What COO Role Would Best Benefit You & Your Company

More than any other business role, the Chief Operating Officer (COO) or senior operations role, is most difficult to describe or create success criteria. The reason? It is dependent on a complimentary fit with the CEO, and as we’ll realize upon reading the excerpt below, there are many variations of CEO’s including their expertise, experience, highest value activities, preferences, and personality. Fitting a COO effectively has to first, realize the need for this fit, and then the fit has to be developed and sustained. Forgive the long read, but if you’re an owner, an operations executive, or work in senior management, I expect you will find it informative and helpful.

Excerpted from:
Second in Command: The Misunderstood Role of the Chief Operating Officer, by Nathan Bennett and Stephen A. Miles (HBR May 2006)

A UNIQUE POINT OF REFERENCE

But it’s hard to discern whether a COO who has succeeded in one company has what it takes to be COO in another; the skill set is neither generic nor very portable.

Finally, there is no single agreed-upon description of what the job entails or even what it’s called. Often, companies turn responsibility for all areas of operations over to the COO—this typically includes production, marketing and sales, and research and development. In some firms, the job is to be Mr. Inside to the CEO’s Mr. Outside. In others, the mission is focused on a specific business need. The most cursory survey of COO job designs shows real disparity in spans of control, decision rights, reporting structures, and the like.

How can a title accommodate such diversity and still be meaningful? Answering that question requires a shift in perspective. The key is in the orientation of the role. While other jobs are primarily de?ned in relation to the work to be done and the structure of the organization, the COO’s role is de?ned in relation to the CEO as an individual.

SEVEN KINDS OF COO

If the COO role is de?ned primarily in relation to the CEO, and no two CEOs are exactly alike, does that mean the job simply defies definition? Not quite. What became clear in the course of our research is that the differences among COO roles arise from the different motives behind creating the position in the first place. It turns out there are seven basic reasons why companies decide to hire a COO, and these yield seven roles that COOs can play vis-à-vis their CEOs. Readers will recognize that the seven reasons are not mutually exclusive, though in this initial presentation we treat them as such.

1. The Executor

One role of a COO is to lead the execution of strategies developed by the top management team. It’s simply a concession to the complexity and scope of the CEO’s job today, with its numerous external commitments. Managing large, often global, enterprises sometimes requires two sets of hands; in such cases, the COO typically takes responsibility for delivering results on a day-to-day, quarter-to¬quarter basis.

This is why the COO position is nearly ubiquitous in businesses that are operationally intensive, like the airline and automotive industries, as well as in organizations that operate in hyper-competitive and dynamic marketplaces like high-tech ?rms. By bringing in a COO to lead and oversee the day-to¬day operations, Seagate allows Watkins to focus on the strategic, longer-term challenges the company will face. CEO Watkins is clearly oriented with his “head up” to understand success in the future, whereas COO Wickersham has his “head down,” focused on the operational details necessary for success today.

2.  The Change Agent

Just as Microsoft did when it hired Kevin Turner, some companies name a COO to lead a specific strategic imperative, such as a turnaround, a major organizational change, or a planned rapid expansion. While the mandate is not as broad as the general execution of strategy, the magnitude of the challenge demands that the change-agent COO have a degree of unquestioned authority similar to that of an executor COO.

3. The Mentor

Some companies bring a COO on board to mentor a young or inexperienced CEO (often a founder). A rapidly growing entrepreneurial venture might seek an industry veteran with seasoning, wisdom, and a rich network who can develop both the CEO and the emerging business. One could logically hypothesize that as the CEO develops, this COO role might either disappear or be heavily restructured.

4. The “Other Half”

A company may bring in a COO not as a mentor, but as a foil, to complement the CEO’s experience, style, knowledge base, or penchants. Observers have viewed the relationships between Bill Gates and two of his previous COOs, Jon Shirley and Michael Hallman, in this light. Jon Shirley, according to one observer, provided a “calm, self-e?acing balance” to Gates’s brilliant and often intimidating a?ect. In such cases, the COO role is usually not meant to lead to a higher position—but sometimes it is.

5. The Partner

Sometimes, the CEO is simply the kind of person who works best with a partner. This can lead to what’s been called a “two in a box” model and is similar to what authors David Heenan and Warren Bennis have termed “co-leadership.” Indeed, Heenan and Bennis contend that more companies should create and cultivate co-leadership arrangements. But it’s probably true that, just as there are doubles specialists in tennis, only some executives are more e?ective when paired.

6. The Heir Apparent.

In many cases, the primary reason to establish a COO position is to groom—or test—a company’s CEO-elect. The broad purview of the job allows an heir apparent to learn the whole company: its business, environment, and people.

