The Hidden Value of the COO

Comm update_26 NovemberChief Operating Officers (COOs) tend to be unsung heroes. By concentrating on the day-to-day running of an organisation, usually across a range of functions, the COO’s shape-shifting abilities creates time and space for a CEO to focus on strategy and their outward, public facing duties. In many ways, the role can be the ideal training ground for taking on the top job.

Giles Daubeney, COO at international recruitment consultancy Robert Walters, says: “The CEO primarily focuses on strategy and dealing with external stakeholders – shareholders, investors, the media and so on, whereas I am responsible for the management of all the Group’s operations worldwide. That said, we do work closely together on all aspects of the business.

“For example, when reporting to the City, I am there at the results presentations and, actually, the way it’s divvied up is that the CEO will do the higher level group strategy and I will talk in detail about the operations, explaining what’s happening across each of the Group’s regions.”

It is arguably the most situational role on the senior executive team. Mark Castle, Deputy COO at construction company Mace, says: “[There are those] who implement the CEO’s strategy and support the rest of the C-suite in running their parts of the business… Others see themselves as potential CEOs-in-waiting and that can create tension, not just with the incumbent CEO but other senior board colleagues who harbour similar ambitions.”

Caroline Brown, CFO and COO of engineering consultancy Penspen, says: “The role of a COO is akin to having the fluidity of mercury; you seep into the cracks that others aren’t occupying. What makes someone good at it is the ability to be agile and to go with the flow. Someone who takes on a number of different aspects of the role without being fazed by the ambiguity.”

Decision Time

Although the context will vary from company to company, the key priorities for COOs are ‘execution’ and ‘delivery’. “Often, you’re driving change as you execute company strategy and that’s hard because people don’t like change,” says Andrew Eldon, COO for Hong Kong-based online retailer StrawberryNet. “You need to communicate clearly with your teams about the company’s overall objectives and strategies so they understand the context of what they’re doing and why it’s important.”

Lucy Dimes, COO of business process services provider Equiniti and former UK & Ireland CEO of telecoms concern Alcatel-Lucent, says: “As COO, in a single day I could be involved in a strategic acquisition opportunity and a cost-cutting programme. I’m also doing a two-day offsite with my team to talk about our plans for 2015 and 2016. So you’ve got to deal with the here and now as a COO, but to do this effectively you also need to be focusing on the future.”

In many cases, the COO can be seen as the co-pilot to the CEO. Adrian Fawcett, Chairman of bed and mattress manufacturer Silentnight Group, and former COO of pub group Punch Taverns, says: “The speed of development in global organisations and the external challenges that go with this mean the COO’s role is becoming more exciting…  In a world where businesses need to respond to customer or market-related issues faster than ever, the COO needs to be the business planner and organiser; it’s a role that requires strong leadership.”

Markus Heinen, Managing Partner of EMEIA Strategy at professional services firm EY, says: “The COO will undoubtedly become more powerful and effective if he or she is able to be part of the board’s strategic discussion. If you don’t have a strategic perspective combined with operational excellence then you will struggle over a longer period of time…

“[Businesses are] becoming more agile and disruptive trends can significantly hit the operations of a business, so COOs need to be on top of this and not only develop their analytical capabilities and strengths, but also think a little bit more creatively.”

A similar point is made by Shaun Chilton, COO of pharmaceutical concern Clinigen Group: “There will be times when you are more operationally focused, but you need to have the ability to [predict] how the tactical decisions made today may affect the future direction of the business. Ultimately, having the dedication to always ask ‘why?’ and refusing to accept anything at face value that doesn’t feel right will lead you to make the right decisions.”

Given the potential for overlap between the COO and CEO, it’s generally agreed that regular communication between the two is important. Andrew Powell, CEO of careers education provider The Training Room and former COO of Colt Technology Services, comments: “The chemistry has to be bang on… Fundamentally, you must have clarity on what your accountability is and make sure that it is clearly understood by the rest of the executive team.”

Mark Pharoah, COO of ComplEat Food Group, a supplier of chilled foods, says that the relationship between the CEO and COO needs to be defined and agreed from the outset: “Once the core strengths of each have been identified and clear responsibilities set out, the operational and strategic input within the COO role should manifest itself with a greater degree of clarity.

“If the CEO is focused on big strategic initiatives, such as major transformational projects or a global growth initiative, then the COO tends to be more hands-on and operational.”

Lucy comments: “The CEO-COO relationship requires the greatest level of contact. It’s vital that you are 100 per cent aligned as you can’t afford for [anyone to feel there are inconsistencies]. The faster the pace you are driving, the more frequent contact needs to be – it might need to be several times a day if you need to discuss, decide and act quickly.

“The key discussions are around: ‘Is this working?’; ‘Are we achieving what we want to achieve?’; ‘What do the month’s results look like?’; ‘Are we on track?’; ‘Do we need to change and, if so, how and when?’”

Unlike the CFO or CMO, the COO is a difficult position to define and there are plenty of examples of companies choosing not to employ one. That said, given the increasing complexity faced by business leaders, there will be situations where bringing in a good COO to form a partnership with the CEO will enable a business to move faster.

Andrew Powell says: “Wherever there are opportunities to do things differently or better, that’s when the COO can really step in and help make the CEO even more successful.”

I hope to see you soon

Matthew

www.twitter.com/criticaleyeuk

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