Article.

Whitepaper: Your COO is Your Secret Weapon

Implementing a role that could save your company time and money.

In this Whitepaper, you will learn:

  •  How to determine when you need a Chief Operating Officer (COO)
  • In what areas of a company a COO can be implemented
  •  How to integrate a COO into your business

Most individuals who hold a position in business, particularly one of entrepreneurial persuasion, have likely heard of or met a COO in their career. But it is also not a surprise that many still do not fully understand the role of a COO.

The position of a COO is largely gray because there is no one set of roles or tasks that a COO fulfills across the board. COOs are known for their versatility, in some cases completely changing their roles in adaptation to a fluctuation involving growth, technology, or company policies.

WHAT IS A COO?

A COO or Chief Operating Officer is often delegated as the second-highest-ranking officer of the business or firm. In any case, the rank of COO is one of high trust and elevated responsibility for the company. Regardless of company-specific parameters of their tasks, a COO’s job is to partner and support the CEO’s vision by ensuring that best practices are in place from a people, process, tools, and technology perspective. At the end of the day, the performance of the business and its ability to scale relies on being operationally excellent from contact to cash. An experienced, well versed COO will bring that to an organization.

A COO can be strategically utilized by the CEO to concentrate in a specific area of the business. They can also wear several hats at once. It is the CEO’s job to identify where a COO may be needed to step in and what roles may consume more time than others.

Examples of these roles can be found broken down in several places. Two of the more popular can be found on Harvard Review’s Seven Kinds of COO and on Open View’s article outlining Three General COO Types. However, examples of the general niche-specific roles of a COO are included below.

  • Resident Financial Officer/Cost Manager

“This is probably the most common definition of the COO: someone who owns all the business support functions, including finance.” (Harvard Review)

  • Go-to-Market Officer

“And then there’s the type of COO who’s really in a go-to-market role, but with the COO title.” (Open View)

  • IT/Technical Operations Officer

“This person ensures that the infrastructure for scale is being built to sustain the growth ahead in an efficient and effective way.” (Open View)

  • Human Resources

“Typical responsibilities include tracking, facilitating, removing friction, and speeding up decision-making.” (Open View)

  • Project Planning/Coordination

“…some companies name a COO to lead a specific strategic imperative, such as a turnaround, a major organizational change, or a planned rapid expansion.” (Harvard Review)

It is of note that the COO should be familiar with all internal and external operations of the company, as their focus lies in execution, lifting the load off the CEO, and elevating employee productivity, but also because the position requires agility, as their focus will change as the needs of the company fluctuate.

Michelle Westich, COO of Thumbstopper, an Orchid Black growth services client, advocates,

“It is not the COO alone who will transform a business, it is the COO’s ability to unlock and unleash the power of the organization, and aim it towards its desired objective(s) that will transform a business.”

Sometimes, a COO’s job is to work out the kinks in a particular part of the company and establish and implement sustainable operating procedures. Other COO positions are permanent and ongoing, with a consistent focus and role. Some COO’s may transition out of second-in-command into the position of CEO or Co-CEO. Again, this decision is the responsibility of the company leader.

Roy Stein of Orchid Black explains:

“The best compliment a COO can receive is that no one knows what he does…He needs to keep the company operating efficiently and smoothly by working with the other functional managers.”

That is not to say a COO cannot be given clear parameters and set personal goals in the company. It is simply the decision of the CEO and team leaders to determine where their business requires the COO role.

However, growth, span of control, and as the need for tactical vs. strategic focus evolves, the COO is often the key supporting role and, essentially, a CEO’s secret weapon.

WHEN DO YOU NEED A COO?

It is common for a CEO to hesitate to hand the reins to another officer in the early growth stages, which is why the role of COO is crucial. Identifying the right COO creates a healthy work environment, a focused CEO on what they bring to the company, and an even better implementation and productivity of employees.