Certainly, being identified as a likely heir does not represent anything approaching a guarantee. On the one hand, an otherwise valuable senior executive may leave if the top job ultimately goes to someone else—or isn’t offered soon enough. On the other hand, the COO’s performance can indicate that the heir title was inappropriately or prematurely bestowed. Several prominent COOs who seemed to be on the glide path to the CEO’s o?ce instead leave their companies; they include John Brock (Cadbury Schweppes), Mike Zafirovski (Motorola), John Walter (AT&T), and Robert Willumstad (Citigroup). Regardless of whether each left because he was passed over for the CEO position, because the timing was not as advertised, or because he found greener pastures, the succession plan unraveled.

7. The MVP

Finally, some companies o?er the job of COO as a promotion to an executive considered too valuable to lose, particularly to a competitor. With this strategy, an organization may try to hedge its bets by stopping short of identifying a specific heir or setting a time-table for leadership succession, in an effort to keep its high-potential executives intrigued about what the future might hold for them, should they stay on board.

ELUSIVE LESSONS

In truth, as we’ve said, the seven roles are not mutually exclusive. Though it’s hard to imagine a single person wearing several of these hats all at once, it’s quite possible that a COO could wear two of them simultaneously. Understanding the roles distinctly, however, and considering their di?erences reveals a few things clearly.

First, the typology we’ve outlined makes it easy to see why COOs have been hard to investigate in any scienti?c sense. Even where studies have been done, it’s often impossible to draw useful lessons from them. For example, one of the few empirical examinations of the role was conducted by Donald Hambrick of Penn State and Albert Cannella, Jr., when he was at Texas A&M. As they reported in the October 2004 issue of Strategic Management Journal, a review of ten years of data on 400 companies showed that ?rms with a CEO-COO structure had underperformed relative to their industry peers. It’s a provocative finding, but its implications are far from apparent. Is the structure itself to blame? Or was a COO hired to compensate for a weak CEO? Put another way, is the COO part of the problem or part of the solution? Hambrick and Cannella o?ered both explanations, and other theories could be constructed. Our work suggests that divining answers from such broad surveys is inherently difficult because the nature of the COO job is so deeply contextual.

Second, knowing the variety of roles that COOs play sheds light on the phenomenon of the “vanishing COO.” Some observers, counting the instances of companies declining to ?ll vacated COO spots, have concluded that the position is headed for extinction. After a COO departs, it often appears that his or her duties have been divided up among top managers without much disruption. When Steve Heyer left Coca-Cola, his responsibilities were dispersed in this fashion, and the position was not filled. When COO Gary Daichendt left Nortel Networks (after just three months), his tasks were assumed by the then CEO, Bill Owens. But the job is oftentimes reinstated or created in a company that didn’t use it before. At Microsoft, for example, rumors of the COO job’s death turned out to have been exaggerated. Although it sat idle for several years after Rick Belluzzo’s departure, it was revived when Kevin Turner was hired.

Finally, the tremendous variation in COO roles and responsibilities manifestly implies that there is no standard set of “great COO” attributes. This makes finding suitable candidates difficult for executive recruiters (as one of the authors can attest). More important, it stymies the CEOs and boards who must select among the candidates. The existence of seven different roles suggests at least seven di?erent sets of attributes on top of the basic—and infinitely variable—requirement that there exist a personal chemistry between the COO and the current CEO.

THE UNDERPINNINGS OF SUCCESS

Even though the role is so contingent, we have identi?ed some success factors that came up consistently in our interviews with executives in widely varying situations. The single element most critical to the success of a CEO-COO pairing, we quickly saw, is the level of trust between the two individuals. To speak of trust is almost a cliché, but the vehemence with which our research participants stressed it suggests they consider it more crucial here than in any other business relationship. Wendell Weeks, who rose from COO to CEO at Corning, referred to the need for a “true partnership, in every sense of the word.” The trust has to be absolute, he said, “because there are those in the organization who are always seeking to drive wedges if they can.” Other executives speci?cally used the metaphor of having one another’s back. Hearing their comments, we were reminded of Harry Levinson’s insightful 1993 article, “Between CEO and COO,” in the Academy of Management Executive. In it, he wrote, “The relationship…is fraught with many psychological complexities. Perhaps it is the most di?cult of all organizational working relationships because more than others, it is a balancing act on the threshold of power.” Levinson went on to explore the dysfunctions that can arise in such situations: unhealthy rivalries, defensiveness, over-control, rigidity, misconceptions, and doubt.

How can a pair of executives get past such perils and develop an extraordinary level of trust? Again, consistent themes in our interviews suggest the answer. The CEO must feel certain that the COO shares the vision, is not gunning for the top spot, and can get the job done. Conversely, the COO must be sure that the CEO will provide whatever is needed to do the job, will not put any obstacles in the way, and will not thwart future career advancement. Let’s explore this question more fully, framing it in terms of what each party owes the other.

