Speed of change forces CFOs to take on greater responsibility and make faster decisions. Having the right people is crucial, says CFO at Vestas, Marika Fredriksson.
When Marika Fredriksson took up the position as CFO for Vestas in 2013, her job description was unambiguously to ensure the survival of the company. Turning a DKK 500 million deficit of the year 2013 into a solid profit of DKK 5.1 billion in 2018 has been a tough and, at times, brutal ride. But Fredriksson has never doubted the recipe for Vestas’ financial success.
“It was all about getting the company back on its feet again. I spent a lot of time defining which activities we should keep and which we should skip in order to generate more money for the company,” she says.
A significant part of the work force was removed in order to create a solid base for growth. The manoeuvre was based on the facts and figures. There was no time for being emotional, Marika Fredriksson says.
“We had to start from scratch raising money, renegotiating with banks, creating transparency and rebuilding trust,” she says.
“I have made turnarounds before in cyclical engineering industries, and I have learned how to deal with both upturns and downturns. But in order to succeed, you need to have the right competencies and create the right culture to drive a turnaround.”
Taking the company to the next level
With a balance sheet of more than DKK 20 billion in 2019, Vestas has gained a remarkably solid financial position. A necessity if you want to survive in a constantly changing market.
“We have been through difficult phases in a very short time frame, but we have managed to grow the company year by year. Now, the challenge is to take the company to a higher level, and that is actually harder than doing a turnaround,” Fredriksson says.
“Everyone has an opinion on what to prioritise. The balance act is to keep up with the speed of change and be competitive in the market, without letting individual interests influence your judgement and prioritisation.”
People you can trust
The speed of change heavily influences the role of the CFO who must assume greater responsibility, gain deeper insight into the business and increase the company’s financial power of decision-making. To do so, a CFO needs employees that embrace the speed of things, Fredriksson explains:
“Having success in a highly demanding market requires the right people and a culture that reflects the market environment. Employees, who can make fast decisions as well as go act on them immediately and a culture that spur this behaviour. You need to have people you can trust, people who can make decisions, and people who can act.”
In this regard, Vestas has an advantage of being a modern industry, being able to bring the purpose of the business – green energy - to the forefront, she adds:
“Candidates see this as a growth potential, and we attract highly skilled employees. We get the best, because they look for a clear purpose with their work.”
Digitalisation is a competitive differentiator
Besides the right people and culture, digitalisation enables Vestas to be one step ahead of competition.
“Digitalisation enables us to differentiate, simplify and improve the turbines, and that is where we start. Most recently, we launched the modular design, which lowers the levelised cost of energy and accelerates the global transition to a more sustainable energy mix,” Fredriksson says.
Digitalisation has also made the company more resilient to sudden price drops in the market. The prices of wind turbines have fallen by 20 per cent in recent years. If prices continue to drop, and the finance department does not adapt instantly, the company will be dead at some point, Fredriksson explains.
“Luckily, we have been able to invent even more intelligent wind turbines and reduce our costs, but also create more value for our customers, for instance through digitalisation,” she says.
Do not jeopardise growth
Digitalisation, compliance and most recently the UN’s Sustainable Development Goals (SDGs) are important areas, which all interlink with the core of the business.
“Today, you cannot jeopardise investment in technology, compliance or the SDGs. Then you jeopardise growth. As a CFO, you need to understand the underlying trends and engage yourself in all areas. None of these are sidekicks, so you have to take responsibility for educating the whole company to make sure that the financial perspectives of all investments are understood by everyone,” she says, adding:
“The implications of e.g. being non-compliant today are enormous. You may be wiped off the map in a second.”
The purpose of Vestas producing green energy plays well with the whole SDG agenda. Vestas has committed to six SDGs and put a great effort into human work in Africa and South America, building schools for girls, advising on birth control and ensuring clean drinking water.
“But we cannot take green for granted as a competitive factor. We are on a journey, trying to push the boundaries for sustainability, CSR and local community commitment around the world. Because wind energy has become so cheap, the key today is not cost alone, but to create value across stakeholders and the SDGs are a way to make that tangible.”
Opportunity lies in the risk
Despite the speed of change influencing all parts of the company and the market, Marika Fredriksson persistently keeps on track. The financial target this year is a double-digit margin.
“I keep emotions and opinions out of all financial dispositions. The facts and figures are what count, and our digital infrastructure helps me collect and analyse the right data. But there must also be a risk factor because opportunity lies in the risk,” she says.
“Nonetheless, everything starts with the team and the right people. People are what make the difference.”