Aradhana Sarin has had a fascinating career trajectory, starting as a physician in India before transitioning to investment banking at JPMorgan, UBS and Citi. As she recently told our Jack McCullough, president and founder of Chief Executive’s CFO Leadership Council, it was all preparation for her current role as CFO and executive director of AstraZeneca. In addition to her work with the Fortune 50 life science company, Sarin is a member of the board of governors at the American Red Cross and on the board of directors at AB InBev.
McCullough spoke with Sarin about everything from talent leadership, to how to stay at the forefront of innovation, to ChatGPT. To hear more, join us in Boston June 6 to 8 at the CFO Leadership Council’s annual leadership conference, where Sarin will keynote.
When I talk to CFOs, inevitably they list leading talent as their biggest challenge. Recruiting, retention, engagement are more complex than ever. So, let’s start there. How do you do it? How do you compete in a cutthroat market for elite talent?
While factors like the job role and compensation can influence a person’s decision to join a company, what really makes them stay is how engaged they feel and the opportunities for development and growth. It is not just about promotions, but also about expanding their horizons and feeling like they are contributing to the company. Additionally, having empathetic and inspirational leaders, liking the people they work with, and having values aligned with the company are all crucial factors in retaining talent.
At AstraZeneca, we focus on employee engagement and listen to what is important to our employees. We prioritize personal and human connections, even in a large company like AstraZeneca. We also place emphasis on development opportunities and understanding the team’s values.
Speaking of careers, yours is fascinating. How does an MD in India become the CFO of the most innovative healthcare company in the world? Did that shape your approach to leadership strategy, to the way you work and build the business?
Yes, I have had many careers, and I feel blessed for that. I am technically on my fourth career, and I have worked in different fields. When I became a physician, it was because I was inherently curious, loved helping people and found studying medicine enjoyable. However, when I started practicing medicine, I realized that it was quite different from learning medicine. Practicing medicine, especially at scale, is like running a business. So having business knowledge is crucial. Additionally, as a physician, I could only impact 10 patients and their families per day. Being part of the broader healthcare ecosystem allows me to have a more extensive impact, whether working for a pharma company like mine or other parts of the healthcare system.
As for how I ended up here, it just happened to be that way. I took risks along the way. Spending eight years studying and practicing medicine and then leaving to go to business school without having studied math or done any math for 10 years was a risk. But I ended up loving finance and tried to get a job in investment banking, which was difficult. Taking risks at different points in your career and never stopping your learning journey is important. Even after gaining 20 years of experience and great clients in investment banking, I took a risk and accepted a job at a company in a completely different industry where I knew I could play a more strategic role with greater impact.
The CFO role has changed a lot lately, but the pace of changes has accelerated since Covid. The evolution has become a revolution. How have you seen the role change, and how do you see it continuing to evolve?
Over the years, I have seen the CFO role expand significantly, and it has become more strategic in nature. While some people try to differentiate between strategic and non-strategic CFOs, I believe that the role has increasingly become strategic. However, the extent to which the role has changed varies depending on the company and the CEO’s vision of the CFO’s role.
One area where the CFO role has undoubtedly expanded is in resource allocation. The role is no longer limited to traditional finance responsibilities like controls and reporting, but CFOs are also responsible for resource allocation on an ongoing basis, financing and capital allocation. To allocate resources strategically, CFOs must have a closer understanding of the business and not just focus on numbers. This requires them to be more business-oriented and become thought partners for resource allocation decisions.
So, as the CFO role continues to become more strategic, CFOs will need a broader skillset to excel. I believe that this trend will continue, and CFOs will continue to play a critical role in driving the success of businesses.
Digital transformation is reshaping the finance function. How do you see it shaping the role of the CFO in the coming years? AI for instance—how do you see it playing out? How do we get ready to take advantage while mitigating the risks?
Digital transformation has had a significant impact on the finance function, and I believe that it will continue to shape the role of the CFO in the coming years. There are many advantages to the technologies that are available today, such as planning systems, vendor management tools and other digital solutions that streamline finance operations.
As for AI and other emerging technologies, I believe they can be helpful in automating tasks and work that is standardized and requires little supervision. This can free up time for finance professionals to focus on more strategic tasks that require greater insight and understanding of the business. However, I do not think that AI will necessarily simplify decision-making, or the resource allocation challenges we have talked about. These tasks require a better understanding of the business beyond just looking at financials.
