The role of Chief Operational Officer is one of the least understood and, at times, the least recognized of positions within the senior executive team. Traditionally they, as their titles suggests, COO’s oversee the day-to-day operations of the organization. But is this true for all COO’s? How much does a COO’s duties overlap with that of the CEO? And with only some companies making use of the position, is it a role on the rise? Or is lauded COO position on the decline?
THE 21st CENTURY CEO & THE COO
More and more, the role of CEO is more about charisma, authority, and popularity in the public eye. Whether it’s appearing in tech conferences, fielding interviews on TV or touring various sites to meet employees, the 21st-century CEO has to be a master communicator.
An enigmatic face of the brand, not just the head of an organization.
There are plenty of examples of these celeb-style, brand-ambassador CEOs, from Apple’s late Steve Jobs to Tesla’s Elon Musk.
Yet this fairly recent evolution of a CEO’s place in an organization makes it increasingly challenging for them to provide the kind of internal leadership and direction required for companies to actually achieve their lofty and ambitious goals.
Traditionally, this is where the COO steps in. Someone who can build and continually sculpt the internal foundations, structures, and processes required for an organization to be successful while the CEO is off promoting his vision to the market.
The actual definition of a COO is an ambiguous one. On paper, the COO is the second-in-command, reporting directly to the Chief Executive Officer and tasked with overseeing the day-to-day administrative and operational functions of a business. But as industry trends shift, so too do the expectations on the role and there can be a huge disparity between COO’s at different companies.
In some organizations, the COO may still be tasked with the traditional role of exclusively handling all back-office functions, while others see it as a proving ground for potential CEOs.
But the lack of a clear definition of the exact role and responsibilities of the title is precisely why some COOs handle everything from human resources and finance to marketing, while others focus more on overseeing supply chain logistics and product strategy.
Simply put, the COOs of today must be able to handle all of the traditional operational responsibilities while guiding new business transformations through strategic initiatives.
WHAT ARE THE QUALITIES OF A SUCCESSFUL COO?
There doesn’t seem to be any common pathway that professionals take to ascend to the role of Chief Operating Officer. People from wildly different career backgrounds can rise to the position and excel equally, it’s all about employing transferrable skills.
Salespeople or marketers find that their skills are useful, even in a dramatically different industry. Financial and human resource executives likewise are schooled and practiced in standardized ways of doing things. But it’s hard to predict whether a COO who has succeeded in one company has what it takes to do the same in another. Even within a single company, the suitable qualities for the COO role can vary.
In many cases, the COO is there purely to help make the CEO’s vision a reality. Sometimes, the COO is brought in to be a positive influence and gently nudge the CEO towards a particular direction. Often, the plan is for the COO to eventually take over when the CEO moves on. But in all of these scenarios, the CEO is the driving force with which the COO must ultimately align.
When it comes to the different types and motivations for having a Chief Operating Officer, we generally find seven distinct types of COO and can describe them based on their function.
THE SEVEN KINDS OF COO
1. THE EXECUTOR
Also known as “the right-hand man”, the executor-style COO isn’t in charge of summary firings as the name might suggest. They’re responsible for leading the execution of strategies developed by the CEO and top management team while at the same time delivering day-to-day results. They effectively own three concurrent, overlapping processes: strategic, organizational and operating.
2. THE CHANGE AGENT
Some companies bring on a COO with the express directive to lead a specific strategic imperative, such as a major business transformation, financial turnaround, or a planned rapid expansion. These responsibilities can be temporary, the role ceasing with the initiative or it can be the precursor to further initiatives down the line.
3. THE MENTOR
This arrangement is popular amongst startups, especially where young, inexperienced CEO’s or founders need guidance in the early stages of the company. A rapidly growing entrepreneurial venture might seek an industry veteran with experience, wisdom, and a rich network who can help develop both the CEO and the young business.
