How CFOs are rewriting the definition of leadership

Speaker A: Hello and welcome. You're listening to the EY Better Finance CFO Insights podcast, a series that explores the changing dynamics of the business world and what it means for finance leaders of today and tomorrow. I'm, uh, your host, Miles Courson from EY Today. I'm, um, delighted to be joined by Cheryl Estrada, senior writer at Fortune and author of the Fortune CFO Daily newsletter. So, Cheryl, welcome. Great to have you here.

Speaker B: Thank you. Thanks so much, Miles. So great to be here.

Speaker A: I'm excited because, of course, you know, the tables are turned a little bit today. As a journalist, you're normally the one asking the question, so I'm excited to be able to turn the spotlight in the other direction.

Speaker B: Oh, great. Yes, I can have that experience that I always give others.

Speaker A: Cesare, you've been on the CFO beat for a while. You connect with a lot of CFOs through your writing, your interviews, the panels you host. And you obviously had a ringside seat at how that role has continued to evolve. So I'm really excited to explore some of those things. So maybe as we kick off, what have you seen change from when you started talking to CFOs to where we are now? How are you seeing the evolution?

Speaker B: So I started at Fortune about five years ago in 2021, March 2021. And when I first started there, we were still in the pandemic. And of course the focus of CFOs at that time was survival, cost control, liquidity management, near term resilience. As we went further and conditions started to stabilize, I realized the conversation shifted toward recovery. The digital transformation largely centered on optimizing processes and modernizing systems. Systems M so technology was beginning to become top of mind. But that was only the beginning because if you fast forward to now, CFOs are basically one of the primary decision makers on AI infrastructure. So as the technology picked up, the role of the CFO became more central in AI story strategy for the company at large. They became more central in enterprise wide transformation, and they definitely become more front facing alongside the CEO and considered the strategic partner of the CEO. So I've definitely seen that shift from where CFOs, of course, they're still focused on finance, but they are more deeply involved in operations and the strategic element of companies.

Speaker A: You talked about this shift, which I think is a good way of describing it, and the expanded scope, the responsibilities. So how are you seeing CFOs show up differently, uh, and how do they balance some of those priorities in that evolved model? There's a lot of expectations of them. How do they meet those expectations?

Speaker B: It's interesting because with the expanding of the purview of the CFO, you have a lot of CFOs who are taking on the chief operating officer role. You have CFOs that are becoming presidents. You have CFOs who have technology reporting to them. One CFO that I've interviewed is The CFO of ServiceNow, uh, Gina Mastantuno. She was on a panel session which I moderated at the Fortune's Most Powerful Women eventually back in October. She described it very well. Uh, she said the role is now a combination of strategic vision, discipline, execution and enterprise wide leadership. And now finance and strategy are inseparable. And she told her teams that they must perform and transform. At the same time. She also took on the role of president. So I think that CFOs are fully aware that the company is relying on them to use their sensibilities to benefit not only just finance, but the whole organization at large in different capacities. And for some it's a, uh, stretch of what maybe they initially signed up to do when they first went on the CFO path. But it is a way for them to expand their knowledge threat and meet the challenges.

Speaker A: I love that articulation from Gina. I think it encapsulates so much of what the role has become. You mentioned this operations role as well. And I think one of the trends we've probably seen is this CofO title, Chief Operating of Financial Officer role. Sort of interested in your views on that, how pervasive it's going, what that role actually means and what's in the scope of it as well. Because I think on the one hand you, you know, again, all this conversation is around your own finance and driving top line growth, revenue generation, value creation, which we'll talk about more. But does the operations role constrain that a little bit more around the gender of efficiency, cost management? And again, is there a conflict there?

Speaker B: Uh, I don't see it as a conflict. I see it as the CFO has firsthand knowledge of what is going on in operations, what was needed that can inform the allocation strategy. I think that the more that they're involved or can see firsthand what the needs of the company are in terms of operations, that helps them make more well managed decisions. It seems in my perspective a, uh, natural fit because CFOs have the training and ability to, to instill processes and procedures that bring returns, because that's what they do. And they take that lens on different parts of the Organization, you should see more efficiency.

Speaker A: You've probably spoken to a number of people who've taken on that operating and finance officer type role. Are there some themes or trends you see, people that are doing that role successfully?