As for mitigating risks associated with emerging technologies, it is important to have a well-thought-out strategy and plan. This includes understanding the potential risks and challenges, implementing appropriate controls, and investing in employee training and development. By taking these steps, we can take advantage of the benefits that technology provides while minimizing risks and challenges that come with it.
You cannot have a long discussion about AI without ChatGPT coming up. From a cybersecurity perspective, do you see any concerns?
There is real potential for companies putting their own data at risk by using these platforms. I think all of that should be assessed thoroughly before adopting these technologies.
AstraZeneca makes massive investments in research and development. Life sciences is one of the most high-risk industries. How do you manage and mitigate these risks? What are some of the lessons for CFOs in other industries?
Managing and mitigating those risks is an ongoing challenge. One approach is to increase the number of opportunities we pursue, to diversify the exposure. That means having several projects in the pipeline, knowing that some will fail. Another approach is to improve the odds of success by gating decisions and making sure you have a clear understanding of what insights you need to make those decisions.
While it is difficult to completely manage the risks involved, these two approaches can help. The lessons for CFOs in other industries are to diversify their risk and investment portfolios and to carefully weigh the risks and benefits of each potential investment opportunity. It is also important to have a deep understanding of the business and the specific risks involved in making informed decisions.
Are there areas, like tech or manufacturing, where best practices in pharma might be transferable?
Yes, it is possible to transfer best practices from pharma to some industries, but not necessarily all industries. Industries that are more innovation-driven or where there is a faster pace of change could benefit from these practices. Industries such as information technology and energy. However, industries that are more focused on steady-stage operational improvements may not benefit as much. It ultimately depends on the specific industry and its needs.
How do you stay current with the business in a company as science focused as yours? How do engage with scientists to help you understand risk?
Staying current in a science-driven company requires effort, but it is also about having a fundamental interest in learning. As a CFO, it is crucial to engage with scientists to evaluate risks, and it requires building relationships with them. I personally try to be very curious and ask a lot of questions, even if they might seem silly. It is also about building trust with those teams so they can share their insights and risks more openly.
But it is not just about engaging with scientists and technologists. It is also about being aware of broader trends and developments. It is important to stay up to date on the latest research, market trends and emerging technologies. It comes down to having a growth mindset and a willingness to learn and adapt to new challenges. It is not just about having the technical skills, but also the ability to learn and evolve as the industry evolves.
AstraZeneca has made hefty commitments to sustainability. What does this mean for your company, and how do you ensure that these commitments are reflected in the company’s financial planning and decision-making?
At AstraZeneca, we take our commitments to sustainability and environmental stewardship seriously. To ensure that these commitments are reflected in our financial planning and decision-making, we have a comprehensive budgeting process in place. This allows us to track exactly how much we are spending on sustainable energy in our factories, as well as how much we need to invest in emerging products.
We track our emissions just like we do our financial budgets. For example, every function and unit has a target for emissions relating to travel, which is set at approximately 50 percent of what they had in 2019. Teams are held accountable to meet their target, and we monitor our progress closely to ensure that we are on track to throughout the year. We have an ambitious goal of reducing by 98 percent our Scope 1 and Scope 2 emissions by 98 percent by 2026 so we are very cognizant of the environmental impact of our factories, our energy use and business travel and actively manage it. Overall, our sustainability commitments are an integral part of our financial planning and decision-making processes.
Wow, 50 percent—that is ambitious. As CFO, how do you balance the need for short-term financial performance with the longer-term strategic objectives of the company? And how do you explain all this to investors?
Finding a balance between short-term financial performance and long-term strategic objectives is always a delicate matter. It is a challenge that requires constant communication, but it is important to remember that you cannot please everyone. Ultimately, you must do what is best for the company and hope that it aligns with the majority of shareholders’ expectations. Investors have various demands, such as dividends, buybacks, growth, share price appreciation and a robust pipeline. However, it is impossible to satisfy all these demands. Therefore, it is necessary to balance them while also acknowledging that you cannot please everyone.
The business climate is more unpredictable than at any point in our careers. What advice can you give CFOs facing relentless volatility?
My advice is to stick to your values and those of the company. Determine what is right for the business in the long term, and things will work themselves out. It is essential to balance the needs of the CEO, shareholders and board, which is part of the CFO’s role.
