As finance chiefs around the country slash everything from travel to payroll, many are weighing their ability to invest for future growth. Those whose companies are struggling for survival don’t have the luxury of thinking that far ahead, as evidenced by a recent McKinsey survey that found 40% of responding executives were actively looking for ways to reduce their research and development budget.
At Zebra Technologies, a maker of bar-code and RFID printers and other identification technologies, CFO Michael Smiley says part of his role is to help the company strike a balance between meeting short-term profitability goals and investing in innovation. The company finished last year with no debt and nearly $225 million in cash on its balance sheet, so Smiley says he and his team are looking for opportunities to invest through the downturn. They’ve also recently been buying back company stock, which they believe is undervalued. Smiley spoke with CFO.com about how he tries to find the balance between short-term demands and long-term growth.
Tell me a little bit about the role you think CFOs play in innovation.
As a CFO, and generally as a company, the objective is to create long-term value for customers and shareholders and provide an exciting opportunity for employees. You want to be part of a winning team. To be part of a winning team, you have to have something special about what you do to create that environment to be successful.
To be a good CFO, you have to have your hands on where you’re allocating resources, but you also have to make sure that those resources are being invested for long-term growth opportunities. At Zebra, we’ve been trying to focus not only on short-term profit obligations but also long-term objectives. That again comes down to making sure the CFO provides a balanced perspective for everyone. Investors don’t just want to hear about near-term profitability, they want to hear about long-term growth. My role is to make sure we have that balance.
Has that role changed recently?
Certainly when the economy is going swimmingly — and perhaps there are more funds than when the economy is not doing well — it may feel simpler. But I think this is a time when companies have the ability to sit down and evaluate where things are and if need be, to make changes. The difficult environment gives you the impetus to look at yourself and make sure you’re on the right path to that long-term value proposition.
At Zebra in 2000 and 2001, we had a period where the company made meaningful investments through that down cycle and benefited from it strongly when the economy recovered. Not that all companies take that same tack, but that’s an approach Zebra has had a reputation for in the past.
So you are taking the opportunity to hire people or acquire new technologies?
We will sometimes find people coming down the street [from other companies] who can really fit well in our organization, and we’ve taken advantage of that. As far as partnering, we’re looking for new ideas.