Speaker B: Yes, I would say. One person who I've spoken spoken to is Amrita Ahuja. She's the CFO and COO of Block. She has told me in interviews how having the role helps inform her role as a cfo, that she has even more increased oversight on the organization and she sees the role going hand in hand. And I would say she's a good example.

Speaker A: I think one of the things we've seen is people coming to the role with a different skill set, different career journey. And as again the scope and mandate of the role has expanded, it's pulling from a broader pool. Any trends you're seeing in terms of the career trajectory and background of people stepping into that expanded role?

Speaker B: Well, I would definitely say that it has evolved from just CFOs who have accounting background who, who focus on the numbers. I've Talked to many CFOs who have come from investment banking backgrounds, just varied type of experiences. There's one CFO who I spoke with recently, her name is Seyoun so Depot. She's the CFO of Plaid and she actually has a degree in applied mathematics and she has an mba. We talked about that. And it's interesting how her background has helped her to meet the moment because she says, uh, she's using her coding experience as a foundation to work with large language models in AI and come up with use cases and things of that sort. And she's also worked in investment banking, she's worked in private equity. And it's so interesting that she's bringing that lens to her job and falls under what a lot of people consider like the modern CFO who has the financial ability but has all of these other strategic experiences and trainings. And even if you look at an AI CFO, someone like Sarah Fryer, she's been at OpenAI since 2024. She didn't take that kind of traditional route to the role she's at now. Her degree is in engineering and economics and she has an mba. I've been seeing that increasingly.

Speaker A: One of the things that we see in our research, particularly the DNA of the CFO recently, is finance leaders re understanding the need to be focused on the value creation agenda. Uh, and at the same time there were some challenges around that in terms of how do you actually measure it, how do you track and monitor it in the conversations you're having, it sounds like you're seeing that focus on the value side. How again, successful CFOs that you're talking to, really communicating from an enterprise perspective what value creation means and how from a finance perspective they're supporting it.

Speaker B: I would say when I think of value creation there comes to mind it's like the metrics that they focus on. So the CFO has traditionally been about numbers, but now it's more about the narrative behind them. So traditionally, okay, CFOs will look at revenue, profit, cash, to name a few, and communicate that as finding a value creation. But there are newer metrics or when I talk to the CFO of Levi Strauss and Company, his name is Harmeet Singh. He is very great CFO in my opinion. He's been at Levi's for many years. He's retiring soon, once they find a replacement. But when I talked to him, uh, a lot about value creation and keeping a company like Levi's that's been around for more than 160 years, keeping it relevant, he was just like legacy. KPIs need to be revised if you want to take advantage of new data and technology was one of the things that he told me. And so with the company having more of a focus on direct to consumer, they're looking at metrics like customer lifetime value, customer acquisition costs, which some would say, uh, well those are traditionally marketing metrics, but that's where a lot of companies are starting to look for value, that customer relationship. So again, how the CFO partners with the C suite and how their role is expanded. So you may say that there was that traditional friction between finance and marketing. But like the CFOs who are visionary, if we want to create value for the company, maybe those marketing metrics will help us. Another example, not necessarily a CFO with a CEO, the CEO of uh, Verizon, Dan Schulman, he recently said on a earnings call that one of the clearest measure of whether the company's turnaround efforts are working is churn, another metric that isn't traditionally financed. So creating value is being innovative and looking at different ways around the organization, whether it be different KPIs, different methods that foster innovation.

Speaker A: I love your point around metrics needing to evolve. And I think particularly with some of the new technologies coming on stream, how do you measure beyond the traditional return on investment type models? That's fantastic. But there's a number of things you raised there that I'd love to explore further. So you mentioned the cross Functional collaboration aspects of the role. Obviously the CEO CFO role traditionally has been very strong. It's a big axis of power in many enterprises. Have you seen that evolve, what drives success in terms of that core relationship? But then you also obviously mentioned the interaction with other functions like marketing, HR technology. The CFOs gotta be really part of that glue that brings the C suite together. So how the CFOs you're talking to build those cross functional relationships as well and sort of the credibility of what finance can bring.