4. THE OTHER HALF
Sometimes, a COO is employed as a counterbalance to the characteristics, skills and personalities of the CEO. A Ying to the CEO’s Yang if you will. Take the former relationship between Microsoft’s CEO Bill Gates and his COO, John Shirley. While Gates was notorious for his brilliance and often intimidating presence, Shirley offered the calm, self-effacing balance.
5. THE PARTNER
Occasionally, the CEO is simply someone who prefers a co-leadership style. This pairing is effective in some circumstances, like in the example of computer hardware manufacturer Dell Incorporated. The then CEO, Michael Dell, appointed Kevin Rollins as COO in 1996 and the pair were committed to leading the company together – even famously sharing the same office in a space only separated by a glass partition.
6. THE HEIR APPARENT
Many businesses bring on a COO to prove or test themselves worth of the role of CEO-elect. The role allows the incoming COO to learn the whole business. Everything from its products, its people and the company culture.
It’s important to note that the role of COO isn’t a guarantee to succeed the incumbent CEO; many COO’s have left their roles prematurely when advancement wasn’t assured or they were found to be ill-equipped for the position.
7. THE MVP
Often, a company will offer the role of Chief Operating Officer to a high-preforming executive that is considered too valuable to lose – especially if competitors are circling.
Sometimes, the MVP-appointed COO can almost be a ceremonious role, one used to hedge a company’s bets by stopping short of identifying a specific heir or setting a time-table for leadership succession. In this way, a company can keep its high-powered executives motivated, engaged and safe from poaching.
WHAT THE COO OWES THE CEO
It’s essential that the COO wholeheartedly believes in the CEO’s strategic leadership and publicly supports any initiative coming from the top-down.
· A checked ego
An effective COO is a self-confident leader but egos need to be checked at the door when dealing with other senior management.
· An eye on execution
A COO is expected to “get it done”. A simplification maybe, but a COO’s classical definition involves overseeing the implementation of specific strategic initiatives.
· Coaching and coordination skills
A CEO must be able to trust that their chosen COO is able to seamlessly step out of doing day-to-day, hands-on directing and leading of a business, and direct and teach and coach others.
WHAT THE CEO OWES THE COO
Without clear and direct communication, plans will ultimately fail. CEO’s should use their COO as a sounding board and discuss operational plans in explicit detail.
· Clear decision rights
A COO’s role in each organization needs to be clearly defined, especially in demarcating between a CEO and COO’s responsibilities.
· A lock on the back door
A COO is to act as the gatekeeper to the CEO. A CEO must sever original direct lines of communication to establish clear reporting pathways.
· A shared spotlight
Despite the COO being utilized to make the CEO successful, recognition should be given where it’s deserved. A CEO should make sure their COO has networking opportunities, skillset development and real voice in decision-making processes.
THE FUTURE OF THE COO ROLE
If you consider the ever-widening scope of the CEO’s job, it’s easy to argue that the COO role is now more integral to the running of a successful organization than ever before.
Yet, some market analysists believe the role of COO is one that is declining across corporate structures. In a study conducted by Hambrick and Cannella, they found a 22% decline over ten years in the number of firms with executives holding that title.
Despite this, the big end of town seems to be bucking the trend. In the last few years, massive companies including Microsoft, Airbus, Alcatel, Chiron, Nissan, Comcast and Apple have all appointed new COO’s.
Modern COO’s now operate in a specifically defined role that is unique to the demands of the CEO and the business. So, for the foreseeable future at least, the role of COO will be defined by nuance, and an ability to adapt and lead through unpredictable transitions and changes.
With such a demand for effective, siloed leadership, it’s surprising that COOs are not more common. It could be because there is continuing confusion surrounding the role. Board members and investors aren’t sure when or how the position will add value. Recruiters don’t have an obvious pool to tap, nor do potential COOs know ahead of time whether the job is right for them.
One thing is for certain, as we continue to demystify the role of the COO, more companies will benefit from more effective leadership.