A guide for aspiring COOs: making the case for the job

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  • Sixty-three percent of COOs believe that mastery of change management is the most important skill followed by the ability to engage effectively at board level on strategic issues
  • Forty percent of COOs regard their position as a stepping stone to the top job – fifty-three of their c-suite peers believe this will happen within five years
  • Other critical skills and experience required include deep and wide business knowledge, being able to identify and leverage global best practice and leadership – influencing and motivating people

Johannesburg 16 October 2013:  There’s no single route to the role of chief operating officer (COO). Rather, it is a position that attracts the most talented and diverse individuals from all corners of the business, all of who share a passion for making an organisation work better. Indeed, a look at the varying career paths of COOs within the world’s leading companies highlights that the routes to the top are as diverse as the demands of the role itself.

This is according to  EY’s Aiming for the top, a guide for aspiring COOs and their organisations (pdf, 3.6mb) report released today. The report, builds on the conclusions of the EY 2012 The DNA of the COO report which included a survey of over 300 COOs.

How to get there

To get hired as a COO, prospective candidates must possess an impressive portfolio of skills and experience. Depending on the sector in question, this often requires relevant technical expertise. This could be to understand the specifics of power production in the utilities sector, or the precise details of drug manufacturing in pharmaceuticals. But there is also the need for strong strategic and leadership capabilities.

Roderick Wolfenden, EY Advisory Leader for Southern Africa says “the role of the COO is dependent on effective leveraging of both hard and soft skills due to the  diverse nature of the role which cuts across a number of competencies. This report highlights some of the critical capabilities that the COO must possess such as mastery of change management, setting and enforcing robust operational controls and engaging in strategic board-level discussions.”

Skills needed to succeed as a COO

The report which follows the career paths of almost 100 COOs including Mlamuli Buthelezi, COO, Transnet Freight Rail and Kofi Amegashie, Managing Executive-Africa, Adcock Ingram found that there are seven specific capabilities required by aspiring COOs.

Transformation: mastery of change management

63% of respondents believe that the mastery of change management is most important. This is due to the role of the COO being to oversee and steer an ongoing change process, whether in response to cost-reduction concerns, technology trends, globalisation or other internal and external forces. The aim is to focus continually on developing the best strategic plans in response to shifting conditions, and then to define and implement a change management process that instils this within the organisation. While other functional leaders might typically handle the more niche change programs within specific functions such as finance or IT, the COO often gets called upon to lead more fundamental transformation initiatives across the wider business.

Effective change management and business transformation skills can be learnt on a number of specialist courses, but there is no substitute for hands-on experience. Candidates need to find opportunities to lead several change or transformation projects to develop the necessary tools and capabilities — ideally ones that scale up in terms of size and complexity. Doing this early on in a career will give them a portfolio of successful initiatives to showcase — and the chance to learn from the inevitable mistakes that they will make.

Strategy: engaging in board-level discussions

The most obvious difference between an operations manager and a COO is the need to engage effectively at a strategic board level. It is one thing to update a team or colleagues on the specific progress of a given initiative; It is entirely another to outline, assess and challenge broad strategic options at board level. Ultimately, COOs should be able to take the vision of the CEO, and translate it into a workable reality.

Aspiring COOs need to prepare for this transition by understanding how to formulate strategy by setting objectives, and mapping out resources, initiatives and milestones against them.

Compliance: setting and enforcing robust operational controls

Businesses from financial services to life sciences, and power and utilities need to have strong internal controls, both financial and operational. There are several recent examples of global banks where the failure of internal controls  led to issues ranging from money laundering to rogue trading not being picked up, and resulted in significant losses and reputational damage. Responsibility for setting up and enforcing such controls often lies with the COO. This is not merely about mitigating risks or avoiding compliance failures. Strong operational controls can also enhance the business, ensuring that processes run smoothly and in accordance with the overall operational model. Managing operational controls draws on several areas of experience and learning. The prospective COO must understand the frameworks that are important to a particular sector and be familiar with related regulatory requirements.

Structure: designing and implementing the organisation’s operational model

Any company’s operational model can be broken down into people, processes and technologies. But the magic that makes one model succeed over another lies in how it is configured and aligned to the overall strategy, and how its performance is measured. The reason many companies appoint a COO in the first place is to help provide the right balance between the CEO’s overall vision and the practical operating solution that underpins this. Working out the best approaches requires knowledge of modelling techniques. This enables the prospective COO to map out different options, assess what impact they make, and back them up with hard facts. It also requires a willingness to shake up the status quo.

Performance: proficiency in identifying and extracting efficiencies

Finding efficiency gains wherever possible is key to surviving in an increasingly competitive, volatile and uncertain environment. Typically, this is now part of the COO’s remit, not least given the role’s exposure and input across so many different facets of the business and wider supply chain. There are several aspects to learning this kind of skill set. First, the prospective COO needs a thorough understanding of the company’s processes. This is a basic prerequisite for being able to spot improvement opportunities. Another necessity is to have a clear grasp of how other functions operate, especially how various back-office operations support the commercial front of the business. This understanding also helps provide the bigger picture of how they all fit together.

Insight: deep industry and market knowledge

Compared with many of their functional peers, COOs are usually required to have a granular understanding of their sector’s operational approach. Beyond this core insight into the inner workings of their business, COOs also need a solid understanding of its commercial dynamics and how they are evolving. This grasp of both the operational detail and business realities has to be backed up with a solid comprehension of the macro trends taking place within the given industry. In all of this, COOs are at the forefront of determining what these changes will mean for the business, and what kind of adaptation will ultimately be needed.

Global: finding a multicultural management approach

To operate at the highest levels of business, COOs need to bring a clear appreciation of how to manage in a globalised marketplace. Whether selling into multiple markets, setting up worldwide supply chains and operations, or employing a highly mobile international workforce, a global approach is a must. So it is important to understand the dynamics of other cultures — from how consumers and employees behave, to the nuances of local regulation. Aspiring COOs must be attuned to such sensibilities, not least as the focus of operations continues to evolve.
In conclusion, Roderick says, “given the increasing focus on growth and stakeholder management by many CEOs, the responsibility for strategy execution is increasingly falling to the COO. It is no wonder that the breadth and depth of capabilities required to be successful in this role is so vast. The value that COOs are contributing to their organisations is finally being given the recognition that it deserves”.

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