The COO Operates Innovatively And Beyond Established Frameworks

The COO Operates Innovatively And Beyond Established Frameworks
At the invitation of Management Scope and consultancy firm Valcon, COOs from various companies came together. The role of the COO varies per organization, and so do the challenges. That does not rule out the fact that there are also similarities. What unites COOs, and in what way is their role changing?

The conclusion of the discussion was clear: according to the participants, the COO increasingly is the linchpin for the functioning of the business. Obstacles must be replaced by solutions, but these require more knowledge and insight than the COO can provide. More is expected from the COO than ‘just’ overseeing operations. Currently it seems to be expected of him or her to adapt the conditions to what the organization needs. This has transformed the role of the COO from an operational all-rounder to a strategic leader who identifies and directs developments around the business in a timely manner. Despite this, COOs are still proud to represent execution – the production, the ‘real work.’

All themes are COO themes
The attending COOs were affiliated with organizations in both the public and private sectors: large organizations where both business and societal issues are high on the agenda. Societal issues that arise — energy transition, sustainability, affordable housing, accessibility, labor market, existential security — translate into projects and assignments, both internally and towards the market. The topicality and urgency of these developments increasingly require major adjustments to the organization. This is because the market and society are so subject to change that new questions constantly arise. New both in scale, such as the transition from construction of major infrastructure works to replacement and maintenance, and in urgency, such as making housing construction more sustainable or making transportation more sustainable.
Additionally, there are societal developments where the organization must find answers for the sake of its own functioning. Increasingly fewer people can build a reasonable livelihood through work. Housing, for example, is becoming less accessible for middle incomes. While not a typical COO theme, this is a significant issue with a major impact on the business and is therefore relevant for the COO.

Agenda under pressure
The government growingly expects organizations to contribute to solving complex societal issues, particularly regarding sustainability. The theme is brought to the heart of the business through legislation and regulations. An example is the EU Taxonomy, a classification system for sustainable activities that allows companies and organizations to be assessed on their investments. It requires significant effort from organizations to comply with such legislation. These issues also put pressure on the internal agenda of the COO, especially in healthcare. With more than 30,000 vacancies and less than 4,000 annual entries of vocational nurses to the job market, there is a growing focus on the COO, the specialist for execution, to find solutions to every business-related issue.
There is also societal pressure that influences the agenda of the COO. Organizational reputations are vulnerable, especially for large organizations with a strong public function and for government agencies. Governments, media, non-profit organizations, and the social environment exert pressure on organizations to take social responsibility. Often, if something goes wrong, the COO, as the person responsible for execution, becomes the scapegoat.

Less execution, more strategy
Adapting to various developments generally means that the COO adjusts the organization to the circumstances. Many organizations have already done this: reducing fragmentation, more uniformity and clarity of policies, on an international level too, without compromising autonomy and effectiveness.
Guarding the organizational culture is also crucial for the COO. Despite numerous adjustments and changes, the entire organization must maintain clarity on connections and coherence, regardless of business units or country locations. The stronger the positive experience within an organization, the lower the undesirable turnover, and the higher the commitment. Sometimes, employees may criticize the company, policies, and top management internally, but they rally when external parties challenge the organization. Both higher and lower-educated employees must experience consistency in strategy, no matter how it is manifested.
These developments make the role of the COO more focused on strategy and less on execution. More and more, the COO is the person ensuring that the business can deliver in the areas of sustainability, digitalization, and industrialization. This can sometimes lead to new services or products, such as bringing fully circular products to market.

This means that the COO dares to operate in innovative ways, outside the conventional frameworks. In addition to new products and services, organizations are forming new partnerships with other organizations, where knowledge sharing is emphasized. This is based on the conviction that traditional competitive relationships can sometimes hinder solutions rather than provide advantages. Collaboration has become a key skill for the COO. The COO also ensures a more integrated approach. There is less room for sequential processes: too time-consuming, too slow.
At the same time, the COO must show a sense of realism. Large solutions that offer relief in 2030 are pointless if the organization cannot reach 2026 by implementing it. Circumstances can change quickly and unpredictably. The arrival of COVID-19, for example, was unexpected. The consequences of the pandemic were so significant that they still echo in many companies. Expectations and norms can also change rapidly. A COO is not judged based on the norms that applied when a decision was made, but on the norms relevant when those decisions are later reviewed.

Life experience is a requisite
The enlarged role in the business has made the COO more influential, also in disciplines such as IT and HR. Increasingly the COO is found standing next to the CEO, outlining how the organization aligns with what the market and society demand. However, the COO does not hold the key to model the business. The powers of the COO are often limited to a specific region for example. Additionally, there are hierarchical limitations. The COO must work together with the CEO and CFO and sometimes with the management of branches, staff, and business units. Even though the COO increasingly operates in a managerial role, he or she is not always part of the Board of Directors. Furthermore, the COO is heavily dependent on stakeholders, such as shareholders, politics, or departments. Decision-making from external sources or legislation can be unpredictable.
The role of the COO has also changed due to the multitude of rapid developments. More than expertise, experience is required. It is a role suitable only for someone who knows every corner of the organization, has faced setbacks, and recognizes their own limitations. These are necessary experiences for the know-how of setting an organization in motion. It is not a role for a young, ambitious manager. The roles of CFO and CIO, more technically oriented executive positions, may still suit those in their 30s. However, the COO of today can only hold his or her ground with a good dose of life experience.

This article was published in Management Scope 01 2024.