As Pavi Binning steps down as President of Canada’s largest organization, he shares a behind the scenes look at some of the major moves at George Weston Limited, his playbook for getting through a crisis and which CFOs can make it to the CEO chair.
We certainly are living in interesting and uncertain times. You’ve been in a couple of situations like Marconi and Nortel which have faced significant challenges. What have you learned about dealing with a crisis as a CFO?
When I took on the CFO roles at Marconi and Nortel, the businesses were in the process of rebuilding. Frankly, I gravitated towards them for that exact reason; when a business is facing a period of significant change you have the ability to make a real impact.
When entering this type of situation you need to develop a clear business strategy. That is absolutely critical. Understanding what the value drivers of the business are, and making sure that you preserve them, while closing down areas and assets where value is being destroyed is vital. For example, both Nortel and Marconi were spending billions on R&D and there were judgement calls to be made around which product set and portfolio could create value over the long term, and which areas needed to be stopped. What surprised me is that sometimes, even when we had agreed to shut certain R&D projects down, you would come back later to find people still working on them.
From the strategy, it’s then important to determine what the key priorities for the business are. Once you’ve done this, you need to rally the whole organization behind these priorities in order to achieve them.
From a financial perspective, I would say that as a CFO, you need to bring a significant amount of rigor and financial discipline towards running a company that is facing difficulties versus a company that isn’t. Areas that I needed to pay special attention to were the drivers of the P&L, expense control, liquidity, debt, financial obligations as well as ensuring adequate cash flow. Most organizations try and improve their processes in these areas but in a crisis situation you simply don’t have a choice.
Above all, what I have learned in these situations is communication with the organization at all levels is absolutely critical. People have to believe that there is a future for the organization and if not, you’ll start losing key people at all levels. One of the things I found was that people are more resilient than you think they are. If people believe that there’s a way through the tough times and that it will result in a positive outcome, they will persevere through it. I’ve seen an enormous amount of loyalty in these situations and a few of the senior people who went through the Nortel situation came to work with me at George Weston.
Your career has spanned the U.K., the U.S., and Canada. How does Canada compare to these other markets when it comes to driving the business?
When it comes to the traditional role of finance (i.e. reporting, audit, tax, treasury etc.) it’s relatively similar between these countries. What I’ve found over the years is that the other aspects of the finance role (i.e. analytical capabilities, business partnership and the role of finance as a business driver and a catalyst of change) are more advanced in the U.K., and probably the U.S., Canada lags a little behind.
When I first came to Canada, I felt the role of finance could be more advanced. For example, at George Weston Limited, we’re now much more progressive than we were, and we’re aggressively driving towards building a best in class finance function.
You’ve made the transition from CFO to CEO. Looking back, what do you consider to be the three leadership qualities that enabled you to be successful?
The first is strategic skills and business capabilities. You have to set a clear vision and strategy for the organization, because without this, you simply aren’t going anywhere.
The second is that you have to engage, inspire and motivate the organization around that strategy which is something that doesn’t come easily to CFOs, because they’re generally more introverted. If you can engage people quickly and in the right way, it makes a huge difference. For example, this approach recently worked well at Weston Foods, when the business needed to be transformed after some challenging years.
The third area that I’ve focused on in the CEO role is to make a real difference. Imagine the CEO’s role - people are not coming to you with easy problems, because if the decision was straightforward they would just make it themselves. You need the ability to assess the situation or the issue very quickly, exercise judgement, make the decision and provide clarity to the organization.
You have made a couple of significant moves with you as President, such as the deal to acquire Shoppers Drug Mart and unlocking the value of the property portfolio. How did your finance background prepare you to deliver on these initiatives?
It helped me enormously throughout my career. As a CFO, I have always focused on value creation and these moves certainly helped George Weston create significant value. Over the years I have been fortunate enough to work for companies where I was able to build capabilities in many areas beyond finance like strategy and M&A. I think the other thing that I would say from being a CFO in the past, we approached both these strategic moves with enormous financial rigor and discipline, and that was important because they were two of the biggest moves the Company had ever made. For example, when we did the acquisition of Shoppers Drug Mart, we actually built a strategic plan of our own for the business, and when the Shoppers’ team presented their strategic plan to us, it was very similar. In that context, being a former CFO helped me in terms of ensuring that we brought the necessary degree of financial rigour in assessing the strategic moves.
It sounds like the Shoppers acquisition was years in the making. At what point did you feel the timing was right to make a move?
