Five Critical Concerns for COOs

Five Critical Concerns for COOs
Chief operating officers are often occupied with day-to-day operational concerns. Joost de Haas, Partner at consulting firm Valcon, contends that COOs must once again become co-owners of certain strategic areas, and explains what they should focus on to find future success and remain a key player in the board room.

The COO is an important – if not indispensable – officer in a company. Operation is after all a key pillar of any organization. Thus, the COO fulfills a pivotal role. One major pitfall however is that they often get completely caught up in the day-to-day bustle. Every day brings new fires to put out and issues to resolve. Sometimes, it seems, this leaves no time for attention to key strategic matters.
Moreover, recent decades have seen all manner of “special envoys” join the board: Chief Digital Officers, Chief Data Officers and Chief Transformation Officers. This has allowed many organizations to make and accelerate progress in these areas. However, many organizations now need to restore balance, and transfer execution in these areas back to the COO.

Rethinking the Role
It is vital for the COOs of the future to rethink their role. Performance of the role must be more expressly decoupled from day-to-day concerns. COOs will need to take on a more proactive role and once again become co-owners of a number of key strategic areas. For the COOs of the future, five points of attention will be critical. Naturally the nuances will differ according to the situation, such as the organization’s sector and stage of development.

The COO of the Future…

  1. Keeps the Focus on the Customer
    This sounds obvious, but it is and will remain the most critical point and, oddly enough, is still often neglected in practice. A surprising number of companies do not have their customer focus in order. Too many companies focus inward, under the banner of “operational excellence”. A stronger focus on a company’s internal organization than on customer experience should set off alarm bells. These cases require a shift towards express reasoning from the outside in. Thankfully more and more companies are centering the customer experience, including designing processes around “customer journeys”. The customer should be at the heart of all facets of operation. A lack of strong customer focus is a fatal flaw. The COO of the future should help define the customer experience and manage operations from this perspective.

  2. … Contributes to ESG
    Operational management has traditionally been the COO’s core business. However, the coming years will only see further growth in an area recently added to this traditional set of duties: The ESG agenda. All organizations will soon need to rework their policies for environmental, social and governance aspects. This naturally falls to the entire Board, but the COO in particular will often be critical to making key ESG aspects measurable and tangible and achieving actual progress. The ESG agenda also offers opportunities not only to make operations more sustainable, but to optimize them as well. The supply chain in particular often presents potential ESG gains, such as in the areas of environment and price fairness. The right ESG measures may result in a “fairer” and higher quality product and more reliable supply chains, and thus also in potentially lower costs.

  3. … Also Focuses on Technology and Data
    The COO of the future must become the owner or co-owner of the digital agenda in their organization. The “digital”, “data” and “technology” files should be in all C-level portfolios, but especially in that of the COO. This is not an invitation to say goodbye to the CDO or CTO, but rather a call for COOs to expressly increase their involvement in these files. A company digitization project under the responsibility of a COO is more likely to be succesful and create value, thanks in part to their unique overview of the operation. Naturally it is vital here for the COO to be aware of what the technology involves, and what technologies can contribute to the company’s operation and success. This means setting higher demands on the digital and technological skills of COOs and their teams. The COO must be up-to-date on the latest developments and possible applications, in areas such as robotics, AI and machine learning.

  4. … Works Continuously on the Talent Agenda
    The COO of the future will need to dedicate more time to the talent agenda. What makes an organization in general and the operation team in particular an attractive and challenging place to work? How will the company transition in response to data and technology trends and, consequently, what skills will it require for future success? As talent is currently in high demand, especially digital talent, this question is crucial. The COO will need to work with the other directors on the strategic talent agenda: Where can we find the various talent and skills required, both internally and externally? How do we develop talent and, just as importantly, how do we retain it? It is critical for the COO to exhibit co-ownership in this area and work in partnership with roles such as the CHRO.

  5. … Keeps an Eye on Transformation
    Outside of technology files, the COO of the future must also keep an eye on transformation. Over the coming years, companies will be in a continuous process of change. The change agenda, which will likely only be more extensive and dynamic in the future, should fall in part to the COO. The COO must take ownership in this domain as well, precisely due to the impact of the transformation on operations. The COO is excellently suited for the task of maintaining a balance between running the business and implementing the required changes. COOs share responsibility for managing the portfolio of initiatives, setting priorities, keeping an eye on the “span of change” and ensuring a proper landing from the transformation. They must also work with the other directors to regularly review progress on the overall change agenda and recalibrate as needed.

The “Now/Soon” Dilemma
All of these points of attention are critical for the COOs of the future, and should appear on their agendas. As noted, this is with different nuances based on the situation at hand. It is certainly not always easy. COOs in particular often face the “now/soon” dilemma: The “now” requires all the attention, the “soon” can wait. To break out of this bind, COOs must make a point of stepping out of the day-to-day bustle and focusing more on the above points. I challenge all COOs to check their agendas for the next few weeks. If they are ready for the future, the majority of their agenda items will fall under the five points above.

This essay was published in Management Scope 04 2022.