Ian Swanson is an experienced finance and operations leader. During his long career, including roles at Seagram, Schering-Plough, and Merck, he has managed P&Ls from $1 million to $2 billion across diverse businesses. Having lived and worked in Asia, Europe and the US, he has gained broad insight into the challenges and opportunities of building and managing complex cross-border operations.
We sat down with him ahead of his presentation at CFO Rising West, taking place in San Francisco this October 19-20.
How did you start your career as CFO at Delicato Family Vineyards?
After spending over 25 years working with large multinational corporations in a variety of financial and operational roles, I was looking to do something different. Although working for large companies, I had spent most of my career working in emerging markets or new business units and I realized that I enjoyed working in businesses undergoing rapid growth or change, and where capabilities needed to be built. After leaving Merck in 2011, I knew that this was something I wanted to continue and that there was an opportunity to work with small-and-medium-sized companies that could benefit from my experience. It was that work that led me to Delicato Family Vineyards four years ago.
How has the role of the finance function changed over the last decade? What do you see as having been the main drivers behind this?
The role of the CFO has changed significantly over the last 10 years and most companies view their finance operation as a 'strategic business partner,' involving the CFO in top-level decision-making as never before. After 2008 and the financial crisis, CFOs were given strategy and crisis management responsibilities that were new to many of them. The role of the CFO grew as a result in ways that have probably come to stay. In an economy in which access to credit can be challenging and the financial health of the business is of paramount concern, investors and lenders are increasingly looking to the CFO to be involved in important decisions the company is making.
What do you see as the finance function’s role in innovation? What do you think are the specific challenges around innovation at Delicate Family Vineyards?
The role of finance in innovation is in decision support, ensuring that the right information is available in the right format to inform the decision, and then pressure testing the idea and asking the right questions. To do this, however, the business has to view you as a partner and not the police, and you have to be able to work with the business through the process from beginning to end – offer to be the sounding board. In this way, the approach is not to be the gatekeeper, but the business partner whose role is to help the business make the idea better. Done the right way, the business will often kill bad ideas early on, and the best ideas just get better. At Delicato I don’t think we are any different. You have limited resources within the organization and you want to make sure those resources are applied against the best ideas.
What do you think are the specific challenges around enabling growth in the health insurance industry?
In my experience I think the biggest challenge is two-fold; the cost of the administration of our healthcare system, and the lack of data standards and system interoperability between various systems. This lack of efficiency absolutely impacts growth – although not in cost. Annual healthcare costs have increased for many years at rates higher than inflation, and while the cost of prescriptions drugs is a part of that, it is not the main issue, as they represent only a percentage of the total cost. In addition, for the additional cost we pay for healthcare in the United States (more than twice the GDP percentage of most industrial countries) our medical outcomes are not statistically better. So where does the money go? In managing the administration between multiple payers (insurance companies) and providers (healthcare systems). When even claim forms are not consistent between payers, and data standards are not developed, the incremental cost is significant. In addition, many healthcare systems do not talk to one another, i.e. lab systems do not interface with patient medical records – and where they do within one healthcare system they do not across systems. In any company, these critical information flows are something you fix quickly.
What do you think presents the greatest challenges for finance leaders over the next year? Do you have strategies in place to overcome these?
The greatest challenges facing leaders today are the many non-financial aspects of the job. No longer is it enough to put an annual plan together and then report out income statement and cash flow variances month-to-month. You have to understand the entire business as well as the CEO; its strategy, its capabilities, the competitive landscape, its strengths and weaknesses, as well as the impact of changing regulations and new technologies. Helping the organization manage its way through this changing landscape and keeping all of the stakeholders apprised is much more of the job than it has ever been before, and I only see the demands increasing.
To address these challenges, it comes down to people; you and your team. Firstly it is important that today’s CFO brings a variety of experiences and skills that can lead in these areas, and then secondly develops a capable, diverse team to support the finance function. Many of the skills required are not taught in business degrees or MBAs, they are taught through experience, and by watching and participating in these activities. Somewhat like the medical profession where the approach is, ‘see one, do one, teach one’. This is a good mantra for today’s CFO. By having a capable diverse team you bring together a collection of experiences that can be shared and leveraged.
What will be the focus of your presentation?
In my presentation, In this presentation, I will share with you some of the areas of focus that I have been asked to be involved in over the last four years at Delicato, and what skills are required to be successful as the 21st Century CFO.
You can hear more from Ian, as well as other industry leaders, at CFO Rising West this October. Register here to receive your pass today.