We worked on the Shoppers Drug Mart acquisition for a number of years before we actually made the move - we were just waiting for the right time. One of the challenges that we had was that we were going to use a significant amount of equity to do the acquisition. In the end it turned out to be about 50/50 debt and equity, and therefore making sure the share price was at the right level, so that we could achieve all the financial parameters and hurdles that we wanted to was very important to the Weston family and Board. Therefore we waited for the right time in terms of actually making the acquisition.
In terms of Choice Properties REIT, we worked on that for about 12 to 18 months before we executed against it. I’ve always believed that if you want to make strategic moves, you have to be deliberate about them. You have to do the work up front, whether it’s the strategic rationale, financial implications, synergies, structuring etc. Thinking through different scenarios and outcomes very carefully is important. But, sometimes things happen on an opportunistic basis and you need to be prepared for that and move quickly.
What has been your approach to building a first-class finance organization?
In every finance organization I led, I built a leadership team across finance, and I called it either the Finance Leadership Team or the Finance Leadership Group. The leadership team was composed of the senior people that reported into me, i.e. the heads of the corporate finance functions like tax, treasury, IR, Financial Control, FP&A etc, as well as regional CFOs from around the world. I would bring that team together and develop a finance strategy that was going to support the overarching strategy of the business. Inevitably I found there were always common themes across every company that I worked for and these themes became the core elements of the strategy. They included areas like talent management, decision support, business partnership and systems and process management.
As a result of developing those four tenants, we made it our goal to drive these priorities through the entire finance function, and I would engage the whole function around them, while effectively allocating leadership responsibility to each priority to ensure that the plan were executed.
I’ve always operated on something that I call ruthless prioritization. One of the things that I always thought about when I was a CFO was where I should be spending my time. I determined areas where I could make the most impact beyond the typical financial role, and then I devoted a significant amount of my time to these areas. As a general rule, if I decided that couldn’t have impact on something, I typically would not attend the meeting.
What about the CEOs that you have worked with. What has been your approach to building a strong business partnership with them?
I’ve been fortunate in my career that I had the opportunity to work for some outstanding business leaders. I haven’t tried to model myself on anyone in particular, but instead take the best from each of them.
The way that I approached every job that I’ve had was by building strong relationships, based on values that are important to me. These values being trust, respect, openness, transparency, honesty and not getting involved in politics - that’s the way I operate. Wherever I’ve worked I have always been upfront. I would sit there and say, “Look, these are all the things that are going well, but let me tell you what’s not going well and what we’re going to do about it,” I'd do the same at the Board and also with different levels of Management. Also I’ve always been reasonably direct in terms of feedback as I’ve tried to coach and develop people.
In my finance career, I’ve also tried to drive functional excellence in every area of finance. As the CFO you are viewed by everyone as the finance expert, so I tried to demonstrate strong capabilities in every area of the function. I was fortunate to work at Diageo where I was able to build capabilities in every area of finance and by the time I had left, there wasn’t a part of finance that I hadn’t run or have a deep understanding of. This served me well as I moved into public company CFO roles.
The third area I focused on was on my leadership capabilities, because these are what take you to the most senior positions in management. As CFO, I tried to influence and have impact across the entire organization that often was beyond my mandate. I’ve never really asked for permission to move beyond the traditional CFO responsibilities but just got on with it. The CFO is uniquely placed along with the CEO to see across the entire organization. My view was to leverage that and to play a role in many areas where a CEO or COO would typically operate.
You have always been a big proponent of finance driving innovation and ensuring the business is “market led”. Why is this and do you have a good example of where this has taken place?
My sense is that, again, because of who finance is, there’s an ability to be a change agent and drive innovation across the entire organization.
As an example, at Weston Foods, we had largely exhausted our cost reduction strategies and one thing that became obvious to me and the leadership team was that we hadn’t led major trends in bakery in recent times. As a result, we decided to really understand consumer insights, needs, and trends, as well as the effectiveness of our sales force, the optimization of our marketing spend, and the investments we needed to make from a growth perspective. To drive this agenda, finance played a major role in getting under the skin of these important areas. We approached this from a completely different angle as we talked directly to our customers about what was going on in the industry, their businesses and how we could help them grow. Having those conversations allowed us to think about upcoming trends and what the future bakery landscape could look like. This uniquely positioned us to begin to drive innovation through a market-led approach.
You've recently announced you will be stepping down as President. What is next for you?
I am leaving the public company and working as Special Advisor to the Weston family. I'll be spending more time in the family’s private companies, which includes the luxury retail business.
The last seven years at George Weston Limited have been phenomenal and we've achieved a great deal, but I believe it’s time to move on to the next stage of my career.
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