I believe excellent CEOs need a set of unique skillsets – they need to be able to unite people, rally the morale, be bold and innovative in strategy.
Good CFOs are very good at numbers, very analytical when presented a well-defined question. They are also responsible for financing and executing M&As which can be strategical.
I think excellent CFOs can bring CEO-like value when they proactively pursue M&A deals or actively manage acquired companies. However, this is not a base case.
I could be wrong, but more often than not, CFOs don’t really need to be innovative or think outside the box to be okay – they are fine to be pragmatic and consistent, and sometimes expected to be so.
When CFOs become CEOs, there might be an attendance to deliver near-term numbers rather than focus on real value creation.
It could also go wrong if they rely too much M&As – bad deals will cost a fortune and even mediocre deals carry opportunity costs.
Alibaba used to have Daniel Zhang as CFO and he became CEO in 2015. When he stepped down in Sep 2023, the annualized return during his tenure is at best bond-like.
That’s why I don’t feel good about Mixue Group – it announced that its CFO Zhang Yuan will become CEO, effective immediately. Mixue founders will stay as co-chairman though.
Let’s see.