The chief operating officer: an ill-defined but crucial role
It’s considered one of the most challenging positions in the boardroom, yet the role of chief operating officer is one of the least understood, devoid of a clear job description and progression route
The chief operating officer has been described as the backbone of an organisation; the glue that connects the commercial strategy of the business with delivery and execution. Yet unlike other members of the C-suite, there isn’t a single description of what the role entails, nor is there a clearly defined route for becoming COO.
Some COOs handle everything – from HR and finance to marketing – while others focus more on overseeing research and development, product strategy and supply-chain logistics. This appears to make the opportunity open to all contenders.
However, with the business world facing unprecedented challenges, is there one function in particular from which chief operating officers are now more likely to emerge?
In recent years, the COO role has evolved from a predominantly operational focus to more of a deputy chief executive role, with a mandate for handling all the traditional operational responsibilities while leading a company’s most important strategic initiatives.
According to organisational psychologist Dr Lynda Folan, author of Leader Resilience: The New Frontier of Leadership, while this may look like a logical evolution, for many businesses, it is not necessarily an effective structural decision. She says: “The lack of definition of what this broader role requires, and the distinct lack of forethought on the succession for these roles, is a business risk – even more so in the volatile business setting of today, where failure is not an option.”
Many of today’s COOs have come from the revenue-driving commercial side of the organisation – the front end of the business – because that’s what drives the profits for many companies. But there are usually a lot of strings to a COO’s bow.
“They might have come up the commercial route but have also spent time in sales operations, customer success or professional services delivery,” says Mike Drew, head of the technology practice at executive search firm Odgers Berndtson.
“Historically, COOs have come from a services and customer success angle but we’re just as likely to see a COO come up via the front-end sales route as the back-end delivery route. Either way, they need to be able to meet in the middle and act as the conduit between the back end and the commercial front end.”
Broader skill set
Regardless of the business function they come from, a potential COO needs to have perspectives on strategy, customer success, operational mechanics and service delivery, as well as commercial acumen. The most suitable COO candidates are therefore likely to be those with well-rounded backgrounds rather than narrow or specialist disciplines.
“A marketing, HR or IT professional is unlikely to become a COO,” says Rachel Davis, co-managing director of talent insights firm Armstrong Craven. “A finance director who has led multiple functions – for example, procurement and IT, which often come under the umbrella of finance – or a sales leader with intimate knowledge of customers, markets, pricing, and therefore margins, would make a better candidate.”
One of the ways the ideal COO candidate requirements have changed in the past two or three years of economic disruption relates to their leadership attributes. “A high emotional quotient and the ability to manage change quickly – with strong communication to bring the whole business along – are critical and these aspects have definitely come to the fore over the past two to three years,” says Davis. “Command-and-control styles are no longer delivering.”
A successful COO understands the importance of the strategic partnership between their role and that of the chief executive. Natalia Shuliak joined data analytics platform DoubleCloud as COO earlier this year. She says: “You can’t be excellent at development, product and the commercial side of the business. At best, you can be great at two of those things.”
The stronger the partnership of the COO and CEO, the greater the chances of them “building something solid”, she says, which is why the COO’s role is “never defined”.
“For example, I’m strong in go-to-market and building a predictable machine, which is what I’ve done in the past in different roles, including marketing, business development, sales, and operations,” she explains. “As COO, I partner best with those who are great in development and product.”
Others insist that the financial, economic and operational challenges facing businesses today have created more opportunities to progress to COO from across all areas of an organisation. Katie Lee, former UK chief growth officer at global media agency Wavemaker, recently became the company’s COO. She sees the role as one that can adapt to the specific growth needs of the business and, as such, is open to candidates from any part of the business and from a variety of roles.
Preparing the next generation of COOs
Nevertheless, Folan insists that the recruitment of the COO should not be a default appointment from within the functional area of an organisation’s operations. With the breadth of the requirements of the evolving COO role, she thinks it unlikely that an executive with a traditional trajectory through operations would be an ideal candidate.
Leading at executive level, with such a range of functions necessary, “requires staff development with a strategic focus”, she says, adding that companies will run into difficulties if this aspect is ignored.
“The appointment will be problematic unless the organisation systematically prepares those identified as having potential for the COO role.”
And without a significant level of investment in that person’s development before their appointment, she says, “they will likely face challenges in delivering the breadth of responsibility”.
From COO to CEO
In most companies, the chief operating officer is second in command. If the chief executive is absent, it’s usually the COO who steps up, making them an obvious candidate for the top job. It is also a well-trodden path. ASOS recently promoted its COO, José Antonio Ramos Calamonte, to chief executive, while earlier this year, former Salesforce COO Bret Taylor moved into a co-chief executive role.
While the past few years have seen other function leaders make the transition to CEO – with the chief finance officer and chief human resources officer being popular candidates for the top job – the strategy-focused nature of the COO role makes it a natural pathway to becoming chief executive. But what really counts for any contender is the ability to flex multiple muscles outside their specialism.
“The CFO usually has a strong relationship with the CEO but, if they’re too focused on just the numbers or cost control of the business, they are unlikely to make a good CEO themselves,” says Drew. “Because the COO has such broad exposure, they’re less likely to fall into the trap of only being focused on one area.”
Carl Uminski was co-founder and chief operating officer of digital product agency Somo until the start of this year, when he became its chief executive. “The CEO sets the strategy, manages investors and is accountable for the direction of the business, but it’s the COO who gets it there,” he says.
A chief operating officer naturally makes a good CEO because they know how the company operates, and its strengths and weaknesses, he says. “However, the role immediately is less operational, less firefighting, less ‘doing’ and more strategic, which doesn’t suit all personalities.”