So You Think You Can Be CEO

Ready to make the leap from CFO to CEO? The right mix of humility and confidence is going to be critical.

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FEI Daily spoke with Dale Rose, founder of feedback & consulting services company 3D Group, about the challenges of moving into and out of the CFO role.

FEI Daily: Do you think it's more difficult to move from a finance role into a higher-level finance role or to transition from finance into a non-finance, more operation- type role?

Dale Rose: I think within a function is a little easier, because you have a baseline knowledge and the language that's the same whenever you shift across functions. 

At the same time, I think within the finance function, it's a double-edged sword. They may assume that, because the language is the same, they know everything. But when you move up, particularly at the top of an organization within finance, the rules change quite a bit. You may get blindsided thinking it's all the same because the acronyms are the same. But, in fact, the expectations of you as a leader change, the meaning and impact of your words and opinions change, relationships to your peers change, all kinds of things change. 

FEI Daily: What are some of the biggest obstacles to moving into the CFO role?

Rose: One of the hardest things is the impression of your colleagues, your peers, your former peers, and your direct report. That's tricky in any role. Just recognizing that maybe one of those peers wanted the role or maybe some of them have different opinions about you, whether you're qualified or not. And people from outside the organization or outside the function are going to have opinions as well. 

Internally, those former peers that are now direct reports, managing those relationships is really, really important. And the biggest advice there is to hold your peers dear. Recognize that having respect and a good working relationship with your colleagues at your current level is really important, not just in your current role but in future roles. 

The other thing I would say for moving into that CFO role, particularly for public companies, that public investor relations is just a completely different thing. Those quarterly calls is a real skill that needs to get developed and it's a pretty unnatural, unforgiving type of presentation. Stakes are really high, but you do have support. You just have to dig in and work with your investor relations person. Speak with peer mentors who have done it before, who can give you advice. Listen to other public calls so that you can hear it enough times that you get a feel for what that environment is like. 

The relationship with the CEO can be very weird as a CFO. You're in a relationship where you're independent and not independent. You need to be able to push back but also follow direction. Working that relationship out and having a CEO that you can trust and work well with is important and that flows into your relationship to the board. As a CFO, that's something you're not going to have a lot of exposure to. If you're a CAO, you're not going to have as much exposure to that. Working that relationship with the CEO and that relationship with the board is going to be a very important part of your world.

FEI Daily: And how about moving out of the CFO role?

Rose: If you're moving up into the CEO role from a CFO role, the great advantage you have is you've had an enterprise view. You're in the CFO role, you've seen the entire organization, you understand the way it operates, you understand the way profit is made and lost. You understand a lot of strengths and weaknesses.

The trick is, when you move into the CEO role, you can't hide behind the numbers anymore. You're now a sales person, a cheerleader, the captain of the ship. You're all these things, all at one time and you've got many, many, many more constituencies. Now, as a CEO, you need to understand all of the language. You need to understand the language of HR, the language of legal, the language of finance, the language of sales and marketing, and you need to be fluent in all of those. 

You have to go into that new role, particularly the CEO role, thinking, ‘Okay, what do I need to develop and where are my weak spots here? What don’t I know?’ Spending a lot of time learning everything you can about each one of those functions becomes really critical. Your stakeholder list gets much bigger. You have to balance the needs of all of these different stakeholders and constituents, and do so in a way that is going to leverage the strengths of the organization and drive profit. It's a very different kind of role, even though they both have a C at the front of them. 

The biggest mistake that CFOs make is assuming that it's just a bump and not a bump up in responsibility. There's a certain kind of ego boost that can come with it, but those things will trip you up if you don't realize you've got a lot of learning. Coming in with the right mix of humility and confidence is really critical in that transition.

FEI Daily: What specific skills do senior-level financial executives need to focus on if they want to move into that CEO role? How about transitioning into a board role?

Rose: The number one skillset is the ability to balance many competing agendas and leverage what I call institutional perspective. You've got to have a sense of the institution as an independent being. You have to balance all of the competing agendas in a way that won't move that institution forward in a wildly uncertain environment. And so, being comfortable with ambiguity, being comfortable with uncertainty and, in a way — at the board level and the CEO level — almost every decision you're making in some way, shape or form is betting the business because the shifts or the decisions you make are for the whole organization. And it can be a huge win or a huge loss. 

Balancing those various viewpoints to come to some good judgment and not just bringing a narrow perspective, whether it be compliance or minimizing risk, you have to also go, ‘Okay, we can't just minimize risk. We have to pursue opportunities where we find them and is this opportunity worth pursuing or not?’

As a board member, you have to weigh if this is the right time in our development as an organization, and are we positioned to take the new strategic shift in this direction? What capacity might we need to build before we make that shift? And you have to be able to be a check and balance against very smart, very capable people who are going to argue that their agenda and their priorities should be the priorities of the institution. You need to really balance it out, which is not an easy thing. Particularly, one of the trickier things I see is executives who go either strongly in the direction of ignoring personalities and people and just trying to do it on the basis of numbers or overweighing personalities and people and trying to minimize the numbers and the financials. I think it's really a matter of balancing the two.

I've worked with CEOs who are very relationship-oriented and they make decisions on the basis of, ‘This is going to make so-and-so mad.’ That's not how you make a decision for an institution. And, yet, it can be very personal. Maybe you've worked with this person for 15 years. You need to make that tough call and be willing to make it and stand on it as this is what's right for the institution, even if it's not right for this individual or that individual and also valuing talent. 

Financial executives tend to overlook the importance of talent development, talent management and building people up. That's where the people-side comes in. You can't treat people like machines. You have to realize they're wanting to grow and develop and move forward. That can be very, very challenging for executives who move into that role and all of a sudden are responsible for, not just one set of priorities, but maybe a dozen sets of priorities that are all competing for resources, attention and priority.

FEI Daily: What’s your biggest tip for a successful career transition?

Rose: I think the most important thing in any transition is the premise that you have to let go of the assumption that you have somehow ‘arrived.’ The biggest challenge is recognizing that what I've learned in the past will help me, but it's not enough. You’ve been given an opportunity to learn and develop in new and powerful ways and you have lots to learn. 

When you go into a new role, particularly a new big role, with… you can call it humility, call it learning orientation, with the perspective of, ‘I've got a lot to learn and I need to buckle down and study,’ that's when you succeed. It's not an opportunity to express power. It's an opportunity to influence the organization in a positive direction. And it's going to be more complicated and more difficult than the role you were in before. 

The second thing is being aware of how you're impacting others and how you're being perceived by others. Because when you shift into a new role, very rarely are you given nearly as much honesty as you were before. People will often not tell the CEO information that might be unpleasant. And so, how do you deal with that at those levels, where people are being very careful about the information that they're giving to you? A little bit of humility can mix with the right amount of confidence and a whole lot of learning… that’s what you need to be thinking about when you're moving into that role.