When Nick Gangestad retired as chief financial officer of 3M in the summer of 2020, he had no plans to take on another operational leadership role at a large company.
Gangestad had spent 35 years at 3M, including six as CFO. He figured he would likely teach at a university and maybe serve on a couple of boards.
“I was a little surprised after I retired how much I missed the day-to-day engagement of challenges you find in being a leader in a company,” Gangestad said.
So as recruiters called, Gangestad laid out three criteria that could bring him out of retirement. He needed to be convinced the company would make a positive impact in the world, that he’d admire the CEO and leadership team and have an opportunity to learn something brand new.
Milwaukee-based Rockwell Automation checked those boxes and more for Gangestad. He said the direction of industrial automation in general is exciting as is Rockwell’s strategy for digitizing the production floor. He also saw Rockwell CEO Blake Moret as someone who knows the customer deeply.
“Talking with him, I could see his personal knowledge of where the industry is, where the customers are, what they're thinking about,” Gangestad said. “I was like this is a person I could really get excited to work with in the coming years. Someone who has that kind of credibility and relationship with customers. I found that exciting and energizing.”
Gangestad started as Rockwell’s CFO in March and it has been an interesting time to be leading the finance organization of a large public company, especially one in manufacturing. With supply chain challenges, inflation and continually evolving technology, it is important for companies to understand their costs, price their products appropriately and make the right investments for both the short- and long-term.
In an interview with BizTimes Media, Gangestad pointed out that Rockwell is dealing with supply chain issues at a time when demand for its products is high. Orders were up 40% in the company’s just completed fourth quarter.
“Understanding what we actually are going to be shipping out the door so we can accurately project what our revenue will be is part of what we have to do,” he said.
Like many companies, Rockwell has increased prices, but Gangestad said customers are understanding given the inflationary environment. The goal is to offset cost increases from suppliers and reflect the value of what Rockwell provides.
“Now, there are some companies that try to go further and (say) ‘hey, can I make some more profit out of this’ and our philosophy around this is generally we're a bit more balanced,” he said. “We want to try to cover our cost increases, but we're also interested in growing in a number of key markets and regions and want to make sure we have competitive prices lined up with the value we are creating for our customer.”
Gangestad said coming into Rockwell there were a lot of great systems and processes in place that help track changes in cost brought on by supply chain issues. Where he’s trying to help the organization is in setting it up for continued growth.
“We're in a time where we think we're in the early stages of a multi-year growth cycle and one of the things I'm trying to make sure that our company and the finance team are aligned around is: how do we make sure that we're making the right investments to really help this company accelerate profitable growth?” Gangestad said. “Sometimes there can be a stereotype of finance really being 'oh, we want to scale things back, we just want to cut costs' and sometimes that's the right strategy, but I think part of the direction I'm bringing in, given where this company is and is poised for the future is making sure we're investing in the right place. I'd say more of my focus is on what are these right investments.”
Finance work also isn’t purely about the dollars and cents. As Rockwell plans to make increased investments in fiscal 2022 into product development, expanded sales coverage and a supply chain that can handle higher volumes, Gangestad said there is a lot of prioritization work his team is involved in.
“I don't think a finance leader can divorce themselves or separate themselves from the strategic element, they have to be thinking simultaneously about operational and returns that we're generating from that but also with an eye toward what's the bigger long-term strategy,” Gangestad said. “The two go hand in hand.”
There are some investments where the return may come years down the road and others where the payback is immediate.
“I think a good CFO and a good finance organization has a balance of both,” Gangestad said. “If it's only the short term, immediate payback, I think you can end up with a company that doesn't end up having the best long-term strategic investments. And likewise, I don't think you can do only just the long-term things as well. I see it as needing to make sure we're funding a balance between both of those.”