WHAT THE COO OWES THE CEO

True respect.

Because a chief executive relies so heavily on the second in command to accomplish mission-critical goals, it’s essential that the COO wholeheartedly believe in the CEO’s strategic leadership. Chief operating o?cers, by virtue of their inherent talents and their organizational position, are highly visible and powerful. If the COO is not aligned with the CEO’s vision, or not convinced that the CEO can ?nd the best path forward, then that lieutenant is capable of real mischief. Dan Rosensweig, COO at Yahoo, described for us the hours he spent talking with CEO Terry Semel before joining the company. Rosensweig invested the time because, in his words, “you have to get in sync with the CEO. If you have an agenda that is di?erent than his or hers, you will absolutely fail the company.”

An ego in check.

In the interviews we conducted—particularly those with COOs—we heard repeatedly how critical it is for seconds in command to check their egos at the door. It’s a tricky balance to achieve, given that COOs must obviously be self-con?dent leaders. “You have to lead while serving,” stressed eBay COO Maynard Webb, immediately adding, “It has been the hardest job that I have ever done.” Interestingly, he then followed up with another reason why the job is hard: “It is not as immediate with gratification as any of the line jobs that I had. When you are solving technology issues, such as is the site up or not, it is pretty black-and-white, and you see some of the results pretty quickly. But you are working on things through a lot more layers as COO, and the results come much slower.”

These sound like two very different reasons for a job to be hard, but we suspect they may be intertwined. Often, the results do come more slowly—and often they come in a way that makes their proper attribution more difficult to discern. Regardless, the COO is not necessarily in line to receive the kudos for a job well done.

An eye on execution.

Back in the 1990s, people in organizations jokingly picked up on a phrase from the television series Star Trek: The Next Generation. In it, starship captain Jean-Luc Picard, having settled on a course of action, would simply instruct his crew to “make it so.” CEOs in general can’t quite get away with that, but to the extent that they are focused on strategy, they rely on COOs to oversee much of the implementation. They must be able to trust that they can a?ord to address longer-term and bigger picture issues because their second in command will maintain a focus on the here and now. Even COOs who are not primarily playing the executor role should have an execution mind-set and a bias toward action.

Coaching and coordination skills.

A COO must be able to direct and coach others throughout the business. Steven Reinemund, now chairman and CEO at PepsiCo, gave us his thoughts on the challenge. He was promoted to COO after having led a business unit and, he told us, “I had to think long and hard about whether I really wanted to move out of running the day-to-day business into a role where I coach and coordinate.” Being a division president, he explained, “is a hands-on job. You get to mold the strategy; you get to direct the e?orts every day. You have the functional people that you work with, and that team performs against a mission, and it is an exciting experience.” The COO job, by contrast, requires an individual who “can step out of doing day-to-day, hands-on directing and leading of a business, and direct and teach and coach others.” Again, regardless of which of the seven roles a COO plays, the CEO must be able to trust that these skills are in place.

WHAT THE CEO OWES THE COO

Communication.

The COOs we spoke with understood that the onus was on them to embrace the CEO’s strategy and work to make it real. But no one can execute against a plan that’s not being communicated clearly and directly. CEOs constantly have fresh thoughts with operational implications; they must be in the habit of discussing those with their COOs without delay. Ken Freeman told us how he and Surya Mohapatra kept the lines of communication active at Quest Diagnostics. “Sunday at 4:00 pm became the time for us to have lengthy discussions….We would see each other at the o?ce, too, of course, but there we would be scurrying around working on the integration of the [merged] companies, driving the company’s performance, and making things go. We had each other’s undivided attention via telephone starting at 4:00, virtually every single Sunday for ?ve years.” Another CEO we interviewed admitted an early mistake: locating his new COO’s o?ce in a separate building, thereby failing to capitalize on the rich communication a?orded by physical proximity.

CEOs constantly have fresh thoughts with operational implications; they must be in the habit of discussing those with their COOs without delay.

Clear decision rights.

To a person, the executives we interviewed stressed the need for explicit and reasonable lines of demarcation between CEO and COO responsibilities. While there was no consensus on what exactly should be part of each job, everyone agreed that the matter had to be sorted out at the start of the relationship. It’s far easier to delineate boundaries when the two individuals clearly have complementary competencies and each naturally gravitates to di?erent areas of expertise. The greater the overlap in competencies, the greater the likelihood that the COO might feel (perhaps accurately) that the CEO is micromanaging and second-guessing decisions. Such behavior on the part of the CEO communicates to the COO a lack of trust that is likely to engender friction in the relationship. When we raised this point with Bob Herbold, another former COO at Microsoft, he responded: “To me, this is a key issue. The way it gets worked out is the individuals—through trial and error, as well as through discussions—?gure out who is going to be doing what and who needs to check with who on key decisions….How the pair will make that happen needs to be agreed to very early in the relationship.”

