Expert Talk – Philippe Foulquier: When finance informs decision-making
Philippe Foulquier, PhD, is a Professor of Finance and the Director of EDHEC Paris Executive MBA and of the EDHEC Financial Analysis Research Center. Over the years, he’s been going back and forth between corporate missions on one hand, and research and teaching on the other. Both rooted in the operational reality of business and in a constant reflection on tomorrow’s financial challenges, he shares his view on how important it is for executives to master today’s biggest financial issues.
Why is a good understanding of finance more essential than ever for any executive?
In the past, and in particular for unlisted companies, finance served strategy and was leveraged only to make sure the company had the financial means of its strategic ambitions. Finance Directors were experts, the only ones who mastered the subject within the company. But everything changed with the 2008 crisis. Now, companies need to care more about optimal resource allocation (equity and debt), performance and profitability. So, finance has become a cross-cutting subject, one that Business Units directors or General Managers need to get to grips with.
“Starting with the 2008 crisis, increasing scarcity of financing has forced companies to care more about optimal resource allocation, performance, value creation and profitability issues.”
What do these professionals expect from a training programme such as EDHEC EMBA?
Today’s executives – and entrepreneurs – are looking for a generalist training programme that enable them to develop a 360-degree vision for their business, combining strategy, finance, marketing, supply chain… Their goal is not to become experts in finance but to understand the overall management of a company and to appropriate tools for performance measurement and optimal resource allocation. Most of them tend to think only in terms of margin – yet, recent crises have shown the limits of such a framework. Thanks to the EMBA, they comprehend the key tryptic of value creation, margin-risk-rentability, and develop a balance sheet- and risk-based approach – paving the way for new strategic approaches.
How do you tackle these topics during the programme?
Everything starts with a very intuitive game: one participant creates a company and, for 3 hours, all participants act as investors, asking him questions so they can know in what conditions they’d accept to finance it… As they get more familiar with all the specific vocabulary, the aura of expertise we often assign to Financial Directors is demystified. Then, besides 60 hours of Strategy classes, the EMBA includes 30 hours of Accounting and Financial Analysis, 30 hours of Corporate Finance and 24 hours of Management Control. In addition, those who wish can follow an optional class dedicated to financial markets.
“EMBA participants comprehend the key tryptic of value creation, margin-risk-rentability, and develop a balance sheet- and risk-based approach – paving the way for new strategic approaches.”
What is the goal of these different classes and options?
The objective is to understand the financial implications of any strategic decision. Actually, in their consulting project (an individual dissertation they have to hand in at the end of the programme, for which they work with the company of their choice), almost all participants develop the financial dimension of their strategic, operational or commercial recommendations, to make sure they’re relevant in terms of value creation. It shows that they’ve naturally developed a global vision of business management. They’ve realized finance could help them make informed business decisions.