Excellence in Leadership March 2010

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  • ExcEllEncE in lEadErship

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    Innovation

    Bridge the gaphsBc group cFO douglas Flint on making more of existing accounting standards

    High-tech, low costBasF indias head of finance and iT discusses long-term investment in technology

    Innovatio

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    e 14 2010

    issuE 14 2010 12

    CIM014_Cover_WCOA .indd 1 19/3/10 14:00:27

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    CIM014_032 Advert.indd 1 19/3/10 13:52:46

  • Excellence in Leadership

    Company insight 3

    Keeping a finger on the commercial pulse is an important preoccupation for business leaders but making that pulse beat a little faster is what really counts. Creating new ideas, pioneering products and ingenious solutions is the name of the game and it is important that innovation continues during the downturn if companies are to thrive in the long term.

    It has been said that recession is the mother of innovation and this certainly rings true when you look at past activity in times of economic strife. Some of the worlds most well-known brands including Disney, Microsoft, Apple and Google have emerged during recessions. In the 14th issue of Excellence in Leadership we ask business experts from around the world to look at the complexities of breaking new ground and outline how to develop new products and services in a sustainable way.

    Syl Saller, Diageos global head of innovation, discusses what business leaders can learn from organisations that flourished in the last economic downturn and outlines some of the new challenges that companies are facing this time around (page 36). Looking ahead, Michael Traem, CEO of international management consultants Arthur D Little, sets out five key success factors that companies must follow if they are to move forward in this changing environment (page 42).

    Governments and the European Union have been making efforts to persuade businesses to spend more on research and development but there appears to be little evidence that this spending has had any effect on sustainable growth. Mariana Mazzucato, professor of economics at the Open University, warns that businesses must understand the conditions that need to be put in place if their endeavours are to be fruitful (page 52).

    Without a doubt, one of the essential factors in successful innovation is ensuring budgets

    are monitored carefully. William Nixon, professor of law and accounting and the University of Dundee, analyses CIMA-funded research, which looks at the importance of including finance professionals at the earliest stages of product innovation and how to avoid the twin dangers of missing the boat, or worse, sinking it altogether (page 24).

    To cynics, accounting and innovation might seem an unlikely marriage. In the face of increasing workloads and greater expectations from stakeholders, its vital that modern finance directors embrace new ways of operating. One of CIMAs most high profile members, Douglas Flint, group CFO at HSBC, gives a unique insight into the pressures at the top (page 8).

    Looking to the future, Ramnath Sundaresan, chief executive of finance, IT and logistics at BASF India, highlights some of the big technology challenges facing finance departments in 2010 (page 17). Finally, to round off our journey, acclaimed writer, business strategist and author Ram Charan studies the findings of a recent global survey on innovation around the world and asks if we are witnessing the decline of big ideas in the West (page 48).

    For our part, CIMA will continue to focus on innovation and excellence in a wide variety of business areas. Recently the quality of our articles in these publications was recognised by the International Federation of Accountants. CIMA knowledge specialist, Louise Ross, was a prizewinner in IFACs annual Articles of Merit awards for her article on business and social networking technology included in our issue on data management in finance. Louises article is reprinted in this issue (page 68). We plan to continue to provide a range of inspirational features and hope that our publication makes your pulse race a little faster.

    The heart of the matter

    It has been said that recession is the mother of innovation and this certainly rings true when you look at past activity in times of economic strife.

    ExcEllEncE in lEadErshipinnovationForeword

    Your feedback is important. If you have any thoughts about the articles covered in this issue or suggestions for features that we could address in future editions, please do not hesitate to contact the editor: michaeljones@globaltrademedia.com. To download selected articles published in Excellence in Leadership, please go to www.excellence-leadership.com

    Charles Tilley, CIMA chief executive

    CIM014_Foreword.indd 3 19/3/10 14:01:30

  • Excellence in Leadership

    8 Bridge the gapHSBC groups CFO Douglas Flint on making existing accounting standards go further.

    ExCELLEnCE in LEaDErSHipInnovation

    Cultivate creativityphin Foster speaks to Diageos Syl Saller about innovation in a downturn.