Open View's article on identifying when you need a COO reiterates,

“Which executives you need on your team, in what order, and at which stage of growth—these are all key decisions for a growing company. Scoping out the roles accurately and then finding the right people to step into those roles is a huge part of being able to harness anticipated growth.”

The more common motivation for the delegation of a COO is due to the CEO finding they have too many hats to wear and not enough time to complete it all. It may also be in anticipation of a company change or growth of the business, as most entrepreneurial endeavors have the intention to expand to a position where the CEO simply cannot manage every inner operation detail.

A CEO may already have a potential COO in mind as a co-founder or team member with an already-associated understanding of the team’s needs or vision. This type of COO likely has a close and compatible relationship with the CEO and employees.

If a COO must be chosen through an interviewing process, Identifying the necessary traits in a CEO before conducting the hiring process is essential to ensuring a healthy and long-lasting relationship.

Often a CEO works closely in tandem with the COO because the CEO holds power to finalize company-wide decisions. But the work of a COO removes unnecessary tasks from a CEO’s worklist, resulting in a high-functioning team when properly implemented.

HIRING A COO

Ideally a COO should have a diverse professional background, having held a variety of positions across the value-chain of the business in order to bring that knowledge and experience to the organization. It is what allows the COO to alleviate the CEO from the day to day and elevate the performance of the team. Situational experience and having strong, soft skills to challenge, motivate, and inspire team members to reimagine how they approach and manage the day-to-day, and what they should stop, start, or change is what unlocks and unleashes the true potential of a team. Therefore, a COO must be trustworthy in managing valued employees of various personalities on their own and needs to be capable of fostering next-level thinking and performance.

Above all, the COO must have a clear understanding of the company vision and desire to achieve daily, monthly, or yearly company goals.

An in-depth ORG article outlining the multilayered role of a COO relates,

“As companies continue to get larger and more multifaceted, the role of the COO becomes increasingly valuable. Their presence alleviates much of the weight put on the CEO’s shoulders in dealing with day-to-day operations. The more that companies expand internationally, the more valuable the COO becomes — after all, what is a COO if not an integral player in keeping everyone on the same page and moving toward the same goals?”

Because of the depth of the role of COO as goal coordinator and weight alleviator, company leaders want to ensure they bring on a COO at the right time. 

THE ISSUE OF FINDING THE RIGHT TIME

The issue of managing a business as CEO from the start is that it may be difficult to determine when the right time is to bring on a COO.

Open View’s COO implementation article continues:

“The definition of COO can vary wildly depending on the company and the situation, so give this some serious thought before you start considering candidates.”

If the company is not in a position ready for a COO, this can cause frustration in the company with a new leader who is unnecessarily involving themselves in the tasks of the CEO. It also can complicate budgeting, with another high-level paycheck demand and, in some cases, another person entirely with a hand in the company finances.

Another concern of CEOs in search of a COO is that the COO will prove incompatible with the company morale. It is important to take thorough time and research to determine the best fit for a right-hand man or woman.

HOW TO IMPLEMENT A COO

Peter Segal, Managing Director at Insight Partners, outlines his experience in an article defining the criticality of a COO:

“This partnership model works because there is always too much uncertainty, too many directions, and simply, too much work for one person to do alone in this early growth stage. Having a partner is vital.”

While it is ultimately the job of the CEO to determine when they need a COO, there are common flags for the necessity of this position.

  • Not enough time to complete important CEO tasks
  • The CEO is interrupted frequently with new needs, resulting in slower productivity on the task at hand
  • The team or teams need a more hands-on manager that can oversee their concerns/needs than what the CEO can give
  • The CEO has strengths in specific categories but may be more secure with assistance in the other categories where their talents do not lie
  • The CEO needs to focus on strategic external/outward-facing activities and so needs the COO to manage internal activities

As CEO, there are specific things to look at when assessing a need for a COO. Where is your time best spent, and are you using your time now for that reason? What roles are you talented at, and which would be better passed on to another competent person? What roles that you possess would you rather be passed on to another trustworthy employee (as prompted by OV's COO article)?

