Weekly Business Insights from Top Ten Business Magazines | Week 327
Extractive summaries and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Since September 2017 | Week 327 | December 15-21, 2023
Strategy & Business Model Section 1
Why do organizations have COOs?
Mckinsey & Company | December 6, 2023
Extractive Summary of the Article | Listen
The COO is often the unsung hero of the C-suite. In 2000, 48 percent of Fortune 500 and S&P 500 companies had a COO. By 2018, that number had dropped to 32 percent. But the COO role is making a comeback. As of 2022, 40 percent of leading companies have a COO, with financial and energy sectors leading the way at 48 percent. They are often leading contenders for the top job: in 2021, nearly 27 percent of CEOs in Fortune 500 and S&P 500 companies were promoted from the COO role, more than from any other internal position. In 2022, the authors spoke with several current and former COOs to understand the most critical skills they needed to manage the challenges they faced in their roles. Majore five among them are:
- Get (way) better at anticipating change. Upheaval is now the norm—both globally and locally. Companies, and their operations leads, need to be prepared for any disruptive event, no matter how far-fetched.
- Collaborate with other key functions and help shape the agenda. Cross-functional engagement is key for COOs, especially when it comes to sales and marketing. An understanding of the customer value proposition is essential for operations leaders, and a close relationship between operations and marketing functions can deliver better customer experience.
- Engage effectively with boards. Since the pandemic, boards of directors have developed a greater appreciation for close collaboration with top-management teams. COOs should take advantage of this opportunity to raise the operations profile to the board.
- Drive operational excellence culturally and technologically. Operational excellence is especially difficult in volatile environments—like the one we’re experiencing today.
- Manage talent creatively. In the wake of the pandemic, COOs are confronting a new set of talent-related challenges. It’s up to them to provide pleasant working conditions, meet employee needs, ensure diversity and equity in the workplace, and create an appealing corporate culture.
The COO agenda guides COO actions, helps the COO focus on things only they can do, and tests whether investments are being made in the right places. Each COO agenda’s core elements will vary by company and context, but the primary elements should include the following: Vision, Plan and execution, Stakeholder engagement, Organization and talent, and Personal operating model.
A vision without a plan is just a wish—progress is unlikely to happen by itself. A solid plan is essential for moving forward. To build a robust plan, COOs should ask themselves the five following series of questions, corresponding to the five above core agenda elements:
- Operations: What is the organization’s current performance and capability? What will it take to achieve performance aligned with the vision?
- Stakeholders: What are the expectations of the CEO and other members of the C-suite? What about the board, employees, and customers?
- Culture: What is the organization’s culture, and does it need to adapt or change? How can I influence those changes?
- Team: Are the right team members in the right roles? Does the organizational structure support the operational requirements necessary to achieve the vision?
- Yourself: What are my strengths and weaknesses? Am I meeting the requirements of my role?
3 key takeaways from the article
- The COO is often the unsung hero of the C-suite. In 2000, 48 percent of Fortune 500 and S&P 500 companies had a COO. By 2018, that number had dropped to 32 percent. But the COO role is making a comeback. They are often leading contenders for the top job.
- Five most critical skills COO needed to manage the challenges they faced in their roles: get (way) better at anticipating change, collaborate with other key functions and help shape the agenda, engage effectively with boards, Drive operational excellence culturally and technologically, and Manage talent creatively.
- Each COO agenda’s core elements will vary by company and context, but the primary elements should include the following: Vision, Plan and execution, Stakeholder engagement, Organization and talent, and Personal operating model. To build a robust plan, COOs should ask themselves series of questions related to the the following five areas: operations, stakeholders, culture, team, and yourself.
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Topics: COO, Operations, Strategy