‘Long gone are the days where we just provided numbers’: The CFO-to-CEO pipeline is growing but does a finance background always make a good leader?

As Toyota recently appointed its Chief Finance Officer, Kenta Kon, as its new CEO, it signals a growing trend of CFOs ascending to the top executive role. This shift is evident across various industries, with 21% of CEO appointments at Europe's largest listed companies last year having previously served as CFOs, according to data from executive search firm Spencer Stuart.

Darren Ellis, CFO for Europe, Americas, Africa, and the Middle East at Standard Chartered, notes that the days when finance leaders merely provided numbers are long gone. Today, the CFO must also be capable of telling the story, setting strategy, allocating capital, steering technology investments, navigating geopolitical risks, and communicating with investors.

This convergence between the CFO and CEO roles is further accelerated by artificial intelligence, as mundane tasks like reconciliations, reporting, and analysis are increasingly automated, leaving finance leaders to focus on interpretation, judgment, and strategic decision-making.

Mark Thumser, MUFG's chief financial and strategy officer for the Americas, believes that AI will play a significant role in this evolution, as it takes over routine tasks traditionally performed by junior staff. As a result, the skills required of finance leaders are evolving, with an increased emphasis on commercial, strategic, and technological expertise. Companies now seek CFOs who possess these skills, as they are better positioned to guide their organizations through the changing landscape.

While the trend of CFOs becoming CEOs is clear, it is not without its challenges. A study by Spencer Stuart of 1,300 CEOs found that former CFOs were the least likely to rank in the top quartile for CEO performance. Moreover, nearly 60% of the 645 CEOs surveyed by Boston Consulting Group planned to make changes to their senior leadership team within the next six months, with finance chiefs being the most frequently targeted.

Uvashni Raman, CFO at online travel agency Booking.com, advises future leaders to develop a broad skill set beyond finance, as this will enhance their effectiveness in the role. Her own career, which included experience in operational finance, procurement, IT strategy, M&A, and transformation in various sectors, demonstrates the value of this diversified background.