There is no single agreed upon description of what the job of a chief operating officer entails

Understanding what makes for a successful chief operating officer (COO) is vital because the effectiveness of COOs is critical to the fortunes of many companies and could be to many more. The second-in-command executive is a role that by rights should become increasingly prevalent. It is prevented from doing so, perhaps, because it is so misunderstood.

When you start to examine COOs as a class, one thing immediately becomes clear: There are almost no constants. People with very different backgrounds ascend to the role and succeed in it. This variability makes the job difficult to study; it’s hard to know whether you are making proper inferences when comparing one COO with another.

There is no single agreed upon description of what the job entails or even what it is called. Often, companies turn responsibility for all areas of operations over to the COO – this typically includes production, marketing and sales, and research and development. In some firms, the job is to be Mr Inside to the CEO’s Mr Outside. In others, the mission is focused on a specific business need. The most cursory survey of COO job designs shows real disparity in spans of control, decision rights, reporting structures, and the like.

How can a title accommodate diversity and still be meaningful? Answering that question requires a shift in perspective. The key is in the orientation of the role. While other jobs are primarily defined in relation to the work to be done and the structure of the organisation, the COO’s role is defined in relation to the CEO as an individual.

Six kinds of COO
If the COO role is defined primarily in relation to the CEO, and no two CEOs are exactly alike, does that mean the job simply defies definition? Not quite. What became clear in the course of our research is that the differences among COO roles arise from the different motives behind creating the position in the first place. It turns out there are seven basic reasons why companies decide to hire a COO, and these yield seven roles that COOs can play vis-à-vis their CEOs. Readers will recognise that the seven reasons are not mutually exclusive, though in this initial presentation we treat them as such.

The executor. One role of a COO is to lead the execution of strategies developed by the top management team. It’s simply a concession to the complexity and scope of the CEO’s job. Managing large, often global, enterprises requires two sets of hands; in such cases, the COO typically takes responsibility for delivering results on a day-to-day, quarter-to-quarter basis.

The mentor. Some companies bring a COO on board to mentor a young or inexperienced CEO (often a founder). A rapidly growing entrepreneurial venture might seek an industry veteran with seasoning, wisdom, and a rich network who can develop both the CEO and the emerging business. As the CEO develops, this COO role might either disappear or be heavily restructured.

The other half. A company may bring in a COO not as a mentor, but as a foil, to complement the CEO’s experience, style, knowledge base, or penchant. Observers have viewed the relationships between Bill Gates and two of his previous COOs, Jon Shirley and Michael Hallman, in this light.

The partner. Sometimes, the CEO is simply the kind of person who works best with a partner. This can lead to what has been called a two in a box model and is similar to what authors David Heenan and Warren Bennis have termed co-leadership. But it’s probably true that, just as there are doubles specialists in tennis, only some executives are more effective when paired. In any case, Michael Dell and Kevin Rollins, whom Dell introduced as COO in 1996, seem to operate in this mode. Dell, as chairman, and Rollins, now as CEO, are committed to leading the firm together, even choosing to ‘co-office’ in adjoining work spaces separated by only a glass partition.

The heir apparent. In many cases, the primary reason to establish a COO position is to groom or test a company’s CEO-elect. The broad purview of the job allows an heir apparent to learn the whole company: its business, environment, and people. Recent examples of firms using the COO position to develop the successor to the CEO include Continental Airlines, where CEO Gordon Bethune (who himself originally joined the airline as COO) recently passed the torch to his COO, Larry Kellner. Similarly, in the time after Rex Tillerson was appointed to the number two position at Exxon, observers noted that he was increas-ingly exposed to the public – a deliberate effort to facilitate his succession to CEO Lee Raymond. And when Norfolk Southern appointed Charles Moorman as second-in-command, the transportation company touted him as the heir, continuing its avowed “practice of picking an executive young enough to lead the company for at least a decade.”

