‘Moonshot!’: the title of the book written by the former chief executive of Apple and PepsiCo, John Sculley. It’s a word familiar to those who frequent Silicon Valley circles, and those who worked in the white house under John F. Kennedy. It is derived from the then US President’s vow to send a man to the moon and back before the end of the 1960s. A moonshot is a game changer – something that alters the landscape in which we live our lives.
According to Sculley, now in his late seventies, there are several “moonshots” underway right now. And one of them, says Sculley, should change the way that every financial director sees his job or conducts her business.
This moonshot is a shift in the terms of power of today’s businesses. One party – the producer — is ceding control. The other party – the consumer — is gaining it. It’s what Sculley describes as a “dramatic, rapid shift from producers-in-control to consumers-in-control”. And, in his opinion, it changes the way financial directors need to do things.
Customers today have access to an unprecedented amount of information, and are able to make decisions in a more informed manner than ever before. They have apps that can help them instantly compare product prices to find the cheapest available. They can find and read user reviews of the products they’re interested in. They can instantly seek feedback on services from their friends or peers. They can instantly purchase goods online as well.
Although Sculley doesn’t mention it, there is another dimension in today’s South African society bolstering the position of the consumer, and this comes in the form of institutional protection. The Consumer Protection Act now enables consumers to make purchase decisions in the full confidence that they can swap or return the product if they are unhappy with it. It’s producing consumers who are more confident and more empowered than they’ve ever been.
“The richness of this information will continue to grow exponentially in the future. It’s almost unimaginable how fast this will happen and the power it will give the customer,” writes Sculley in his book.
So what does this mean for the financial director? It means that he or she needs to be able to understand and speak to the consumer in order to survive.
The financial director needs to understand how to price products disruptively
Sculley says that financial directors need to know how to price their products in order to meet the all-powerful consumer. Today’s consumers are becoming more and more comfortable with the notion of “having things when you need them” rather than building an empire signified by owning things. So they buy things when they need them, and they buy them at the cheapest available cost. Your pricing strategies should reflect this. In Asia, Sculley points out, Xiaomi is selling an iPhone knockoff at a greatly reduced price. The company is less than five years old and is worth R45-billion.
The financial director needs to take advantage of affordable capital
While interest rates worldwide remain relatively low in government’s efforts to boost economic activity, financial directors need to use this to borrow and boost growth in their businesses. Sculley goes so far as saying that now is the best time to build a billion-dollar company.
The financial director needs to develop a customer plan
Sculley argues that the traditional business plan, while important, is not particularly strategic. In essence, the business plan is a “budgeting process”, he says. On the other hand, a customer plan is “far more telling” in several ways.
“Customer metrics are far more telling about whether you’re doing the right things to not miss an opportunity and maybe build a way of looking at an industry that nobody has ever thought of before,” Sculley said in an interview with ww2.cfo.com. “What I’m saying is that a customer plan is far more telling in terms of what can we do to really disrupt, to innovate, to dramatically change the business.”
If your business is looking for the insightful leadership that Sculley suggests is needed by today’s financial director, contact The Finance Team. We have a team of highly skilled finance executives who can assist your business on an interim or part-time basis.
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