Speaker B: A uh, lot of the CFOs that I talk to understand the importance of effective communication, the importance of being more front facing than they traditionally have been and creating methods for the different C suite leaders to connect. And a big part of that I would say is data. If you're the CFO and you are working with the different divisions in the company and a lot of CFOs decisions are on data, I say that it's less of working in silos and it's more of having that commonality of data. And that's where the technology comes in where everyone can have access and everyone can be on the same page. So I think that's a big part of that. And CFOs some are creating committees within Finance or people, it could be someone from FP&A, it could be someone from accounting that become those who have interaction with the other parts in the organization. So you can have this finance team that goes to marketing meetings and finds out what their needs are, shares data, comes up with ways to create value. So I think from the CFO it's like kind of a top down of creating that communication, the commonality with data and then the communication of having finance have that seat at the table to be able to interact with the different departments.

Speaker A: That's a great point. And using data as the platform to build from. But once you're at that table, how do you bring the insight from the data and the application of all of the insight that uh, finance has access to from the history, but also how trends may develop in the future. I wanted to get back maybe sort of connecting the data point also with the point you made about innovation. Joel, because I think that's a really interesting one in the finance context, how CFOs model innovation across the organization but also within the finance function. Because again you think about a lot of finance organizations, they've tended to be focus on control. The things that we can't allow any errors in are absolutely, you know, sort of ingrained with many finance Professionals. That's a big challenge now when you're asking them in this rapidly evolving world to think differently, to bring fresh ideas. Any examples you've seen of how CFOs have been successful in driving that culture shift to create more innovation, culture and mindset?

Speaker B: I would say an example would be the CFO of Adobe. He is very involved from a technology standpoint at the company and he has the finance team very involved in creating use cases for AI. For example. They have hackathons and they are encouraged to come up with ways to find that value in the technology that the company uses. And I see that the effective CFOs are looking for ways to inspire team members to take an active role in shaping strategy, especially when it comes to technology and AI. That is a way to create innovation within the company.

Speaker A: We talked about how the career path has evolved with people coming into the CFO role from a wider career background. Historically we do our DNF CFO survey. One of the things is the CFO role is really aspirational. There's high degrees of satisfaction, the responsibility, the things that those are, uh, doing I think really creates high levels of satisfaction in the role. Historically. We've seen some data in the market recently. I think Russell Reynolds put out some research. One, we're definitely seeing the trend of CFO tenure coming down. The Russell Reynolds survey particularly talked about actually people choosing to move out of the role, attributing that to the pressures. When you look at the upsides and downsides, people choosing to step away, interested if that's coming through and the conversations you're having as the scopes expanded, the pressures expanded, is it now getting too much? And do you see people being willing to step away?

Speaker B: Yes, I did see that Russell Venner's study, the CFO turnover is being fueled by retirements. The role is definitely, I would say become very intense. The scope maybe is larger than what a lot of CFOs may have signed up for. But I have seen a, uh, few seasoned CFOs move toward the direction of retirement. Could be perhaps that they're ready to pass the baton on to the next generation. But we're in a, I, uh, say age where an executive may have to keep redefining themselves in a way or reinventing themselves to keep up with the pace. You look at what the traditional CFO was in the back office in a sense. And now I speak to CFOs all the time who are on stage and they're representing their companies and they're sitting alongside of the CEO. So part of what is maybe compelling some people to step back from the role is that it's really changed. But I think in a way it can create an opportunity for a new generation of CFOs who have that sensibility to be more people oriented or have these different types of backgrounds that we talked about earlier that when combined with finance, that create a robust opportunity. But you definitely have to be someone who's willing to be ready to face a lot of uncertainty that we've been experiencing and really think perhaps outside of the box and really be focused on innovation. So I would say it's a lot of skill sets that maybe traditionally you wouldn't think that you would need as being a cfo.

Speaker A: I think that's well said. I think change and transition is important. It's healthy. And my view also is that, uh, frankly, as we've talked about, because the way the role has expanded, because you've got people coming from a broad background, actually there are more opportunities being created, whether that's on advisory positions on boards. I don't think necessarily some of the CFOs that are moving out of the direct CFO role are retiring, uh, from work. They're moving into transitioning into a different stage of their career, which the experiences they have is allowing them to take on these different roles. Uh, to me, it's hopefully a positive indicator on this point of pressure. One of the questions we ask guests and CFOs that come on the podcast is around how they maintain their well being. You mentioned Gina, um, ServiceNow, who's obviously very visible on LinkedIn and some of the social platforms in terms of the importance of well being. Her, uh, priorities around fitness and health. As you sort of look at other CFOs you've spoken to, what do they do to deal with the pressure and maintain wellbeing and balance?

Speaker B: Um, you know, Miles, a popular response that I hear is spending time with family.

