Unnatural progression

Do CFOs make great leaders? This is a key question, because often they are in pole position to take the reins of a company. But they are by no means always the best choice.

I often wonder if CFOs are temperamentally suited to becoming bosses. For most of their career they focus on the numbers - especially the costs. By contrast, the man or woman running the show must have other priorities: sales, staff, customers, products and service.

My experience is that founders of companies tend to be extroverted, confident and strong communicators. They have grand ideas, but are often bored by administration, detail and spreadsheets. By nature they tend to be positive in outlook - and sometimes dangerously over-optimistic.

Such personalities need a reliable and cautious partner to initiate and police financial controls. That individual might be the chairman (or woman), but is more likely to be the finance director.

It strikes me that enduring the necessary training to gain a chartered accountancy qualification, or similar, requires a degree of patience lacking in most born entrepreneurs. The visionaries I've worked with were too impetuous for years of post-graduate study. They wanted to get out there and follow their dreams.

I suspect that founders tend to be right-brain thinkers: creative, intuitive and capable of seeing the whole picture. Accountants are likely to be left-brain spirits: highly rational, analytical characters who are perhaps more passionate about the cash than the actual goods being sold. And given that a business that runs out of cash can no longer trade, I strongly approve of that obsession in a CFO.

None of this is to say that FDs cannot be bold thinkers, or capable of decisive action, and of course I am generalising somewhat. All manner of types qualify as accountants and become CFOs. Moreover, before they run an entire business, a chief executive has to come from somewhere. In most cases their experience will not be broad enough to allow them to understand all aspects of a business. So they will have the same shortcomings as a CFO who wants to run the whole enterprise.

Perhaps CFOs are better placed to end up running large corporations, rather than building their own start-ups. Most entrepreneurs have a maverick streak that doesn't really fit with the expectations and training of a CFO. Such risky stuff somehow doesn't fit with the traditional concept of prudence that is at the heart of the accountant's philosophy.

Yet while the CFO might not be a born business founder, he or she is usually well-placed to become number one in an existing operation if the CEO dies, falls ill, gives up or gets sacked. Frequently the CFO is the youngest executive director on a board, with energy on his or her side; usually they are, to all intents and purposes, the second in command; and they will typically have the respect of non-executives and investors, who usually determine these appointments.

Interestingly, while some CFOs can become the ultimate boss, former CEOs simply cannot become finance directors. They not only lack the qualifications, usually they would be too bullish and insufficiently conservative. And they would be highly unlikely to possess sufficient expertise is such areas as tax, banking, company law and IT, a core skill set for a modern CFO. Meanwhile, this all assumes the person in question is numerate - and I have met far too many founders who are scarily deficient in this regard.

Readers might consider my views somewhat old-fashioned and rigid. They reflect the fact that I tend to back smaller, entrepreneurial companies. Perhaps I have preferred working with CFOs who are content to carry out that set of tasks, rather than strive to run their own show. Every firm is a team effort, and at the top every member is vital. Great CFOs are as valuable and as hard to find as outstanding CEOs - but I believe the talents needed are fundamentally different.