In the lead up to this year’s CFO Forum, we speak with adidas’ Chief Financial Officer Robin Stalker about the company’s financial positioning. Want the full story? You can see Robin speak at the CFO Forum on the 16 & 17 May in Sydney.
1. Yahoo Finance named adidas “Sports Business of the Year” in 2016. What does it take to remain competitive with retail apparel juggernauts Under Armour, Nike and Skechers?
2016 marked the first full year of ‘Creating the New’, our strategic business plan. The positive results clearly show that our strategy is paying off. Focusing on our strategic choices Speed, Cities and Open Source makes us much more impactful in the marketplace. Our new operating model – Brand Leadership – ensures a high level of commonality worldwide when it comes to the appearance of our brands and products. In combination with our consumer-obsessed mindset, it is helping us to increase the desirability of our brands and products around the globe.
Our products resonated extremely well with consumers across the globe. Several of our key footwear franchises such as the UltraBOOST, NMD or Yeezy took top spots in all sneaker rankings and caused long queues in front of stores.
Companies need to deliver constant results, however financial results are only one part, as we need to ensure a multi stakeholder view to drive long term success of the company. This goes by diligently managing our brand, our people and our environment footprint.
2. How do your relationships with the sales, marketing and logistical teams inform your financial strategy and success?
I see the Finance team as an important business partner for the rest of the organization. That’s why Finance needs to be close to the business and maintain close relationships to the various other departments.
This integrated approach comes to life in our Integrated Performance Management (IPM) Initiative. We know that our company’s success doesn’t depend on financials only. Therefore, we also work towards achieving our non-financial KPIs, e.g. KPIs set by our colleagues in Marketing (Net Promoter Score), Global Operations (on-time delivery), HR (employee engagement) and Sales (Market Share).
Finance has a unique role to play, being present across the entire value chain and in all key decisions; it is our responsibility to engage our business partner to drive long term strategic decisions. Looking at our sustainability commitment, we are playing a crucial role within our industry and are leading the way in regards to environmental footprint and circular economy. A good example of this is our Parley partnership where we are removing waste plastic from the oceans and recycling them to footwear and apparel.
3. Given your 17 years of experience as Chief Financial Officer, what was the driving factor behind adidas’ financial recovery throughout the 2000s?
There are many reasons why our company has been incredibly successful over the last decade. Our brand is more popular than ever before, through commitment to innovation to create unprecedented products but as well on the supply chain, we are bringing innovation such as speed factory to have a completely automated footwear production.
Looking back at the financial crisis, 2009 required management and steering to balance our performance by focusing on cash flow. This put finance at the forefront in what fundamentally is a marketing and sales organization, and has enabled finance involvement in the following years helping drive more sustainable and profitable growth. Furthermore, we have established our corporation as the leading company on the sustainability side and are being constantly recognized as the employer of choice, however a good balance between these dimensions is required to be successful in the long term.
4. adidas was confirmed as a member of the EURO STOXX 50 Index last September, recognising the strength of the company’s recovery over the last decade. What will be the greatest challenge to adidas’ financial position over the decade to come?
At the epicentre of our strategy ‘Creating the New’ is our ambition to further accelerate growth by significantly increasing brand desirability. Therefore, it is our task to ensure that we stay relevant for our target audience and continue to connect with them a meaningful way, no matter when and where our consumers choose to interact with our brands.
A strategic focus area to drive brand desirability will be digital. Digital touches our company at every point along the value stream – how we design, develop, manufacture and sell our products.
We have a unique opportunity as a Finance team to drive our business in regards to taking the right strategic decisions for the future success of our company, not only steering our financial performance but more holistically to drive a balanced performance across multiple dimensions for our stakeholders. The finance team is in a unique position and has a responsibility to do so; my role in the future will not be the Chief Financial Officer but the Chief Value Creation Officer.