The CFO must become the CEO of Number 10

FE Team | Published: June 30, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

John Willman
As Gordon Brown prepares to assume the premiership on Wednesday there is one question that business leaders and management experts alike are longing to have answered: can he make the transition from finance director to chief executive?
"Some finance directors go on to make outstanding CEOs, but others lack the extra skills the top job demands," says Miles Templeman, director-general of the Institute of Directors, which provides leadership training for its members.
The qualities a chief executive needs are very different to those of the successful chief financial officer. A recent survey for CFO Europe magazine found 45 per cent of finance directors thought their chief executive too optimistic. Only 5 per cent thought the opposite.
Finance directors are by nature Eeyores, chief executives Tiggers.
"The chief executive's job is to be ambitious, take risks and grow the organisation," says Samuel Johar of Buchanan Harvey, the executive search firm. "The finance director's entire training is to control risk and be risk-averse."
Mr Johar says that while the finance director might seem the natural successor when the top job becomes vacant - an insider whose record is known - clients usually prefer someone with general management experience. "Most finance directors think they could become chief executives, but they couldn't. One in 10 will have the necessary qualities - but they are the exception rather than the rule."
The biggest challenge on moving from CFO to CEO is to think strategically, says Sir Martin Sorrell, once finance director of Saatchi & Saatchi and now chief executive. "The focus for a finance director is narrower. It tends to be on cost and on evaluating the effectiveness of investments. As the CEO, you're responsible for the strategy and it has to be revenue as well as cost-focused."
Philip Bowman, another ex-finance director who made the top job first at Allied Domecq later at Scottish Power adds that a different type of leadership is needed as chief executive.
"When you run a company, you have to provide leadership - giving people a reason to get up in the morning and go to work beyond collecting their pay packet. Each person is different: what motivates one person does not necessarily motivate another.
"But they all need some sort of vision or clarity of purpose and you have to convince them you are somebody whose leadership they are prepared to follow. If they don't believe that, you won't get the best performance out of them." Tony Blair has been good at knowing when to become close to people and when to pull back, says Rob Goffee of London Business School, co-author of Why Should Anyone Be Led By You?
"Chief executives also need to be able to move between closeness and distance, but finance directors never get too close because they have to do horrible things like say no to people - so they find it hard."
Mr Templeman says the chancellor will have to change the way he has worked during 10 years at the Treasury. A notoriously focused individual, he works long hours to solve problems with a coterie of trusted advisers.
"The chief executive's role is too big for one man alone - no matter how hard he works. He will have to trust others with responsibility and be more open to advice from a wider circle."
Murray Steele of Cranfield University School of Management, who coaches top executives, says finance directors are often short of "EI" - the emotional intelligence leaders need to build rapport with colleagues.
"The CEO's role requires strong interpersonal skills. But people senior enough to be considered for it often find it hard to change their behaviour."
He also warns that history can come back to bite a chief executive. "If you have made enemies of powerful figures, you may not be able to count on their help in the future.
And he offers an insight that Mr Brown may find ominous. "Can someone change their behaviour and management style at this stage in their career. I haven't seen that in 30 years in this job."