    Cash controlinterteks aston Swift on how precise cash management can maximise corporate performance.36 72

    Contents

    High-tech, low costBaSF indias ramnath Sundaresan on how prioritising investment in innovation can keep costs down.17

    CIM014_Contents.indd 4 19/3/10 14:02:47

  • Excellence in Leadership Issue 14 2010

    Editor | Michael Jonesmichaeljones@globaltrademedia.comChief sub-editor | Elliott AykroydProduction manager | Dave StanfordGroup art director | Henrik WilliamsDesigners | Catherine Douglas, Mehmet SemClient services manager | Derek DeschampsSales manager | David Chaidavidchai@globaltrademedia.comHead of sales | Richard Jamiesonrichardjamieson@globaltrademedia.comCirculation manager | Linda BurgessPublisher | William CrockerEditor-in-chief | John Lawrencejohnlawrence@globaltrademedia.com

    Excellence in Leadership is published by Global Trade Media, a trading division of Cornhill Publications Ltd, and is an official publication of the Chartered Institute of Management Accountants (CIMA).

    Registered address:John Carpenter House, John Carpenter Street, London, EC4Y 0AN, UKTel: +44 207 753 4200 Fax: +44 207 724 2089Email: info@globaltrademedia.comW. www.globaltrademedia.com www.excellence-leadership.com

    Registered in England No. 01564127

    Chartered Institute of Management Accountants (CIMA)26 Chapter Street, London SW1P 4NP, UKT. +44 (0)20 7663 5441Ana Barco, CIMA, Senior Product Specialist E. ana.barco@cimaglobal.com

    ISSN 2041-24442010 CIMA and Global Trade Media

    Every quarter Excellence in Leadership brings you the latest thinking from top industry practitioners and thought leaders. It is easy to subscribe: To subscribe, go to www.getthatmag.com or email cs@progressivemediagroup.com.

    All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, photocopying or otherwise, without prior permission of the publisher and copyright owner.

    The products and services advertised in Excellence in Leadership are not necessarily endorsed by or connected in any way with CIMA. The editorial opinions expressed in the publication are those of individual authors and not necessarily those of CIMA or Global Trade Media. While every effort has been made to ensure the accuracy of the information in this publication, neither Global Trade Media nor CIMA accept responsibility for errors or omissions.

    Further copies of Excellence in Leadership are available from Global Trade Media at a cost of 12.00, 13.00 or $18.00 per copy.

    Printed by Warners (Midlands)

    EXCELLENCE IN LEADERSHIP

    EX

    CE

    LL

    EN

    CE

    IN L

    EA

    DE

    RS

    HIP

    Innovation

    Bridge the gapHSBCs group CFO Douglas Flint on making more of existing accounting standards

    High-tech, low costBASF Indias head of nance and IT discusses long-term investment in technology

    Innovatio

    n ISSU

    E 14 2010

    ISSUE 14 2010 12

    ExCELLENCE IN LEADERSHIPInnovation

    3 Foreword Charles Tilley, chief executive, CIMA

    Vital statistics

    7 Vital statistics

    Innovation and the finance department

    8 Bridge the gap HSBC group CFO Douglas Flint believes

    proposed changes to the way fair value is measured in the wake of the financial crisis could have a fundamental economic impact. He speaks to Nigel Ash about making more of existing accounting standards rather than chasing the chimera of regulatory perfection.

    12 Essential ingredient The imperative to innovate is well

    recognised but some may be surprised to learn that, far from spoiling the broth, the management accountant is an essential ingredient of success. CIMAs Louise Ross takes stock of the management accountants role.

    Technology and innovation

    17 High-tech, low-cost BASF Indias Ramnath Sundaresan on how

    long-term investment in innovation can lower costs, and not only in financial terms.

    21 Escape the net RSA, The Security Division of EMC

    22 The application of science Genpact

    23 Business-critical information MicroStrategy

    Tactical innovation

    24 Finance first Bill Nixon at the University of Dundee

    and Mostafa Jazayeri at Manchester Metropolitan University investigate the charge that the focus on cost at the design stage of a project is too narrow.

    29 Collaborate to innovate Asite Solutions

    Strategic innovation

    30 In the mix IESE Business Schools Antonio Davila

    strives for the best blend of accounting and innovation.

    Innovation in the downturn

    36 Cultivate creativity Phin Foster speaks to Diageos Syl Saller

    about how some of the worlds most successful and innovative companies have been born in bad times.

    41 A clear vision Axa Corporate Solutions

    Corporate innovation

    42 Five steps to success Michael Traem, CEO of global management

    consultancy Arthur D Little looks at the influences driving the modern economy and corresponding innovation success factors.