The MVP. Finally, some companies offer the job of COO as a promotion to an executive
considered too valuable to lose, particularly to a competitor. With this strategy, an organisation may try to hedge its bets by stopping short of identifying a specific heir or setting a time-table for leadership succession, in an effort to keep its high-potential executives intrigued about what the future might hold for them, should they stay on board.

Elusive lessons
In truth, these roles are not mutually exclusive. Though it’s hard to imagine a single person wearing several of these hats all at once, it is quite possible that a COO could wear two of them simultaneously. Understanding the roles distinctly, however, and considering their diffe-rences reveals a few things clearly.

First, even where studies have been done, it’s often impossible to draw useful lessons from them. For example, one of the few empirical examinations of the role was conducted by Donald Hambrick of Penn State and Albert Cannella, Jr., when he was at Texas A&M. As they reported in the October 2004 issue of Strategic Management Journal, a review of ten years of data on 400 companies showed that firms with a CEO-COO structure had underperformed relative to their industry peers. It is a provocative finding, but its implications are far from apparent. Is the structure itself to blame? Or was a COO hired to compensate for a weak CEO? Put another way, is the COO part of the problem or part of the solution?

Second, knowing the variety of roles that COOs play sheds light on the phenomenon of the vanishing COO. Some observers, counting the instances of companies declining to fill vacated COO spots, have concluded that the position is headed for extinction. After a COO departs, it often appears that his or her duties have been divided up among top managers without much disruption. But the job is often reinstated or created in a company that didn’t use it before.

Finally, the tremendous variation in COO roles and responsibilities manifestly implies that there is no standard set of great COO attributes. This makes finding suitable candidates difficult for executive recruiters. More important, it stymies the CEOs and boards on who to select among the candidates. The existence of six different roles suggests at least six different sets of attributes on top of the basic – and infinitely variable – requirement that there exist a personal chemistry between the COO and the current CEO.

Even though the role is so contingent, some consistent success factors have been identified. The single element most critical to the success of a CEO-COO pairing, is the level of trust between the two individuals.

How can a pair of executives get past such perils and develop an extraordinary level of trust? Again, consistent themes suggest the answer. The CEO must feel certain that the COO shares the vision, is not gunning for the top spot, and can get the job done. Conversely, the COO must be sure that the CEO will provide whatever is needed to do the job, will not put any obstacles in the way, and will not thwart future career advancement.

A role on the rise?
Ask anyone who has worked as or alongside a COO – the job is demanding. Now we know it’s unique, as well. Perhaps that’s why COO is the only C-suite title to which there is no magazine devoted. It’s a trivial observation but perhaps a telling one: the common set of issues and interests that would imply a common goal simply does not exist. Is it a role in decline?

We can easily argue that there is a growing need for the role. First, consider the widening scope of the CEO’s job. Today, we have bigger companies, with expanding global operations, aggressively pursuing acquisitions. CEOs are asked to be public figures, communicating with many constituencies at the same time that increasingly democratic and knowledge-based organisations require them to spend a great deal of time campaigning internally for any change they hope to make. Second, companies are becoming more deliberate about succession planning. Boards are anxious to identify and groom heirs and often see the COO title as a useful step in the process. Finally, the easy mobility of top talent means companies must find ways to hold on to their most valuable non-CEO executives. The COO title can be effective in staving off wanderlust.

In light of these trends, it’s surprising that COOs are not more common. They would be, if there were less variability and confusion surrounding the role. Board members aren’t sure when the position will add value. Recruiters don’t have an obvious pool to tap. CEOs don’t know whom to trust. Potential COOs don’t know whether the job is right for them. This is why it’s vital to build on the work outlined here. As we continue to demystify the role of the COO, more companies will benefit from more effective leadership.

Harvard Business School Publishing. Copyright 2006. (Distributed by New York Times Special Features) http://hmu.harvardbusinessonline.org