COVID’s negative impact on commerce and the general economy will be felt for some time. 3M (tkr: MMM) is not the only company to hire a new CFO with operating experience in an effort to mitigate the operational uncertainties of COVID.
One may believe that all CFOs are operators. Think again. “His (3M’s new CFO), deep and extensive experience in leading the financial operations of industrial and healthcare businesses – as well as driving operational changes – will make an immediate impact as we manage through the current economic challenges and continue to position 3M for the future..” said 3M Chairman and CEO Mike Roman when the hiring of Monish Patolawala away from GE Healthcare was announced last week. Many CFO’s are strong at GAAP accounting but are not effective operators.
3M is not the only company to chart such a course. Our inbox is filled with CFO announcements where incumbent CFOs have decided to “retire” only to be replaced by CFOs from other companies who presumably have stronger operating backgrounds. This is why we stressed months ago the importance of investors pushing their chips in with management teams that had the beneficial experience of leading through the 2008 downturn. A few years from now we will have a new cohort of COVID/Battle-Tested CEOs and CFOs.