Anyone who thinks that CFOs spend their days staring at spreadsheets doesn’t fully understand what it means to be a modern CFO. It goes without saying that CFOs have to be extremely close to the inner financial workings of the company. But at the same time, they must also look outside the company—to customer, competitor and macroeconomic trends.
Watching trends with an “outside-in” perspective and understanding the interplay between trends was a big theme in our most recent CFO of the Future Summit with Accenture and Harvard faculty. I recently discussed what this means in practice with Luca Passa, who is the CFO of Endesa, a Spanish multinational electric utility company.
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Let’s talk a bit about your role at Endesa. What are your primary responsibilities?
I have a dual role. As the CFO of Endesa, the leading Spanish utility, I oversee all the funding and control, administration, tax, risk, and investor relations as well as financing and insurance. I’m also in charge of similar functional areas for the Iberia region for our holding company, Enel. In both roles, I oversee the relationship with the market regulator, and have all regulatory-focused responsibilities.
I understand you have an investment banking background. How has this experience shaped your priorities and strategies at Endesa?
I would say that my time in investment banking—all the different responsibilities I had over the years—prepared me well for my current role. Having been on the client service side for so long, I developed a broad understanding of how things are done in different European countries as well as in the United States. This multiyear experience equipped me well for being on the corporate side especially because I was trained to look at decision making as objectively as possible.
I would imagine that this objective view is a great perspective to bring to other members of the management team who have been at Endesa for their entire careers.
I think that’s very true. When I started, I was basically working as an internal advisor to management. There are plenty of “yes” people in the corporate world in general, not at Endesa or Enel specifically. However, that has never been my approach. I’ve always focused on what’s necessary to drive meaningful change targeting growth and efficiency.
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Speaking of improving performance, you’ve helped lead the digital transformation at Endesa. What advice would you give other CFOs based on your own experience?
First, I’d remind every CFO that there is no going back. The corporate world is getting more and more digitalized. As CFOs, the more we know this, and the more we understand this topic, the better.
At Endesa as well as at Enel, we moved to the cloud in 2018. While the move from physical servers to the cloud was tough, the hard work we did set us up to support remote working during the pandemic. We were able to transition an employee group like Enel of almost 70,000 people, including Endesa, to remote working in a matter of days for more than 50% of its employees’ base.
Our digital transformation has also helped us to improve access to information. I can easily know what we are producing by logging into a single platform, relying on up-to-date real time information. With this foundation, we’re now working on predictive closing as well.
That’s excellent. You’ve also focused a lot on sustainability. How do you define the intersection between sustainability and digital transformation?
A digital business is definitely a more sustainable business. Our experiences during the pandemic reinforced this for me and us as an organization. Our digital foundation made it possible to manage the business without jeopardizing performance. In addition, we have the data access and visibility we need to make sound decisions as a sustainable business. This is something that our stakeholders care deeply about.
You’re on top of two of the major trends I see in Finance today—digitalization and sustainability. While we’re not completely past the pandemic yet, what priorities are you setting for your team to be future ready?
The way we think about how work gets done will be different. We’re thinking about more flexible work models within the context of the laws, which are stricter here in Europe than they are in the United States. A big part of this will be the cultural evolution that goes with it.
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As far as the business environment is concerned, the way we compete with new entrants and existing competitors is going to be completely different.
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What I can say is that despite all the challenges of the past 18 months, the crisis has left us better prepared to manage through change in the future.
I couldn’t agree more. Managing through a crisis reveals what a company is made of like nothing else can. As we close out the conversation, I’m curious if you have any reflections on the CFO of the Future Summit that you’d like to share. As you know, managing through volatility was a big theme.
I think Harvard Business School professor Francesca Gino was tremendous. She reminded us that disruption is a constant state. This can include massive disruptions like the pandemic as well as small, everyday occurrences. We must be adaptive, which often means stepping out of our comfort zones and looking beyond ourselves for solutions. This can be difficult in the corporate world, but it’s important now more than ever before.
Thanks to Luca for taking the time to discuss his experiences as CFO of Endesa. He’s close to the pulse of so many trends that CFOs are thinking about today, and his experiences are insightful and instructive.
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