Speaker A: It's very grounding.

Speaker B: It's very grounding and it keeps things into perspective. A lot of CFOs that I spoke to, they enjoy traveling. Gina, she's very athletic and she works out. I know, but at the end of the day, it always comes down to spending time with loved ones and putting that first.

Speaker A: I'm sure you talk to people who are also stepping into the role as well as seasoned professionals. If you were thinking of distilling down some of the insights you've got from the conversation to someone who is new to the role, is there anything you'd counsel them to, to think about in this area.

Speaker B: One of the things I would say to really think about is how are you staying abreast of technology? Because, and you know, Miles, that AI isn't going anywhere. And a lot of companies are going forward and wanting to invest and reimagine what the company will look like with AI policies and procedures and things of that sort. And I think as the board increasingly turned to CFOs, as CEOs increasingly turn to CFOs, you would need to have that type of aptitude. Not that you need to be a technologist, but you definitely need to be aware of AI and how it functions and be experimenting with it yourself. I would say that that would be a number one thing. And I would also say that you would need to be someone who is agile, someone who is able to, okay, you have plan A and plan B. Well, you're going to have to go to C. You know, you have to have that flexibility now with so much uncertainty and be willing to listen and have good communication skills. And that's of course on top of having the financial know how. But I see those things as being quite important if you're stepping into the role nowadays.

Speaker A: I think you mentioned the importance of communication and listening is such an important part of that. To me, I think that's really important differentiator going forward. Joe, you made a really important point and I, I think this point about staying educated and informed is so important and I think technology is the extreme example, but it applies more generally for new CFOs, for all CFOs, frankly. How do you make the time to stay educated and informed about what's happening is so important? And on the podcast we ask through some of the surveys and research we do. And I think to me one of the common threads around that is building personal network and that's within your organization, but obviously externally as well, because you need that outside in perspective. I, uh, just want to say, does that resonate with you? Do you hear that as being a common theme in terms of saying staying relevant, staying up to date and any recommendations you'd have about building personal network and sort of how you create that council around you to be, uh, informed.

Speaker B: Miles? Yeah, I talked recently to CFO and he said that he has a cohort of peers in which they discuss things and they have learnings from each other. So it's kind of a network based education which I think that CFO's value and a lot of them participate in.

Speaker A: So we talked about the personal Dimensions of role. We've talked about enterprise value creation. Just thinking a little bit about the finance function. Obviously with all technology or conversation around how this is evolving so fast, the vision for what the future of the finance organization looks like is front and center. Any themes coming through in the conversations you're having about what finance organizations need to be focused on, where the priorities are?

Speaker B: With AI and automation, it's definitely CFOs that I've spoken to have the intent of having the finance team be even more strategic. So if you have automation doing mundane tasks, it allows for, let's say someone, uh, in FP and A to be more strategic and be able to think outside of the box and be able to contribute more to the finance function, doing a role that they enjoy. I think for CFOs, the future of finance is elevating the finance organization to be not only the cfo but the organization itself to be that strategic partner to the company, to the different divisions. And that's what AI and automation is hopefully going to help do. I think also what I've been hearing is that in terms of implementing AI in the finance function, it's also a means of how are we going to reimagine certain positions as well? If you have that FP and a person, we may have to really redesign what the requirements or basis is for that position. As we use technology that's going to like agents. Right. If you, you have an agent that's doing the mundane work, you have an agent that is going to help that particular role. How will we redefine that role? It's also when you think of agentic AI and agents, are we going to be in a situation where perhaps you'll be managing an agent? Who knows. Right. So all of those things are going through the minds of CFOs and uh, at the same time they're using AI themselves and thinking of ways of how it can make streamline their job and make it function better. When I was talking to the CFO of Platt who I mentioned earlier, she was telling me ways in which she uses it as like a thought partner AI and she bounces ideas off of it it. And so I think the future of finance model will be just like even more strategic and effective use of technology.

Speaker A: That absolutely resonates. I think you may have covered this. Sure. But I think there was this conversation around should CFOs have their own personal agents? I don't know if you're seeing that anytime soon, but uh, I've been sitting in, obviously there's personal aspects. But then you talked about how do you reimagine workflow and the way work gets done. So I think again we're seeing a lot moving beyond just the personal productivity, beyond individual use cases, more into this workflow within functions, but also across functions. Right. How processes get reimagined. Interested in any other examples where you're seeing organizations every start to embrace the potential potential of AI?

