COOs have potential to shape future success for organizations

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  • Forty-nine percent of COOs thrive on today’s constant change and challenges
  • ‘Big data’ a powerful opportunity for the COOs to identify emerging trends and create new insights
  • Forty percent of COOs aspire to be promoted to CEO within the next five years but have to prove their value to the business first

London, 2 November 2012 – With the toughest job in the C-suite, Chief Operating Officers (COOs) who can combine deep operational knowledge with broad strategic insight are ideally placed to innovate and create future growth for organizations according to EY’s DNA of the COO report released today. The report, based on a survey of over 300 senior operational professionals globally and 43 in-depth interviews with C-suite peers, highlights how the role of the COO has changed dramatically over the last decade from an operational to a strategic role – with real power to change an organization.

The ability of a successful COO to extract structural clarity within today’s complex and fast-changing environment can be a clear benefit for any organization looking to innovate and grow. However, combining the operational focus with a strategic perspective is not straightforward and 49% of the COO’s C-suite peers strongly agree that it is one of the most difficult roles in the management team, requiring strong leadership to catalyze and implement the strategic agenda.

On the role of today’s COO, Adrian Edwards, EY Global Supply Chain & Operations Leader, comments, “Operations are increasingly of strategic importance addressing both the revenue and the cost challenges that organizations face. If you think of the critical role that the COO now plays in new channels to market, and in enabling revenue growth, then it becomes clear why the role is now so fundamental to the success of a business.”

Growing scope of COO role increases the complexity
With one in three respondents indicating the most striking changes to the role over the past five years being increased complexity and a wider set of tasks, it is encouraging that 60% report this is fundamentally what makes being a COO worthwhile. Indeed, 49% of respondents strongly agree that they thrive on the constant change and challenges. Beyond the traditional operational demands being placed on the COO, many have become the ‘go-to’ person for handling any larger business transformation initiatives; harnessing the focus and capabilities of the COO to manage the pace of change, which continues to accelerate within the business environment.

New technology has played a significant part in this acceleration, with COOs now facing an ever increasing volume of data to analyze and respond to. While ‘big data’ presents operational challenges, it also provides a powerful opportunity to identify emerging trends and combine datasets to create new insights into the business, with 46% of COOs reporting that understanding analytical and predictive models as very important in their role.

A focus on analytics is also increasing the transition, within the COO role, away from a purely operational focus to one that also encompasses a forward looking, strategic perspective. Seventy percent of their C-suite peers consider the ability to participate in strategic discussions a vital skill for the job, along with other abilities, such as delivering business transformation effectively.

Leadership skills are vital, but confidence is lacking
In order to deliver key elements of an organization’s strategy successfully, like business transformation, clear leadership is essential. Eighty-seven percent of COOs report that highly developed leadership qualities and interpersonal skills are the most crucial attributes; yet many COOs (57%) recognize a need for improvement. This lack of leadership confidence and profile is reflected in the perceived value of the COO amongst the C-suite.

Edwards comments, “When asked whether a company would perform worse if it had no COO, only 51% of C-suite executives were very certain.

Therefore COOs have more to do in order to prove their value to the rest of the organization and for those who aspire to the CEO position, it is essential to make their input more visible to both internal and external stakeholders.”

Rapid-growth markets: shaping tomorrow’s leaders
When looking ahead, just 40% of COOs polled aspire to be promoted to CEO within the next five years, however among rapid-growth markets respondents the proportion increases considerably to 54%. With many COOs in developed markets focused on eking out greater operational efficiencies to defend their company’s market position, rapid-growth market COOs have a more enviable priority list, including the need to build capacity, scale up production and ensure that the right resources are in place to capture growth opportunities.

This agenda demands a highly entrepreneurial and strategic mindset, along with the ability to introduce efficiency and process optimization so that growth can be sustainable. The rapid-growth COO recognises that growth needs to take place in the context of greater efficiency; and this dual focus on top-line growth and bottom-line performance requires a broader palette of skills, makes them highly attractive candidates for other leadership roles in the future.

When looking at the evolving role of the COO going forward, Edwards concludes, “The days when COOs could focus their attention on the nuts and bolts of operations are fading. Today, mastery of operational issues is a given, and COOs have a clear opportunity to help define the strategy that underpins a CEO’s vision and then take the lead in implementing it. Perhaps more than any other executive, COOs have the power to change the organization. And as companies look to an uncertain future, this is a skill that will remain in high demand.”

For more information and to download the report, visit www.ey.com/dna-coo.

About EY
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