From oil to milk: a fresh challenge

Guy Cowan says his role at Fonterra is more about managing people than numbers. Picture / Kenny Rodger

For a man who balances the books on Fonterra's $12 billion yearly revenue, Guy Cowan is relaxed about numbers.

Of course, a mere $12 billion is hardly going to intimidate him.

In his last job - as chief financial officer for Shell USA - he was responsible for US$50 billion.

"I wouldn't actually categorise myself as a natural number-cruncher," he admits with a charmingly English flair for self-deprecation.

Despite his crisp upper-class accent and James Bond-ish sense of style, Cowan was actually born in Argentina, his family part of the tight-knit British expat community that dates back to the 19th century.

He never played polo but - like Fonterra's Canadian chief executive, Andrew Ferrier - he has played a fair bit of rugby.

Admittedly he grew up in Brazil, where he spent hours learning how to bend a soccer ball in weird and wonderful ways. But time at boarding school back in Argentina and in Wales sorted him out. He's had a passion for rugby ever since and, when he's not supporting Argentina, he backs the All Blacks.

That is one reason the corporate heavyweight was prepared to pack up his family and move from Houston to the other side of the world. But there are plenty of others.

To start with, he had been looking to move on from Shell.

"When I looked to the future at Shell I could see the opportunities were limited," he says.

Shell had bought in a younger man as chief financial officer for the global organisation, so Cowan was realistic about his prospects.

But in his 23 years with the oil industry giant, he had quite a career. He worked in South America, London, Nigeria, the US and Australia and became something of a fix-it man, moving to divisions and subsidiaries that were not performing and sorting them out.

Fonterra approached him when his name appeared on a headhunter's list.

Having never heard of the company, he looked up the name on a list of the world's leading oil and gas companies. When it wasn't there, he decided it must be too small for him.

Ferrier convinced him otherwise and Cowan made the transition from black to white gold.

He says the theory underpinning Fonterra's business is not so different from the oil industry.

"Oil and dairy are commodity businesses. They have to drive their cost base down."

Commodities are vulnerable to price volatility, "so they reduce that volatility by adding value to some of the products. That's what you do with brands."

In the end, Cowan says, they are both about extracting molecules from the environment and processing them with stainless steel.

It is easier to milk a cow than to find an oil field, of course. But that key difference - what happens down on the farm - has turned out to be one of the things Cowan enjoys most about his new job.

"The irony is that I did wonder about working so closely with the shareholders," he says.

At Shell, the shareholders were always in the distance, "over the horizon somewhere".

At Fonterra, they are very much involved in influencing the business.

"They do add value. Management is able to pick up signals which enables the company to evolve much faster than it might otherwise."

The joys of working with farmers might have surprised Cowan on the upside, but the lifestyle in New Zealand certainly hasn't let him down.

"I kick myself as I drive along the waterfront watching the sun come up over the harbour."

From his Mission Bay home, it is just 12 minutes to Fonterra's HQ - something the world's biggest cities can't compete with.

A bit of a beach bum in his youth (he was part of a team that won the British surf lifesaving champs in 1968), Cowan has bought a boat and is looking forward to getting on the water this summer.

He had an idea what to expect here from his time in Australia.

His wife, Meaghn, is Australian and has family in Brisbane - now just $99 away, Cowan points out with an accountant's eye for a bargain.

But the most important reason for joining Fonterra - and his reason for taking on any job - was the fresh challenge it presented .

"Fonterra's a young company with lots of exciting possibilities. It's been through the first phase of post-merger integration and cost savings. It's now in the second phase, which is about putting in place better processes and systems and basically improving performance."

Not that he thinks Fonterra's accounting and business systems needed a total overhaul.

Some - like the procurement business - have needed some substantial work, for other parts it has been a case of building on existing systems, while some others were already pretty well established.

The need to produce forecasts, annual reports, keep businesses on budget, is a fairly universal part of any CFO's job.

"Finance has to be at the heart of any business," Cowan says, finally sounding like a proper accountant.

The finance team has to be involved at the beginning of every decision, with any potential acquisition and new investment.

Inevitably that leads to a role in the strategic decision-making.

Cowan works closely with Ferrier and the Fonterra board, particularly in assessing the impact of any strategic moves on the payout to farmers.

He has an accounting philosophy based on a mantra of "four S's": simplification, standardisation, speed and shared-services.

Technically that's five S's, but accountants probably count hyphenated words as extraordinary items.

The shared-services concept is about making sure that all a company's regular, repetitive transactions are managed cost-effectively by one multi-skilled department.

Fonterra has established a 200-person business services division in Hamilton.

Ultimately, Cowan says, for a CFO to be a success is really less about managing numbers than it is about managing people.

He estimates that about 60 per cent of his job is about leadership, and admits he hasn't really done any pure accounting since he was 31.

His goal now is to cement world-class systems in place at Fonterra and build up a strong finance team.

He is upfront about the likelihood that he'll probably be here for just three to five years.

But by the time this truly international citizen moves on, he aims to have two or three people from within his team ready to replace him. 

Guy Cowan

Age: 54.
Born: Argentina.
Raised: Brazil.
Education: Honours degree in engineering from the University of Sussex. Chartered accountant (UK) and certified public accountant (US).
Career: 23 years with Royal Dutch Shell, culminating in being CFO of Shell USA.
Family: Australian wife Meaghn. Three adult sons and a seven-year-old daughter.