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Strategy and innovation
How the CFO can drive the growth of digital business.
Digitalisation has gone from being a differentiating factor to becoming the cornerstone on which all business strategy rests. That is the main reflection left to us by Diego Vázquez, CFO of LVMH in Spain and Portugal.
Diego Vázquez, the financial controller of the LVMH group in Spain and Portugal, believes that the CFO has become an essential piece in the inevitable commitment to the digitalisation of companies, since “that is the person who fuels it as necessary” and is also capable of calculating “the profitability, positioning and impact” it provides. In his opinion, the digital change has been “a shift to another mindset” at both a business and communicative level that has radically changed our way of working.
In his particular case, responsible for the finances of the LVMH group, Diego Vázquez recognises that what it is ultimately about is “selling more”, but not only at a commercial level, since other factors now also play a part, such as “profitability by product, by area, even by retailing”. He thinks that the CFO should be the “link between all departments to maximise the profitability of “these new ways of selling”. After all, the financial officer is the one who provides “the commercial or marketing team with the tools they need,” so they have to be up to date on their needs to provide them with “the fuel they need”. To do this, they must be able to perform “the necessary financial engineering” to give them the resources they need.
“Resources” which, according to Management, have been increasing over the years, since “the budget allocated for investment in paid social media, in CRM, in newsletters, etc. used to be very small”, but is currently much more. And it is precisely the CFO, thanks to their “global business oversight”, who has to ensure that it is used correctly, thanks to their ability to “keep the cool head required to make the right decisions at all times”, which makes this “a hugely powerful role” within the company.
This is also noticeable, he says, when drawing up budgets, which are no longer approved every X months as they used to be, but rather “these times are now shorter and monitoring takes place almost weekly or daily”. However, this change in timing when designing the budget strategy is not always positive, as it can lead to “mistakes being made”. So, he says, the CFO also needs to have “a large dose of patience and coolness” so that they can “assess, consider from different angles and look for alternatives”.
In short, these types of managers have to develop the ability to quickly assess and make the right decisions at all times.
As an example of this, Vázquez explains that today's financial managers have to decide fast on issues such as “Whether it is still worth having a point of sale on the street with all the expenses that this entails or it is more profitable to dedicate more resources to establishing a powerful online point of sale”. This change in mindset, in his opinion, also includes other skills, such as being able to analyse “the return you get from working with influencer marketing”, which means that the CFO profile must also be fully integrated into “the way young people think”. With everything that is happening today and the constant changes companies are facing, also as a result of the pandemic, people are specialising and focusing more and more “on digital, on new ways of communicating and on new professions that are emerging”.
According to Diego Vázquez, it is about updating the profile of financial officers who “have had a very stable position and a well-established professional career by the age of 40, up to now,” but now have to “adjust and adapt to change to think more digitally and lean on much younger people”. Vázquez, the current financial officer can no longer remain locked in his office. He has to sit down with “the marketing team, the trade team, the sales team, with the digital manager, etc.” so that he can “soak up” and develop that necessary “360 vision” of the business. “If I told my father today to what extent I am involved in my company's business, he wouldn't believe it,” he says.
