The changing role of the CFO: Insights from Kathrin Dahnke

In this podcast, Heidrick & Struggles’ Peter Behncke speaks to Kathrin Dahnke, former CFO of Osram, a global German company offering innovative and sustainable lighting solutions. Dahnke shares her experiences on navigating the company through the pandemic and discusses the challenges she faced and what aspects of leadership helped her succeed. She also offers her observations on how the CFO role has changed during the COVID-19 pandemic and how these changes will have an impact in the future.

Some questions answered in this episode include the following:

• (2:03) What leadership skills have you and your team developed in the last 18 months that are helping you thrive in this new normal?
• (4:00) How did the role of the CFO change during the crisis and which changes do you expect to last?
• (4:55) What challenges do you foresee for CFOs in the next five years and how can CFOs prepare to face them?
• (6:23) What are the differences in how D&I is tackled as a CFO as opposed to a board member?
• (7:39) One traditional path to a CEO role is by serving first as a CFO. Do you think that's still a good career background for CEOs?

Below is a full transcript of the episode, which has been edited for clarity.

Welcome to the Heidrick & Struggles Leadership Podcast. Heidrick is the premier global provider of senior-level executive search and leadership consulting services. Diversity and inclusion, leading through tumultuous times, and building thriving teams and organizations are among the core issues we talk with leaders about every day, including in our podcasts. Thank you for joining the conversation.

Peter Behncke: Hi, I'm Peter Behncke, partner at Heidrick & Struggles and member of the Corporate Officers Practice. In today’s podcast, I'm talking to Kathrin Dahnke, former CFO of Osram, a global German company offering innovative and sustainable lighting solutions. During her mandate from April 2020 to June 2021, Kathrin contributed to the realignment of the industrial group from a traditional lighting manufacturer to an innovative, high-tech champion. She also sits as non-executive director on the boards of Knorr-Bremse and B. Braun Sharing Experience.

Kathrin, welcome, and thank you for taking the time to speak with us today.

Kathrin Dahnke: Peter, thank you for having me.

Peter Behncke: Kathrin, can you tell us about your career journey and what aspects of leadership helped you succeed and get to where you are today?

Kathrin Dahnke: My first focus is on listening to what people have to say—especially what they don't tell you or why you don't get all information. Second, I think it’s all about the team that is on your side but also on your level. The team aspect is very, very important and I think one of our leadership challenges is to define [what it means to have] the right people over time in order to form this kind of team. That's the two key elements.

Peter Behncke: What leadership skills have you and your team developed in the last 18 months that are helping you thrive in this new normal?

Kathrin Dahnke: Well, COVID-19 really changed our lives and we didn't have any idea on how deep the crisis would develop, how long it would take, or what kind of impact it would make on all of us in our production, on our way of working, or on our market climate. We were suddenly in a crisis mode and having gone through the financial crisis of 2008–2009, I remembered all the tools we used at that time that helped tremendously in order to react quickly. First, everything was about safeguarding liquidity using all the tools you have on the financing side, but it was also about expanding limits with banks just in order to make sure you are best prepared for whatever happened to be the case.

Second, since we were in months of complete uncertainty about next developments in the pandemic, we had to have a continuous view on our budget. It was more or less a short-term view; we didn't look at any long-term budgets at all in that stage and instead we did more short-term sensitivity analysis and a liquidity forecast that was focused on the last 18 months.

Peter Behncke: How did the role of the CFO change during the crisis and which changes do you expect to last?

Kathrin Dahnke: The role very much changed in terms of the strategic aspects—the strategic aspect in that position became less relevant. We were a little bit more hands-on, working on liquidity and, of course, on the cost position. And, at the end of the day, that is what’s going to last, because I think a lot of companies (including ours) have taken the opportunity to review their cost structure—their fixed cost structure especially—and I think we will have a leaner business environment going forward. Maybe that is one of the better aspects of the crisis.

Peter Behncke: What challenges do you foresee for CFOs in the next five years and how can CFOs prepare to face them?

Kathrin Dahnke: Well, the first challenge is to define the new normal at work; what are the lessons learned from home office working, video calling, months of remote work?  What's good and how will we continue to reinforce what has been good. So, I think work will be one of the new challenges.

The second challenge is that we will have to review our logistics chain—all of us. Do we really need to be as globalized as we are in every aspect or is there a certain aspect of security that is a value in itself when it comes to a crisis? We just see that global logistics chains and parts, the sourcing of parts, is still under very clear pressure, and it’s going to last, from what I see, for more months. Therefore, the logistic chain needs to be rethought for the future.

Peter Behncke: Diversity and inclusion is a must have. What are the differences in how D&I is tackled as a CFO as opposed to a board member?

Kathrin Dahnke: As a female, it’s very difficult for me to distinguish the new impacts of diversity. I truly believe and have seen for myself that mixed teams create more openness, sometimes more creativity. And the mixed-team idea is well acknowledged in most—maybe not all—but most of the industry today. I think, as I said before, the most important advantage of diverse teams is creativity, and the team-building aspects are also important because, especially in diverse teams, I found a lot of breaking the rule team developments, which were unusual in what I've seen before.

Peter Behncke: One traditional path to a CEO role is by serving first as a CFO. Do you think that's still a good career background for CEOs?

Kathrin Dahnke: Sure, but it’s only one of the possibilities. I don't think that it should be that way or that this is the new normal. A CEO role, depending on the governance and the business model of a company, makes a lot of sense if you're coming from the industrial or engineering side, just as much as if you’ve come from the CFO side. And even lawyers can make extremely successful CEOs, so I don't think that the CFO role is the only way or necessarily the ideal way into a CEO role.

Peter Behncke: What's the most important way your organization is building on the lessons of 2020?

Kathrin Dahnke: The two points I mentioned: we are deeply investigating what we have learned from the new ways of working. Going forward, the working model has to do with how much real estate you need. And we will have to look into our total logistics chain—and this isn’t about shipping instruments such as planes or ships, it’s actually really about looking for new sources—about more sources on mainland Europe, for example, closer to production sides, and on the global footprint we have on the production side as well. That's the third aspect.

Peter Behncke: Kathrin, it was, as always, a pleasure talking to you. Thank you very much for making the time to speak with us today.

Kathrin Dahnke: Thank you.

Thanks for listening to the Heidrick & Struggles Leadership Podcast. To make sure you don’t miss more future-shaping ideas and conversations, please subscribe to our channel on the podcast app. And if you’re listening via LinkedIn, Twitter, or YouTube, why not share this with your connections? Until next time.

About the interviewer

Peter Behncke (pbehncke@heidrick.com) is a partner in the Heidrick & Struggles’ Frankfurt office and a member of the firm’s global Industrial and Financial Officers practices.