While it can be overwhelming to begin the process of seeking a COO, there are specific traits a CEO can watch for on resumes and in the interview.

  •  Confidence in personal strengths
  • Competence and enthusiasm for managing different personality types
  •  An extensive background in the industry (this usually involves a BA or MFA (As pointed out in an article by the ORG: “Chief Operating Officer”)
  • Approachable and assertive personality
  •  Clearly sees company vision and long-term projection of goals
  • COO possesses skills that the CEO does not/has skills complementary to that of the CEO (Otherwise, the CEO is hiring another CEO)

For a deeper examination of the type of partner you want as COO, Orchid Black explains our process of identifying a “triple-threat partner” in this related article: Triple Threat.

Example

For example, a CEO might find that they are talented in running company numbers and innovating new product ideas, but don’t have the skillset to find those that would be interested in these new products. Bringing on a COO with a background in marketing and networking whose primary focus is to connect with other investors and ensure product release makes room for the CEO to do what they do best while ensuring a future for the company.

INTEGRATING THE COO

After the COO has been selected and hired, the CEO needs to integrate the COO into the company properly. A most important component of their integration involves establishing clear roles and requisites for the COO. Leaving them to determine this themselves will result in a blurred line of responsibility and a less effective partnership that could lead to distress rather than productivity.

Coach the COO on the near and far company goals. Explain to them why they are needed at this specific time in the business’s growth.

First Round Review outlines a speech given by Linda Kozlowski at First Round’s CEO Summit, where she identifies the three areas to ask yourself questions when taking on a COO:

  •  What kind of help do I need? Why do I need it? How will it address an obstacle?
  •  How strongly is this obstacle influencing the company?
  •  What exactly will this person do to alleviate the impact from this obstacle? How will that change over the next quarter and year?

See relatable article on preparing the business with a proper plan: White Paper: Get a Plan.

Kozlowski also advocates for checking in frequently and regularly with your COO. The COO will need to familiarize themselves with the company departments and employees, as there will be open lines of communication with them in the future. It may also be useful to explain the role of the COO clearly to employees from the start to give the COO clear authority and responsibility in the team.

WHAT ABOUT SMALLER COMPANIES?

While it may seem more common for large corporate companies to employ one or more COOs, a COO can be a useful component to any size of business. There is no size determiner for a COO; it is instead a matter of if the company needs and ability/willingness to invest in growth. At any size, a COO is an important role to consider in easing the CEO’s load, even if in preparation for a future point in time.

Orchid Black suggests that every growth-stage company company needs a COO.

ORCHID BLACK’S CONCLUSION

Critical Success Factors:

  • Determine if it is time to invest in a COO
  • Find the right COO for the needs of the business
  • Ensure compatibility with the CEO and culture through their personality, values, and vision

 Fortifying and growing a business will challenge the best relationships, but the CEO and COO will need to have trust and mutual respect to successfully tag-team and improve and grow the business.

Being able to think strategically and tactically execute is critical. A performance-minded COO that is able to provide visibility into what’s working and not working, implementing effective and efficient operational controls and instituting a way for the team to communicate and quickly adapt will position the organization for great success. 

We cannot emphasize enough the necessity for soft skills/people skills in a COO. Being able to challenge, inspire, and motivate others respectfully and with empathy is essential.  

About the Author

Orchid Black is a boutique growth services firm complete with former founders, CEOs, COOs, CROs, and board members. We are accomplished operators and strategy consultants with an investor mindset and deep M&A experience. 

Like an orchid, a company’s maximum value emerges from cultivating growth. Orchid Black’s unique business model not only accelerates value, but aligns our compensation with our partners’ success. We invest together, betting on a collective vision, using shared skills and expertise.

If you would like to learn more please visit Orchid.Black or contact: grow@orchid.black.