While the role of a CFO has traditionally been clearly defined, that’s not always the case across the C-suite. The duties of a chief operating officer, for example, are much more flexible. A COO’s duties can run the gamut from operational support to responsibility for revenue, Michael Tannenbaum, COO of spend management platform Brex Inc., told CFO Dive.
This is a fluidity that can overlap with the roles of others in the leadership team — or, as the role of the CFO begins to shift, that can lead to a merging of the two roles altogether, a place that Tannenbaum is familiar with holding. He joined the San Francisco-based company in 2017 as its finance chief and first C-suite hire before transitioning to the role of COO.
“For a while, I’d say that I, in title was the CFO, but I acted as the COO,” Tannenbaum said in an interview. “In many ways, I think those roles are increasingly merged.”
Melding COO, CFO responsibilities
An alum of finance firm SoFi, Tannenbaum took on many of the responsibilities of a COO as its finance chief when entering Brex. He ceded CFO duties for a while when Brex appointed Adam Swiecicki as its CFO in November 2021. Swiecicki departed to serve as CFO for Rippling in October of last year, according to his LinkedIn profile, and Tannenbaum is now serving as acting CFO as well as continuing to fulfill his COO responsibilities for Brex, the company confirmed.
The duties, and therefore the qualifications, of a COO can vary widely depending on the organization. At technology companies, the COO role tends to focus more on managing risk and finance, which was the case for Tannenbaum upon joining Brex. He said the title of COO was eventually added to “reflect what I had been doing for a long period of time.”
This has led to an ebb and flow of the position’s popularity and status throughout the decades: in 2008, 48% of leading companies had COOs, McKinsey reported, a figure which dropped to 32% in 2018 — before rising to reach 40% of leading companies last year.
However, with the former rigidity of a CFO’s role easing as finance chiefs become more strategic players and take on new responsibilities, the COO and CFO positions are beginning to see more frequent overlap.
Companies have started to consider the potential benefits of a combined CFO-COO role. Melding the two functions can improve the quality of the organization’s financial reporting, according to a 2019 report by The Wall Street Journal citing a study from the Journal of Management Accounting Research. The dual role can also help to eliminate misunderstandings between operational and finance teams, the WSJ said, enabling more accuracy as well for crucial accounting calculations.
The need for CFOs with such skills also spiked at the start of the year, with technology companies especially seeking out “war-time” or operational finance chiefs, who could bring financial rigor to every part of the business, CFO Dive previously reported. The modern CFO needs to be more strategic generally, Tannenbaum said.
“It’s not just about reporting, but it’s about forecasting, giving the company guidance on where things are going,” he said.
Technology and the changing C-suite
The CFO and COO roles are far from the only C-suite positions seeing their roles change: Even the focus of the CEO has transformed, leading to a ripple effect throughout the rest of the leadership team.
“I think that the CFO is actually being asked more and more to be responsible for, ‘where’s the stock price going,’ whereas historically you’d find that as the CEO job,” Tannenbaum said. “And so that gets back to that strategy piece.”
Emerging technologies are also shifting executive responsibilities. Similar to when cloud technologies first came onto the scene, CFOs are being tapped to understand and calculate the implications of AI for their organizations, Tannenbaum said.
“Boards are asking CFOs, ‘Well, what’s the company’s and what’s the finance team’s AI strategy?’” he said. “‘How are we either accelerating revenue or lowering costs, with all this new technology that’s coming out?’”
However, while the CFO should take point on determining AI’s impact, that does not necessarily mean that financial leaders need to turn into technologists or data scientists, Tannenbaum said.
“We want all the finance people to be like data scientists,” he said. “I think actually, it’d be better in many ways to have data scientists spend more time within finance.”