We’ve all heard someone say that something is “on the COO agenda” or “part of the COO agenda.” But what does that mean? All too often, it’s unclear. In a recent roundtable discussion, few COOs said that they had taken the time to think through and define their agenda.
Part of the reason lies in how people become COO. Most move into the role from a closely related operations position, making the transition feel like less of a change than moving between functions. There’s little trigger that would nudge a leader to step back and reflect.
Let’s provide one. Before starting a COO role, I’d encourage the new COO to answer two simple, critical questions:
- Why do we (the organization) have a COO?
- Why am I (specifically) in the role?
Understanding the context of the role is important, particularly the scope and the situation. The scope could encompass overall responsibility for primary or core operations, as is often seen in heavy industries, such as mining or transportation. In financial institutions or holding companies, by contrast, the COO might be responsible for business support functions, such as HR or back-office processes. In yet other organizations, the COO’s role is akin to a president, overseeing business units.
The situation refers to factors in the overall business—or market—driving what needs to happen in operations. A particular business may be undergoing significant transformation, for example, or a period of recovery. At one major retailer, the COO role was established to lead the operation until a designated successor gained more experience and was ready to move into a senior executive role.
The COO must then understand why they themselves are in the role. It could be because of a specific skill set, or linked to the overall situation—such as Industry 4.0 expertise in the case of digital transformation. Given that more than 25 percent of Fortune 500 CEOs came from the COO role, it could also relate to succession planning.
A particular COO may be selected to balance the strengths of another executive, such as the agribusiness COO whose detailed operational expertise provided a counterweight to a strategic, visionary CEO. The combination helped the company reach new levels of operational excellence.
The scope and situation illustrate a further important point: the COO role is much more than an extension of what the individual was doing before. The job is not just being a “super site manager” who now oversees multiple sites. It is a true C-level role, with a broader view and often new responsibilities.
Seeing what drives value
The COO must be crystal clear on what creates distinctive value for the company—hint: it probably isn’t just low cost—all while understanding what the strategy means, how operations drive the strategy, and which operational sensitivities will determine the outcomes.
Connecting the cascade of drivers to strategic objectives is essential. A logistics company launched a portfolio of operations initiatives, but found that even the most wildly successful ones had little impact on overall results. A mining company worked to raise the performance of individual sites until all showed “green,” only to discover that companywide operational performance remained “red.” In both cases, the linkages between the overall strategy and operations initiatives were broken—a gap that the COO is best positioned to fill, leading to better prioritization of operations efforts and investments so that they achieve strategic outcomes.
Setting the COO agenda
The COO agenda guides COO actions, tests whether investments are being made in the right places, withstands day-to-day firefighting, and helps the COO focus on “COO only” topics. The core elements of a COO Agenda vary by company and context, but in general, the primary elements include:
- Vision. My colleagues’ research found that only 22 percent of employees believe that their leaders have a clear direction for the organization. Understand the strategic mandate, and if it does not exist, create one.
- Plan and execution. While this step—the “how” of making the vision real—includes near-term operational excellence, it also looks 6/9/18/36 months ahead with a portfolio of initiatives designed for each team frame.
- Stakeholder engagement. One COO we interviewed defined operational excellence as “a full appreciation of the complete set of stakeholders and what their requirements are, including customer, board, public, and employees”. This is a clear “COO-only” topic, essential to leading operations in support of the business strategy.
- Organization and talent. The COO role is not about running the operation yourself, but about leading and enabling the operations organization. Experienced COOs have told us to ensure that the “team is in control”, and to “find the best team and lean on them”. The COO is responsible for creating the most capable operations organization, including succession planning.
- Personal operating model. The COO role and its responsibilities differ from previous roles. As one recent experienced COO described it, “You need to proactively manage the inertia of organizations. You need to manage how you spend your time and attention, how you lead, and how you interact with stakeholders.”
These elements will help a COO forge a proactive agenda, make decisions, and prioritize tasks. The perspectives and expectations of core stakeholders—investors, CEOs, and other C-suite executives—should also guide the COO agenda. We’ll explore each of these areas in follow-on articles in this series.