The financial function has undergone sea changes over the past decade driven by everything from changing market dynamics to digitization. Today, organizations expect their leaders to be direct contributors to the growth. While creating significant challenges, this environment also offers enormous growth opportunities for financial leaders. Kaushik Mitra, Vice President & Chief Financial Officer, PepsiCo India joins us for an exclusive interaction, wherein he talks about the latest financial strategies and leadership insights. Kaushik joined PepsiCo more than two decades ago. With 30 years of diverse professional experience, Kaushik is responsible for leading the Finance function and agenda for PepsiCo’s Food, Beverage, and Nutrition business in India, Bangladesh, Sri Lanka and Nepal. Below is an excerpt from the interview.  

What are some effective ways the leaders adopt to share financial insights with stakeholders and promote teamwork between different departments?

What does it take to build a Collaborative Organization? There are five enablers, in no particular order of importance: (i) Busting the Functional Silos by creating synergy between functional KPIs and the overarching business KPIs of revenue, share, profit and sustainability; (ii) Moving away from individual KPIs to Team KPIs; (iii) Having clearly defined “Ways of Working” and clarity of “Roles and Accountabilities”; (iv) High level of Trust and EQ among Senior Managers; (v) A strong tone at the top, with the CEO driving a collaborative culture.

While cross-functional collaboration is required across the organization, there are a few areas where collaboration is critical to the execution and success of the business. This includes Commercial Effectiveness, Supply Chain Agility, Proactive Risk Management, and Idea-to-Execution Speed. Collaboration can be a key differentiator between success and failure for organizations. A collaborative culture is tough to build and needs organization-wide effort and patience. In the long term, it is bound to pay back handsomely by way of a sustainable competitive advantage that enables an organization to out-execute competitors consistently.

How can Manufacturing companies generate quick and precise predictions to detect problems before they escalate?

It all starts with building a culture of proportional ownership, where risk is integrated into business meetings. At PepsiCo, we place a lot of reliance on culture. Good governance has a lot to do with a culture that emphasizes doing business the right way and making process owners, not finance, own the risk and the corresponding controls to manage the risk. We cannot have an army of people watching over others to ensure compliance with policy and code. We are also putting a lot of effort into moving away from manual controls to smart, automated ones, which reduce human touch and errors in execution. Rapid digitization of business processes is enabling control automation.

Effective risk management processes have evolved from having a control-based governance approach to a risk-based governance approach. At PepsiCo, we have an excellent framework for governance that starts with a management tone at the top and is centered around proportional ownership of the governance agenda beyond the fiduciary functions of finance and legal, supported by a robust risk-based control framework which is reviewed periodically and finally validated by an independent internal audit and corporate audit program. All of this is ring-fenced by a comprehensive enterprise risk management process governed by regular risk and audit committee meetings. 

I am very passionate about an initiative we undertook a few years back on simplification. We called it SSAEO (Simplification, Standardization, Automation, Elimination and Outsourcing).

Can you share with us the details of any particular initiative regarding mitigating risk? 

I am very passionate about an initiative we undertook a few years back on simplification. We called it SSAEO (Simplification, Standardization, Automation, Elimination and Outsourcing). As we add complexity to our business, we increase risk. So, we must regularly look for opportunities to simplify processes and schedules of authority without increasing risk. Putting the business processes through a ‘workout’ —and I literally mean taking our redundant work and steps—helps improve the overall control environment.

Next comes standardization. In terms of sequence, sometimes we put the automation in without having fixed the process. It’s like putting the cart before the horse. Standardization reduces work and saves time, period.

Automation is the next step which helps move away from manual error-prone risk mitigators to integrated digital key controls. You are able to use smart diagnostic tools to review transactions and processes regularly at the press of a button. Elimination is a powerful tool that we do not use effectively. We tend to add stuff. We like adding SKUs, we like demanding more data and analytics, we love to have more resources, we need more people for sure, and we create more work for ourselves. Try doing a ‘workout’ session to remove redundant work, and streamline approvals and workflows. This will reduce risk while improving agility. Outsourcing is the logical end of this process of working smart. Having outsourced transaction processing and business analytics, I feel we have made good progress. Ideally, you would like to keep the Navigator, Transformer, Value Creator and some key custodian roles within the organization and outsource everything else.

What are the essential characteristics of a transformational leader in financial management?

As the finance function transforms, the skills required to succeed in finance are also evolving. To be future-ready, finance professionals will need to possess a combination of technical, analytical, and strategic skills. Some of the key skills include data literacy, technological proficiency, strategic thinking, communication, and collaboration. 

Finance professionals will need to be proficient in data analysis and interpretation. This includes understanding how to work with large datasets, using data visualization tools, and deriving actionable insights from data. With the rise of automation, AI, and other digital tools, finance professionals will need to have a solid understanding of how these technologies work and how they can be applied to improve finance processes. Additionally, proficiency in cloud-based finance systems will be crucial for ensuring efficient collaboration and reporting. As finance becomes more closely tied to business strategy, finance professionals will need to develop strong strategic thinking skills, such as the ability to assess market trends, evaluate investment opportunities, and align financial goals with broader organizational objectives. They will need to think beyond the numbers and consider the long-term implications of their decisions.

The ability to communicate financial insights clearly and effectively to non-finance stakeholders is becoming increasingly important.  With the growing complexity of the global business environment, finance professionals will need to develop a strong understanding of risk management. They must stay up-to-date on regulatory changes, cybersecurity threats, and geopolitical risks that could affect their organizations.

What advice would you give to the upcoming financial leaders in the industry?

Get out of your comfort zone and embrace the benefits of digitization.

Ultimately, everything boils down to value creation by influencing and impacting multiple stakeholders with data and experience while building a future-ready finance function. So, as you build your career on the CFO track, focus on these elements. Program yourself to think of value rather than costs. Often, values lie in growth and in doing the right things as compared to doing things right. Hone your influencing skills. Data is your trusted ally in that process. Leverage digital tools to mine real-time data and use that to influence others. But influencing is not only about data and logic. It’s also about building trust and credibility. Trust and dependability go hand in hand. The one thing the Board and CEO look at the CFO for is a safe pair of hands and a steadying influence on the organization’s performance. Last but not the least, build a great team. Surround yourself with people who are better than you in their respective areas so that team thinking goes way beyond just yours as a leader. Your job is not to be the most knowledgeable in the finance team. Look at yourself as a captain and coach who sets the context, empowers, motivates, supports and celebrates success together.

 

Hobby: “I am a keen musician and have an amateur YouTube Channel. I love playing several musical instruments, including the guitar, keyboard and percussion. I write fiction novels, and some of my books have been published.”

Favorite Cuisines: “I am a foodie, and my favorites include Vietnamese and traditional Bengali dishes.”

Favorite Movies: Spellbound, Casablanca, the Hitchcock series, Die Hard Series, Pink Panther series, As Good as It Gets, What Women Want, Argo, The Shawshank Redemption, ZNMD, 3 Idiots, Pather Panchali series, World War II movies, all the Feluda movies of Satyajit Ray, and many more.   

Favorite Books: Rebecca, the Satyajit Ray Feluda series, Tuesdays with Morrie, Khaled Hosseini books like The Kite Runner and Thousand Splendid Suns, Arthur Hailey books like The Airport and Detective, Frederick Forsyth books like the Odessa File and Dogs of War, Sherlock Holmes, John Grisham books like The Firm and A Time to Kill, To Kill a Mockingbird, Shantaram, and many more.  

Favorite Travel Destinations: Vietnam, San Francisco, Kurseong, Goa, Kolkata in winter, and Bali.