An interview with Pearson CFO Robin Freestone provides some insight and advice into addressing the shift to digital and emerging markets.
Large-scale shifts into new technologies can be troublesome for many sizable corporations and even smaller ones. The same holds true for the shift CFOs are facing from the increased focus on emerging markets versus traditional markets. There are plenty of challenges in these shifts, but there are also rewards for the CFOs that can navigate them successfully. Robin Freestone, the CFO of Pearson, has managed to do just that, and shares his insight in a recent interview.
Freestone has a heavy background in accounting but has successfully embraced the increasing roles CFOs are picking up in all organizations. He has a talent for looking at the big picture of his company and its impact. He supports Pearson making an impact on society and promotes the fact that the company “combines good deeds with business acumen.”
One of the areas he is very proud of in his work is the fact that under his leadership, digital business has gone from 20% of Pearson’s sales in 2007 to 33% by 2011. He acknowledges the “steep learning curve” of transitioning into digital and notes that the company has been moving into digital for almost a decade. This is in spite of the fact that Freestone’s own report has listed technological change “as both the number 1 risk in terms of impact and of probability.”
Freestone and Mergers, Acquisitions, and Digital
One of the most challenging functions of a CFO in digital and emerging markets is handling mergers and acquisitions. Freestone has found a great deal of success in making sure that each deal they make only amounts to “about 1% of [Pearson’s] market capitalization” so that a failure does not harm the company too drastically.
Final Word of Advice
One of the primary reasons that Freestone supports more CFOs looking into expanding or shifting more heavily into digital business and acquisitions, is that digital “ties down much less working capital.” Freestone is a heavy supporter of improving risk reporting when companies make moves into digital and emerging markets.
He advises that it’s very important for a company and its finance team to focus “primarily on strategic and major operational risks,” not the traditional set of non-related risks which most companies in the field are facing at the time. This change in risk reporting can help the company navigate the very specific risks which are different for every company in emerging and digital markets.