Partnering for performance.

• Author: Mand, Martin G.
• Position: Northern Telecom Inc.'s finance function - Includes related article - Management Strategy

How does a company's finance function thrive in an international economy? Northern Telecom has a plan, and it's rooted in two areas: partnering and people.

At Northern Telecom, we realize it's hard for a company to survive today relying only on the domestic market. To say competitive, you have to look to global markets. But exporting alone doesn't make a firm global; you need to operate globally. You have to understand the unique requirements for your products in foreign countries, and you typically need worldwide research and development, global manufacturing facilities, and local alliances.

How can the finance function help? Finance needs to be thought of as a partner within the business, and it needs people who can work unhampered by national borders. My simple definition of excellence for the finance function in a global economy is this: Each team member should do his or her job a little better each day. No dramatic change, no rocket science, just gradual, neverending, continuous improvement in all we do.

THE NEW FINANCE FUNCTION

The financial executive's traditional roles as custodian of assets and historical reporter are still essential to the corporation, but they rank low on the value-added scale because they don't help a company move forward. That's why today's executive must participate as a full business partner at the highest level of strategic and tactical decision-making and must provide timely and insightful information the company can use as a competitive weapon.

At Northern Telecom, we've put into writing the objective of our finance function: "To provide the highest-quality, proactive, innovative, cost-effective, timely, value-added services and support to the businesses and the corporation by being a full business partner."

In 1991, Northern Telecom's finance function played a vital role in every aspect of the company's major business opportunities. In the $2.6-billion acquisition of STC in the U.K., we were crucial in planning and executing the deal. We helped evaluate the "fit" of STC as an acquisition candidate. We raised money in tight credit markets, refinanced at more favorable terms, and then sold off nonstrategic units to help reduce the debt. We then supported the integration of the STC units into our global organization.

For Northern Telecom's 1992 joint venture with Motorola, we analyzed the financial implications of the alliance and then worked closely with Motorola's finance people to develop the new business arrangement. We partnered fully with line management. And we supplied the venture with finance personnel, including its CFO, to staff the start-up.

When Northern Telecom reorganized recently, the financial function worked closely with operating management to set up the reporting processes for the new organization, which moved us from a product-driven to a market-driven company using a matrix management approach. Now, we can offer the company a more in-depth look at such areas as markets and customers, manufacturing costs, and new product roll-outs. We also made important...