Q: What’s your role as CFO of The Executive Centre entail?
A: My responsibilities as CFO are to manage the accounts of the business, corporate finance functions, and, more uniquely, data analysis. For accounts, I oversee a book keeping team and a chief controller that focuses exclusively on that aspect of our business. The corporate finance, which is my background coming from private equity, and data analysis I handle more directly.
Q: What do you mean by data analysis?
A: I take financial information, I crunch through it, and I analyse which components are making us the most money, and which are the business lines our customers pay the most money into. We look at costs of materials; costs of capital expenditure; we look at sales, and operational team performance; and we look at our physical stock performance. Then we cut that data in multiple ways, analyse it, and then deliver it back to our operations teams.
Q: What value can you derive from this analysis?
A: It enables our operations team to understand exactly the kinds of products and services our customers want and are most happy to pay for. Instead of providing things people may find nice, but don’t necessarily value. Furthermore, we utilize that information any time we’re designing and building new centres. With our operational data, we’re able to build the customer what they want and what they’ll pay for, instead of frills they’re never going to use. I think we’re very strong in this area. In terms of our data, I think we have a very numbers driven approach compared to most companies in Asia.
Q: So what are the biggest challenges a pan-Asia business like The Executive Centre faces?
A: Probably the biggest challenges are the soft issues. Dealing effectively with different people in different cultures, both when setting up new offices and maintaining our existing presences, requires a certain nuance. The way you negotiate in Taiwan, versus China, versus Japan are three completely different things.
But it’s not just about negotiating with our different suppliers and landlords locally, it’s also about managing our local teams. What I say, and the data I provide, to get someone to perform in Shenzhen is markedly different from what I say to someone in Tokyo. The real challenge is realizing that the same data and performance reviews I give back to all my teams is received differently by different cultures. The way we’ve addressed this challenge by creating a unified base of information that we’re developing to have the same effect regardless of their culture. We’re not there yet, but we’re getting good at it.
Q: What’s something you are doing to improve communication pan-regionally?
A: Well, traditionally what we’ve done is provide information in silos. What we try to do now is disseminate information across all our regions in a shared format. It’s helping us a lot. Our different offices understand how their peers are doing in different locations. It cuts across a lot of cultural barriers by doing that. Our local teams know how they’re doing.
Q: Do you have any insights on the corporate relationship with private equity, as you’ve worked on both sides?
A: Any private equity company that invests in a company is looking for double-digit returns. That’s what they want. Of course different private equity funds have different hurdles. Some longer term funds might require a 10-15% return if you’re lucky. Most want to see 25% or more. For us, we’ve been able to meet the requirements of our private equity partners, but it can be difficult. There’s a reason why bonds have single digit returns and you’re lucky to get 7% [annual] growth in your stock portfolio. Businesses that are even able to return 25% to private equity aren’t easy to find. We’re a growth company, so we can meet those hurdles. In some ways, the pressure isn’t on me as much, because I know my business and I know what returns I can deliver.
Q: What’s something that distinguishes your operations at The Executive Centre that you think might interest other CFOs?
A: One thing we do that’s very innovative is we’ve advanced from using the simple, common spreadsheet programs for our financial analysis. We use a multi-dimensional database analytical tool called Quantrix. It’s a very powerful piece of software. It transformed the way we use data. Rather than just get an enterprise resource planning system, and then get consultants, and a tech guy to do some tailored programming, we can analyze raw data and use it. I don’t have to go through every cell and wonder if my data’s good or not any more. I highly recommend it for other CFOs who are interested in data.
I’m a big data person. I love data. I don’t think most companies know and understand their data the way we do. There are companies that don’t know their data; there are companies that know their data but don’t understand it; and then there are companies that both know and understand their data. We’re really pushing to be in that top category.