    46 Control the cost of carbon The Energy Saving Trust

    48 Against all odds Eminent business consultant Ram Charan

    on why Innovation is not just about R&D, it needs to be a discipline that exists throughout the business.

    Innovation and investment

    52 Intelligent investment in innovation The Open Universitys Mariana Mazzucato

    explains how an intelligent approach to innovation can prevent over-investment.

    56 A secure route to working capital Demica

    East meets West

    58 Winds of change As companies search for new ideas to

    promote growth after the recession, Leslie L Kossoff explains to Ian Duncan what lessons can be learned by studying Asia.

    64 Change of direction The WorId Banks Mark Dutz explains how

    in-depth analysis reveals opportunities in emerging markets for companies to outstrip their Western counterparts.

    Social networking

    68 Look to the future Louise Ross plugs into the online business

    community to take a close look at the risks and opportunities presented by the social networking revolution enabled by Web 2.0 technology.

    Also in this edition:Cash management

    72 Cash control Jim Banks speaks to FTSE 100 company

    Interteks Aston Swift about the tools and processes needed to cut it in todays tough financial environment.

    Outsourcing

    76 A global view Unearthing the true value of process

    excellence, flexibility and improved compliance in many cases means taking a truly global view of the organisation and its shared services provision, as Henkels Joachim Jaeckle explains to Jim Banks.

    80 Next issue

    82 Directory

    CIM014_Contents.indd 5 19/3/10 16:19:45

  • Excellence in Leadership

    Head6 Business continuity management 6

    Editorial advisory board

    David Blackwood Jeff van der Eems Bev Hampson

    David Blackwood is group FD of Yule Catto & Co plc. Formerly he was the group treasurer at ICI. He qualified as an accountant with Deloitte before joining ICI in 1985. After a spell at EVC in Brussels he joined ICI Films as CFO in Brussels.

    Jeff van der Eems was appointed CFO of United Biscuits in 2005 and additionally became COO in 2006. Born in Canada, he joined United Biscuits from PepsiCo, where he worked for 12 years in a series of senior finance and strategy roles in EMEA and the US.

    Bev Hampson has been with Volvo for 16 years; in the UK in various finance roles for both the car company and Volvos finance company. She also had a two-year assignment living and working in Sweden at the Volvo Global headquarters in 20042005.

    Claire Ighodaro Keith Luck

    Keith Luck is director general of finance at the Foreign and Commonwealth Office. His background is in telecommunications, consultancy and banking. He was finance director for two London boroughs before returning to the private sector in a business development role.

    A past president of CIMA, Claire Ighodaros board roles include non-executive director of Lloyds of London, the Banking Code Standards Board and UK Trade & Investment, trustee of the British Council, and council member of the Open University.

    Arul Sivagananathan

    As SVP for F&A operations for WNS Global Services, Arul Sivagananathan is responsible for transitioning over 400 full-time accounting workers from the largest insurer in the UK to a green site centre in Colombo. He is responsible for F&A across India and Sri Lanka.

    Sara Shipton

    Sara Shipton is a fellow of the Chartered Institute of Management Accountants and has a BA (Hons) in Accounting and Management Control. She runs her own consultancy business based in the East Midlands and is working on a number of projects for CIMA.

    Kai Peters

    Kai Peters is chief executive of Ashridge, the business school located in Berkhamsted, near London. Prior to joining Ashridge, Peters was director of MBA programmes and then dean of the Rotterdam School of Management (RSM) at Erasmus University in the Netherlands.

    Sriram Kameshwar

    Sriram is a graduate in commerce, associate member of the Institute of Cost & Works Accountants of India, qualified Chartered Financial Analyst and an associate member of CIMA. He heads finance operations for Prudential UKs subsidiary in India.

    Keith Luck

    CIM014_EdPanel_VitalStats.indd 6 19/3/10 14:29:37

  • Excellence in Leadership

    Head 7Vital stats 7

    Vital statistics Innovation

    Innovation distinguishes between a leader and a follower. Steve Jobs, CEO, Apple

    Financial crisis Stalled too many customers CEO no more. Jonathan Schwartz, chief executive of Sun Microsystems announces his resignation in an innovative fashion: on Twitter with a haiku.

    Innovation is the central...

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