Who is the Chief Operating Officer and why he is a business

coo

The responsibilities of marketing or human resources directors are clear – the scope of tasks is shown by the title of the position. The role of the chief operating officer is more complicated: its content depends on the specifics of the business.

Vladimir Sharov has 20 years of experience in top positions. He was Chief Delivery Officer at Innovecs, Global Operations Director at Luxoft, and Managing Director at GlobalLogic and Intel. He has worked with teams from 20 to 2500 people in the CIS, Europe, Asia, and USA markets.

 

 

Do all businesses need a Chief Operating Officer

The COO role does not exist in every top management team. It is more common in companies that have a daily operational cycle where you need to constantly monitor and improve the quality of processes. For example, in manufacturing, aviation, automobiles, and IT. At the same time, CCO tasks differ depending on what needs the business has and how responsibilities are allocated between C-level roles.

In addition, there is no single list of criteria by which to assess whether a company needs a CCO. It depends on the objectives, goals, and expectations of the owner/CEO.

For example, Microsoft hired Kevin Turner of the Walmart retail chain for the CCO position in 2005. He helped the company get into the retail business (a significant expansion of the business model) and rebuild the sales system. And after he left, 11 years later, the role of CCO at Microsoft was split among 5 other top executives.

Intel has a large team of top managers, there are line directors and group leaders (sales marketing, product marketing, production), but no COO.

What tasks does the business set for the COO?

 

COO

There are often three areas of focus for the COO:

  • Implementing operational strategy. The COO is responsible for the organization’s internal processes. These usually include back-office activities (manufacturing, supply chain, hiring, HR, IT).
  • Quality Management. Implementation of standards, organization of management and staff qualification, certification for compliance to international standards ISO, CMM, etc.
  • Creating a system of performance indicators. The most popular – KPI and OKR.

How responsibility is divided between the COO, the CEO and the owner

There are 7 major variations of the COO role in world practice:

#1. Executive. His task is to implement the strategy from the board of directors. The COO is not responsible for everything, but becomes the “engine”, which focuses on the main business process and creates a system of indicators. He also facilitates the work of the marketing, sales, human resources, and other directors.

#2. Change Agent. Usually, an expert in a particular area is hired for this purpose and given the authority to implement change – for example, to move the company to a new business model (as was the case at Microsoft).
#3. Mentor. This role is more common in American and European companies – when a startup owner hires an experienced industry “veteran” to advise and set up operations.

#4. “The Second Half. In demand in businesses where the owner/CEO’s personality needs to be balanced. For example, an impulsive visionary at the helm of a company can be strengthened by an SO – analyst and “exec” overseeing “operations.”

#5. Partner (Two in a box). This is relevant for large corporations, where the range of tasks is so wide that the owner/CEO is physically unable to cover everything. Often the CEO’s role is conventionally designated as Mr. Outside (work with clients, investors, and partners), and the COO’s role is Mr. Inside (internal processes). Inside (internal processes).

#6. Successor. If the CEO is getting ready to leave the company, the role of the COO is introduced into the structure, in order to immerse the future head of the organization in the business. And at the same time, to see if he can handle the responsibility of the CEO.

#7. “Valuable Person.” The COO position may be created specifically for an executive who has grown with the company and does not want to lose him (especially to a competitor).

What may cause a conflict between the COO and other executives?
The role of the COO is specific: being in charge of the company processes, he has to enter the territory of other top managers. Whether or not the dialogue works out depends on his expertise and the atmosphere in the top management team.

The interest of the owner/CEO is very important: has the head of the company given real authority to the operational director, has he explained his role to the other top managers? Sometimes power is delegated nominally, because the owner/CEO cannot completely “let go” of what he used to manage himself. This hurts the business: doesn’t unload the head of the company, doesn’t allow the COO to turn around, confuses the team.

In addition, much depends on the perception of line managers. When a new player comes in, the tops go through all the stages of team dynamics all over again, including “forming” and “storming”.

The stage may end constructively – the executives will see the COO as having interesting expertise and a fresh perspective. But if the “intervention” is perceived as a threat – it becomes a disruptor, and the CCO is the first to “fail.
The COO should not hurt the personalities of other executives and question their competence. In experience, questioning tactics work best:

  • What else can we improve in this process?
  • What is our next step in developing this function?
  • What will keep the function/process effective in the future?
  • Why are the accomplishments of CCOs difficult to measure

The job of the COO is to establish and continually improve processes as well as the evaluation system. But in practice, improvements are implemented by function managers with their teams. A “gray cardinal” effect occurs – the COO’s leadership, analytical work, consultation, and negotiation are overlooked.

It also happens that after a successful change that the COO oversaw, the owner wonders, “But what did the COO contribute, what exactly did he do ‘with his own hands’ in the successful project that the IT director launched?”

In addition, there are times when the COO comes in to solve an understandable “pain,” and once the task is done – the need for a separate role falls away. The process is fine-tuned, people are hired and trained, responsibility is distributed among the top team. Or in an international organization, part of the functions are delegated to the regions – the directors of locations in different countries are empowered by the global COO.

What kind of background does a COO need?

#1. An analytical mindset. This helps the business make Data Driven decisions. For example, the CEO has a hypothesis that the recruiting department is inefficient – the average hiring time is 60 days. The COO examines historical data, compares it to other companies, and “gets to the bottom of it.” When it comes to popular junior-level positions, 60 days is indeed a long time. But if they are hiring a “signor” with knowledge of unique techniques in such a timeframe, it might even be fast.

#2. Interest in technology. Helps to find new, sometimes unexpected reserves for automation of routine and innovation.

#3. Team management experience. 90% of CCO activities are project work.

#4. Communication Skills. Ideas need to be able to “sell” at all levels, otherwise resistance is inevitable.

 

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