Speaker B: I would say hpe Hewlett Packard Enterprise. I recently, a few months ago spoke with Marie, uh, Myers is a CFO and she's really has been utilizing it and seeing great productivity gains. They made great strides in that. I think that for AI and finance there are a lot of CFOs who are looking at the value use cases and the value for that. But not everyone is like has their foot on the pedal to accelerate in that aspect. I uh, don't know if that's what you're seeing. I'm seeing that there are some exceptions, but it's still determining what use cases are helpful and valuable. What are you seeing?

Speaker A: Yeah, uh, I think that's right. As I said, I think the conversation is moving beyond just individual use cases to what uh, are the skills that are being established that are repeatable across the enterprise. How do you embed AI into workflow? What do the roles look like in that reimagined world? And I think particularly organizations that have invested in rationalizing ERP platforms, they've invested in global business services and shared services where you've got multiple functions as part of one organization. I think there's real opportunities to turbocharge some of that process reimagination. Um, so yeah, definitely share that view. But I think one of the challenges kind of goes back to the metrics conversation we were having earlier is how do you assess the investment? And we sort of mentioned traditional return on investment isn't necessarily the right model when you can maybe assess the cost of what you're spending. But it's difficult to measure the upside when it's uncertain, unclear because these are new technologies you don't know the benefits from. So again, as you speak to CFOs as they think about how do they balance competing priorities for capital allocation. And I think you're seeing them think about particularly in how big a bet to place on new technology.

Speaker B: I would say managing AI investments and decisions has become in my opinion one of the defining challenges of the modern CFO role. Um, because I think it may be hard to fit into traditional financial networks. Because when you think about it Technology is evolving faster than the measurement cycle and so timelines really don't conform to the conventional capital budgeting logic. I would say that effective CFOs are navigating it by reframing the risk equation. For example, hyperscalers position that the downside of under investing in AI infrastructure exceeds the downside of overspending. That missing that capacity window is like a, uh, existential competitive risk. While excess capital is a recoverable, uh, financial one, so to speak. I think that it may require like a more aggressive posture than traditional discipline would suggest. So in practice, I think CFOs are structuring spending in tiers like a baseline infrastructure. They consider table stakes and then strategic bets, uh, with defined milestones and then maybe a smaller pool of exploratory investment perhaps where the expected return is learning rather than near term revenue. In other words, maybe they're looking at it in terms of different horizons and then they have to talk a lot to boards, not just presenting the numbers, but telling the story of the vision of the conceptual framework. So I think that that would be some kind of example of what I've been seeing, especially our companies that are doing like a lot of spending on AI.

Speaker A: I think that segmenting out the different time horizons is an important one. I think the time horizons have been compressed just given how fast technology is moving. You've got to be thinking in much, much shorter cycles initially, but still tied back to the longer term vision of where you're trying to take the organization and the enterprise. We covered a lot of ground. Fantastic conversation. Talked about a little bit of the past and a lot of the present. As you look to the future, what are some of the trends that you're tracking and you're going to be talking to CFOs over the coming months?

Speaker B: Definitely AI. Yeah, that's, I mean that's a given. Right? And some other factors other than AI. Interesting that I've uh, recently covered. What was announced last week is that the SEC is revisiting whether or not companies should have earnings reporting semiannually or quarterly or giving the option to have it semiannual instead of quarterly. That's something that I've been uh, talking to a lot of CFOs about and that should be interesting to follow. And definitely a big concern now is the rise of inflation. I think at this point CFOs have a lot of experience and um, uncertainty. But still, how are you going to face again these challenges and come out of the other side? How do you manage the short term and also focus on the long term. So those are quite a few pieces that I'll be talking with CFOs about.

Speaker A: Fantastic. Well, it's been great to talk to you. I really appreciate you subjecting yourself to be on the other side of the microphone today.

Speaker B: It's not easy, Miles.

Speaker A: Well, hopefully you'll appreciate what you're torturing people with going forward. Uh, it's been great. I feel. I've had a. I've had an interview with probably 10 or 15 CFOs through your, uh, through your voice. I really, really appreciate you taking the time to join.

Speaker B: You're very welcome.

Speaker A: If you've enjoyed this or any episode of the EY Better Finance CFO Insights podcast, please subscribe, subscribe or leave a rating or review. You'll find related links@ey.com betterfinance and as always, thank you for listening.