --> 00:24:55,155 One of the important things that AI or these tools bring, is to join 406 00:24:55,155 --> 00:24:59,655 the various dots in the organization and see what the human eye, sometimes, 407 00:24:59,655 --> 00:25:02,710 cannot see in the maze of data. 408 00:25:02,710 --> 00:25:05,322 I think most of the organizations, today, have a lot of data. 409 00:25:05,322 --> 00:25:11,250 But they say that information is power, while data is just data. 410 00:25:11,250 --> 00:25:13,489 and I, also, think that most of the companies are still 411 00:25:13,489 --> 00:25:16,940 in that discovery phase of this AI journey. 412 00:25:16,940 --> 00:25:20,950 And there are some proofs of concept, but there are few. 413 00:25:20,950 --> 00:25:22,989 But things are evolving very quickly. 414 00:25:22,989 --> 00:25:27,489 I tell you today you have tools that you can join 415 00:25:27,489 --> 00:25:31,300 the whole sales and operation process that you have today. 416 00:25:31,300 --> 00:25:34,822 Which used to be earlier, in the companies, operated separately 417 00:25:34,822 --> 00:25:37,610 to a financial planning process in the organization. 418 00:25:37,610 --> 00:25:39,309 So you do your sales and operational planning 419 00:25:39,309 --> 00:25:41,850 and then you do your financial planning process, 420 00:25:41,850 --> 00:25:45,655 and then you try to make sense of how to join that together. 421 00:25:45,655 --> 00:25:49,650 Today, there are tools which we know, 422 00:25:49,650 --> 00:25:54,655 which we have worked on, which can actually seamlessly combine, these two. 423 00:25:54,655 --> 00:25:56,988 And they could start with your sales and operation planning, 424 00:25:56,988 --> 00:26:00,960 and link into your financial planning softwares and processes. 425 00:26:00,960 --> 00:26:06,322 Giving one source of truth to everyone, and bringing a huge amount of simplification 426 00:26:06,322 --> 00:26:08,655 and effectiveness in the organization. 427 00:26:08,655 --> 00:26:12,655 Then there are tools and AI-based, and machine generative tools, 428 00:26:12,655 --> 00:26:16,960 which help you to get more out of your marketing spend. 429 00:26:16,960 --> 00:26:20,590 Which tell you that you spent X amount of dollars, 430 00:26:20,590 --> 00:26:25,200 on a particular campaign or a promotion, and this is what you got. 431 00:26:25,200 --> 00:26:32,321 Versus you spent X amount of dollars on a second campaign and this is what you got. 432 00:26:32,380 --> 00:26:37,821 And then you can evaluate which is the one which is going to drive more reach 433 00:26:37,821 --> 00:26:40,720 and awareness and return for you. 434 00:26:40,720 --> 00:26:46,130 And where do you start getting only marginal returns 435 00:26:46,130 --> 00:26:48,155 from a particular kind of promotion? 436 00:26:48,155 --> 00:26:52,321 And we have tools in the market that can do that, today. 437 00:26:52,321 --> 00:26:55,730 There are tools that can help you to drive better forecasting 438 00:26:55,730 --> 00:27:00,059 of your consumer demand, based on weather predictions. 439 00:27:00,059 --> 00:27:03,488 And then they tie that to the historical demand patterns 440 00:27:03,488 --> 00:27:06,154 linking it to macroeconomic forecasts. 441 00:27:06,154 --> 00:27:09,059 So they can play very well in terms of your historical data, 442 00:27:09,059 --> 00:27:12,930 plus the future trends that they are forecasting. 443 00:27:12,930 --> 00:27:17,154 And they can give you pretty good accurate picture of what you don't know 444 00:27:17,154 --> 00:27:20,190 and what can happen in the future. 445 00:27:20,190 --> 00:27:24,821 What I'm trying to say is there's a lot out there, today, and it could help 446 00:27:24,821 --> 00:27:28,988 tremendously for companies to understand their problem statement 447 00:27:28,988 --> 00:27:30,529 and find a solution for it. 448 00:27:30,529 --> 00:27:33,988 But I think it's important for companies, before they embark on these tools 449 00:27:33,988 --> 00:27:36,321 to find their problem statement. 450 00:27:36,321 --> 00:27:39,070 What is it that I want to solve? 451 00:27:39,070 --> 00:27:42,488 And if they can make that problem statement, I think, there are enough tools 452 00:27:42,488 --> 00:27:46,029 available in the market to get a solution for it. 453 00:27:46,029 --> 00:27:49,321 But they have to start now, the future is now, 454 00:27:49,321 --> 00:27:53,321 and it's not five years from today or two years from today. 455 00:27:53,321 --> 00:27:55,987 – Well, I think that's a great way to wrap things up. 456 00:27:55,987 --> 00:27:57,450 Ashish, thank you so much for coming on 457 00:27:57,450 --> 00:27:59,821 and sharing your knowledge with our audience, today. 458 00:27:59,821 --> 00:28:02,654 – It has been a privilege, Adam, thanks a lot for inviting me 459 00:28:02,654 --> 00:28:05,090 and I hope you have a great day. 460 00:28:05,090 --> 00:28:07,154 < Outro > 461 00:28:07,154 --> 00:28:08,821 – This has been Count Me In, 462 00:28:08,821 --> 00:28:12,987 IMA's podcast, providing you with the latest perspectives of thought leaders 463 00:28:12,987 --> 00:28:14,821 from the accounting and finance profession. 464 00:28:14,821 --> 00:28:17,429 If you like what you heard and you'd like to be counted in, 465 00:28:17,429 --> 00:28:19,950 for more relevant accounting and finance education, 466 00:28:19,950 --> 00:28:25,987 visit IMA's website at www.imanet.org.