Strategy & Operations » How finance leaders can break the rules to change the world

How finance leaders can break the rules to change the world

'Borrowing' assets, instead of 'investing' in them, can help CFOs transform their company’s operating model to adapt to new circumstances with speed – often leaving competitors behind

How finance leaders can break the rules to change the world

For senior finance professionals, breaking the rules can feel rebellious – even scary.

You are used to following conventions and steadying the ship to assuage the concerns of analysts and shareholders. But mastering an entrepreneurial mindset can help you mitigate risk and identify new opportunities which, given the current economic landscape, could help you survive – or even thrive – amidst today’s choppy waters.

So how can you start to adopt a more entrepreneurial mindset – and why should you share those learnings with your team?

Beg, borrow (but please do not steal)

Large companies often operate with an implicit rule that the assets required to pursue a new project require investment. Investments create returns, after all. But what if you didn’t have to invest to do something big? That’s what CFO Akhil Gupta of Bharti AirTel, the Indian mobile telecom operator, asked in 2004.

He was frustrated that every new spurt of growth called for new investment in the Bharti network. New investment in network equipment and IT hardware and software. New towers and base stations. And more. Gupta and his team decided to ask Bharti’s network equipment suppliers, including like Ericsson and others, and his main IT provider, IBM, to become outsourced partners, taking over the complete responsibility for keeping pace with Bharti’s growth—building, maintaining, and servicing the network and the IT systems that supported it.

Bharti would ‘borrow’ the assets required to grow profitably in rural India. The rest is history. Bharti reinvented the way mobile operators do business and by 2021, its revenues reached $13.5 billion and it ranked number 92 on Forbes Magazine’s list of the world’s most innovative companies. Breaking the conventional rules, indeed!

The world’s best entrepreneurs – and the best CFOs – know that ‘borrowing’ assets, instead of ‘investing’ in them, can transform their company’s operating model to adapt to new circumstances with speed – often leaving competitors in the dust.

Ask for the cash, ride the float

Today’s best entrepreneurs see cash as the lifeblood of their businesses. Run out of it and you’re in deep trouble. Profits are far less important. That is why they operate with a mindset that ‘asks for cash and rides the float’.

Take Elon Musk and Tesla. Tesla’s plan was straightforward. Build a sports car. Use that money to build an affordable car. Use that money to build an even more affordable car. While doing this, also provide zero-emission electric power generation options. Not long after Musk joined the Tesla founding team, which had yet to build Tesla’s first car, he suggested they try to sell some cars. Within three weeks Tesla sold out of its initial offering of 100 Roadsters. The price? $100,000 cash now! A cool $10 million was in the bank with which to build the cars.

The “ask for the cash” mindset has continued throughout Tesla’s journey. When the more affordable Model 3 was announced in 2016, nearly half a million eager customers paid $1,000 deposits to get a place in the queue. That’s nearly half a billion dollars with which to do the engineering, fit out the factory, and start building Model 3s!

By asking for the cash in advance and negotiating optimal terms with their suppliers, Musk has been able to finance Tesla’s future and its evolution into one of the world’s most valuable companies.

How to find and develop entrepreneurial leaders in your company

Asking for $100,000 deposits for a Tesla Roadster that existed only in Musk’s and his partners’ minds was an audacious, and rebellious, act. But as the saying goes, “If you don’t ask, you don’t get”.

If you’re a leader trying to get your people to think and act more entrepreneurially, and diverge from the conventional path, then encouraging them to ‘borrow’ the assets your next growth spurt requires and ask your customer for the cash to finance it is a great way to jump-start your company’s growth. These are but two of the six counter-conventional, break-the-rules mindsets that make successful entrepreneurs different from the rest of us.

So how might you find and develop such talent in your company? One answer is to budget each year for a small set of innovative and novel experiments that try out new ideas, each of them led by what Jeff Bezos calls a ‘two-pizza team.’

By that Bezos means a 100% dedicated group that’s small enough to make lunch of two pizzas. Not all those experiments will pan out, of course, but the few that do might transform your company, and your career as well. And you will quickly identify some future leaders who can help take your company where it wants to go.

Finance leaders often hold the key – and the purse strings – that can unlock innovation, and mastering an entrepreneurial mindset can help you kick start that journey. So what are you waiting for?

John Mullins is an associate professor of Management Practice at London Business School and the author of a new book, Break the Rules! The Six Counter–Conventional Mindsets of Entrepreneurs That Can Help Anyone Change the World


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