Focus On Solutions: Sargento’s CFO On Crisis, Innovation And Skillsets
Sargento’s CFO says never compromise on long-term innovation
Sargento is an iconic American brand dating back to 1953, and remains a family-owned enterprise even as it has grown into a $1 billion + company. Many companies like this benefit from a legacy reputation and brand recognizability, but some struggle to innovate and adapt to a changing world and consumer tastes. In a recent discussion with Sargento CFO, Jeremy Behler, I asked about the challenges facing his company, which has been successful in maintaining continuity whilst remaining competitive in its industry. What he told me is relevant for CFOs across all industries, at public and private firms alike: when faced with a problem, focus on the solution. And importantly, never compromise on long-term innovation for the sake of short-term gains or savings.
Jeff Thomson: Food manufacturing companies like Sargento have faced unprecedented supply chain issues in recent years due to the Covid-19 pandemic. As CFO how have you demonstrated agility and adaptability in solving complex problems related to supply chain? How closely does your finance team work with procurement and what best practices can you share with other CFOs facing supply chain problems?
Jeremy Behler: The past few years have tested all of us like never before. I
Jeremy Behler, CFO of Sargento
’m incredibly proud of our team’s agility that delivered excellent results during a period of intense volatility. A great example of this was seen in our order fulfillment, or service levels, that remained best-in-class throughout the pandemic despite numerous material shortages and shipping challenges. This is a result of our finance and supply chain teams working together to analyze data and assess options as a team to identify a solution. If you are in the middle of a lake and your canoe springs a leak you don’t think about how the leak occurred, fix the leak first and only after that shift to preventing future leaks. Similarly, we strive to focus on the solution first and only after the solution is implemented successfully pivoting to understand the underlying issue and how we can be better prepared in the future.
A key enabler to this success is our significant FP&A Supply Chain investments. For example, in 2015 we had no dedicated supply chain FP&A resources. Today, the Operations and Supply Chain FP&A group represents 40% of our FP&A team. This strategic shift enhanced our ability to rise to the many challenges presented by the pandemic.
Thomson: Sargento is one of the largest privately held food manufacturers in the U.S. with a historic brand dating back to 1953. The roots of your company are based in tradition, but you must also cater to changing consumer tastes, which requires R&D spend and innovation. How does the finance team contribute to innovation at Sargento? How do you balance meeting short-term spending needs with longer-term investments like R&D? How does this relate to your role and to the importance of agility and adaptability?
Behler: Innovation is deeply rooted in our company’s history thanks to the entrepreneurial spirit of our founder, Leonard Gentine. Innovation and culture have been key contributors to our growth. The most salient example of our commitment to innovation is the significant resource investments we make in this space. We have a dedicated New Product Development (NPD) team that includes consumer insights, FP&A, R&D and a number of shared cross-functional resources. Being privately held with shareholders focused on long-term growth allows us to invest deliberately and consistently in our brand and innovation, including [during] lean years. We have never reduced marketing spend or innovation investments purely to meet a short-term financial target. Our fully dedicated FP&A role works together with the NPD group to analyze new opportunities and help balance risk across our portfolio. This rigor and discipline are key enablers to Sargento’s consistent category leadership in growth and innovation.
Thomson: In a more resource-constrained and environmentally conscious world, sustainable business management is now among the responsibilities of the CFO. This requires upskilling finance teams in strategy, enterprise risk management and data analytics, as new measures are used to chart progress in sustainability. How do you as CFO contribute to the upskilling of your team in these areas? How important are technical skills versus skills more difficult to quantify such as adaptability, resilience and agility? Does today’s finance team member need both?
Behler: Any successful finance team requires high IQ and EQ (Emotional Quotient). Historically it was more heavily weighted to IQ, and I feel that high EQ has been increasing in importance, for good reason. IQ is the price of entry now, but EQ is where you see the real differentiation. I advocate for hiring on personality and cultural fit over a specific skillset. Curiosity, candor, agility, accountability and objectivity are critical skills I look for that don’t always come naturally and can be more difficult to teach. It’s far easier to teach someone how to apply their skills in a different industry than it is to transform the skills of an industry expert with lower EQ. Perhaps the most important element of agility is learning how to fail in a way that isn’t overly disruptive. If we never fail, we probably aren’t taking appropriate risks, and we don’t have those learnings to support our future growth.