A lock on the back door.

Obviously, the creation of the COO role adds a layer of management; executives who previously had direct access to the CEO now have an intermediary to address. One of the COO’s first challenges is to develop relationships with direct reports that discourage them from seeking backdoor access to the CEO. At the same time, the COO must depend on the CEO to block efforts by those who might want to circumvent the position. This is not to say that restricting access to the CEO is the goal. Ed Zander, now CEO of Motorola, previously served as COO of Sun Microsystems under Scott McNealy. Zander says the two made it clear that any of the COO’s direct reports was entitled to go to McNealy to talk about things. But the lines of responsibility were still respected. “One thing that Scott did very well was to never undermine me,” Zander told us. “He always backed all my decisions. He would hear people out but then send them to me.”

A number of the people we interviewed noted how much personal discipline is required on the CEO’s part to maintain this kind of line. “I have been working on nailing that back door shut for a while,” eBay COO Webb told us. “I think it is a tough, tough thing to do, especially when you have a CEO that actually loves to get involved in problem solving and wants to help. I think what you have to do in that case is to enable, not control, communication and be transparent.”

A shared spotlight.

Without exception, the COOs we interviewed accepted the fact that their job was to make the CEO successful—and that in doing so they in many ways rendered their own contributions less visible. But, especially for COOs who aspire to the top job, that creates a dilemma. Jim Donald, president and CEO of Starbucks, noted that what gets executives to the role of president and COO “won’t necessarily earn them a CEO role. Once you are in the COO role, you have to…broaden the network of things you do. You need to work with the board, work with the CEO, and work to lead others to be successful.”

It falls upon the CEO’s shoulders to make sure that this development takes place and to share the spotlight whenever appropriate. If the CEO is not deliberate about this, then the board will have no reason to be impressed by the number two, who may then prove ultimately unpromotable. Kevin Sharer, who was COO at Amgen before he became CEO, lays heavy emphasis on this point. He told us that the success of the CEO-COO relationship is “75% dependent on a few things that the CEO does.” He framed those things for us as a series of important questions:

Does the CEO give the number two real authority, real operating responsibility, power that is real, power that is seen by the rest of the company as real? Second, does the number one actually encourage and let the number two person have his or her own voice in board meetings and operating reviews? Third, does the CEO give coaching, counseling, and really see the success of the number two as part of the company’s success?

A ROLE ON THE RISE?

Ask anyone who has worked as or alongside a COO—the job is demanding. Now we know it’s unique, as well. Perhaps that’s why COO is the only C-suite title to which there is no magazine devoted. It’s a trivial observation but perhaps a telling one; the common set of issues and interests that would imply simply does not exist.

Is it a role in decline? Some observers, as we have said, certainly think so. The Hambrick and Cannella study, for example, found a 22% decline over ten years in the number of ?rms with executives holding that title. Yet in the last few years, companies in a wide range of industries have announced new COOs, including Microsoft, RadioShack, Airbus, Allstate, KPMG’s U.S. subsidiary, Alcatel, Chiron, Nissan, BellSouth, Comcast, Eli Lilly, Apple, and Medtronic.

We can easily argue that there is a growing need for the role. First, consider the widening scope of the CEO’s job. Today, we have bigger companies, with expanding global operations, aggressively pursuing acquisitions. CEOs are asked to be public figures, communicating with many constituencies at the same time that increasingly democratic and knowledge-based organizations require them to spend a great deal of time campaigning internally for any change they hope to make. Second, companies are becoming more deliberate about succession planning. Boards are anxious to identify and groom heirs and often see the COO title as a useful step in the process. Finally, the easy mobility of top talent means companies must ?nd ways to hold on to their most valuable non-CEO executives. The COO title can be effective in staving off wanderlust.

In light of these trends, it’s surprising that COOs are not more common. Our suspicion is that they would be if there were less variability and confusion surrounding the role. Board members aren’t sure when the position will add value. Recruiters don’t have an obvious pool to tap. CEOs don’t know whom to trust. Potential COOs don’t know whether the job is right for them. This is why it’s vital to build on the work we’ve outlined here. As we continue to demystify the role of the COO, more companies will benefit from more effective leadership.

A version of this article appeared in the May 2006 issue of Harvard Business Review. 

Nate Bennett is a professor with the Robinson College of Business at Georgia State University. He is the author of Your Career Game and Riding Shotgun: The Role of the COO.

Stephen A. Miles (smiles@heidrick.com) is an Atlanta-based managing partner in the Leadership Consulting Practice of the executive search firm Heidrick & Struggles and a coauthor of “Second in Command: The Misunderstood Role of the Chief Operating Officer” (HBR May 2006).

For the complete article:  HBR: Second in Command – The Misunderstood Role of the Chief Operating Officer

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