The Importance Of A COO
You don’t need to look far to find the COO of a company – generally they’re the person making the cold hard decisions, the buzzkill shooting down the CEO’s dreams, and the issuer of freely given and unsolicited advice in the most brutal fashion imaginable.
Every story needs a bad guy, and every superhero needs an arch nemesis.
(We’re joking, by the way!)
In today’s blog, we’re discussing the importance of a COO in the modern company.
It’s all well and good to poke a little fun, but the truth is that a COO is perhaps a more important character within the business setting than the CEO – and at the same time, undoubtedly the most misunderstood.
What some employees may see from a second in charge is a role that may appear to have a necessity to suck the fun out of the air around them. The boring person – always talking about systems, and integration, and replicating results. A realist, bordering on pessimism – there’s water in the glass, but it’s only half full.
The truth couldn’t be further from the fiction.
What They Do
If you consider a company as a nuclear reactor, with the flamboyant and idealistic CEO as the radioactive fuel, then the COO has to be the carbon control rod the reigns in the reaction and prevents a core meltdown. The COO is the glue that holds the company together. Ultimately, they’re the one making the hard calls, who has to be cold and calculating when nobody else has the intestinal fortitude to do so.
In terms of an organisation chart, the COO answers only to the CEO – and is the second in command. The Chief Operations Officer is a role that also comes in other flavours, but is inherently the same - "executive vice president of operations," "chief operations officer," or "operations director."
This is the person within a company who oversees the day-to-day running’s of the business – like administration, and any facet of the operational facets of the company as well as internal affairs. If the CEO is the public face of the company, the one wheeling and dealing, then the COO is the one who really crunches the numbers and has to advise the CEO on whether the deal is a boon or a bust.
Generally, someone in a COO role would have a strong analytical background in finance, and will have made their way up the management ladder steadily over time thanks their excellent leadership skills and team communication.
This doesn’t mean they have to be a stick in the mud either. The days of the rather beige COO from 50 years ago are over, making way for a more colourful COO who brings vibrancy and charisma to the role, while at the same time stamping their authority on the company and being as at ease in the public eye as the CEO.
What They Are
Traditionally the COO role falls to the integrator, the ying to the yang that is the visionary CEO. The COO/CEO relationship must be one that contains some level of underlying conflict, without open hostility. Logically, a COO’s personality has to be matched to the CEO in such a way that they have opposing outlooks and ideas, but are still able to work together to achieve the best outcome.
There are seven main type of COO, and the one a business needs really does boil down to what the business needs. It’s a versatile role that, when poorly filled, can break a business. There are no clearly defined boundaries here, and a COO can be one or many of the following archetypes.
1 - The Executor
This COO is charged with the implementation of company strategies developed by the management team, driven to deliver the replicable results and growth on both a day-to-day basis, as well as a quarter-to-quarter measure.
You’d find a COO like this in big business that is operationally intensive, so think tech forms, airlines, automotive manufacturers. They’re the “head down” thinker concerned with the here and now who frees up the CEO’s time to be the “heads up” thinker concerned with the long-term goals, and the strategy required to get there.
2 - The Change Agent:
A slightly less bookwormish COO, and more of a brash, bold, “here to get things done” type. The change agent is generally recruited into a company with the express purpose to spearhead new initiatives and shake things up a bit – for instance, a corporate restructure or preparing for an anticipated period of rapid growth.
This COO would have a level of unquestionable authority to a much higher degree than usual, and would find themselves brought into a company running on fumes or that needs to be turned around.
3 - The Mentor
Simply put, the mentor COO is hired to lead younger CEOs down the right path, bringing their overwhelming experience to bear. A company founder would usually do well to hire a mentor, generally an older person who has been around the block a few times and who knows the traps and pitfalls that could ruin a growing business.
As the CEO matures and develops, there comes a time for the mentor to move on and find their next ward to guide through the initial hurdles of a start-up business.
4 - The Mvp
The COO role isn’t always filled via external recruitment, sometimes it’s the reward for hard work – an internal promotion for the Most Valuable Player or MVP within a company.
This is typically a bit of a sneaky play, as the CEO doesn’t want to lose their best employee to a rival company. They hand the MVP a huge promotion, and the responsibility to come with it – as well as an opportunity to be the “right hand man” of the business.
5 - The Coo
This is a COO in the most traditional sense, brought in to complement the CEO – think back to the nuclear reactor example. The traditional COO will have an entirely different skillset the CEO, so the relationship can act like 2 sides of the same coin.
6 - The Partner
This is literally the exact opposite of a traditional COO, as the partner is just another version of the CEO. This is called the “two in the box” tactic, where a CEO works better in a co-leadership arrangement similar to the way there are doubles specialists in tennis who never achieve success playing solo.
7 - The Heir Apparent
An aging CEO or one who is looking to step back from the business in the coming years may choose to be the mentor to the COO – with the aim of handing over the reigns when the time comes.
In this relationship, the COO gets the opportunity to learn from the feet of the master, and se how the company works inside and out, as well as how to make the right decisions for its success in the future. At the same time, the heir apparent has the time to prove they have what it takes to succeed the CEO – no guarantees either.
The numbers don’t like – there has been a 22% decline in the number of companies who have an executive holding a COO or equivalent title over the last 10 years. That number would superficially lead you to believe that the COO is becoming less important that it was in recent years, but numbers aren’t everything.
Microsoft, Airbus, Nissan, Apple – all companies who still have a COO and who have chosen to announce new people in the role following the retirement of long-serving COOs. These are top companies, who thrive on efficiency and innovation – if a COO wasn’t needed, they wouldn’t have one.
There is actually a growing need for the COO role, as CEOs are now asked to be public figures who address the public via social media and other engagements – leaving them less time in the day to look at the internal workings of their companies. In the digital world, image is everything it seems.
As a result, the COO has to encompass the public face of the company similar to the CEO, but have their eyes firmly focused on the company as it stands now. They’re on the whole more colourful characters than they were in the past, and there has been an increase in the heir apparent variety. This is a time where the talent pool of valuable non-CEO executives is relatively small, so the COO title is a great way to groom a future company leader while at the same time keeping them planted within the company.
Seeing how variable and flexible the COO role can be, it’s a little bit surprising that the number of COOs is falling. Perhaps there is a little confusion about what the role should encompass, as there is no hard as fast rule about what a COO looks like in the modern day.
There is certainly a chance for aspiring companies to benefit from more effective leadership, by pairing their CEO with the right COO.
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