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The Role of COO (Chief Operating Officer)

Recent reports from the US indicate that following the global financial crisis many American corporations are eliminating the position of COO. The COO role has long been a contentious one, with significant potential to generate conflict between the CEO and the COO. There has been a major criticism that existence of the COO role reflects an unrealistic relationship between strategy development and operations, current views indicating that strategy development, or at least fine-tuning, is an on-going process based on feedback from strategy implementation/operations.

From my own experience, I think there are situations where the COO role is highly appropriate. For example, let’s consider the situation of a small mining and exploration company whose major assets are in a high-risk country and whose success has been largely due to the CEO’s performance in initiating and managing relationships with government in that country and in attracting Australian and offshore sources of capital. Given the strategic importance of these two responsibilities and the heavy demands they place on the CEO, a strong case can be made for a COO to ensure that people on the ground are being appropriately serviced and that other issues of daily operations are being effectively managed.

IT and other high-tech companies also are regular users of the COO role. In an industry where success is determined by technological innovation and/or rapid and regular new product development, if the CEO’s major contribution to the company is in these areas, it is highly unlikely that she will be able to manage the broader operations responsibilities. Apple under CEO Steve Jobs is a good example of the effective use of CEO and COO positions in such situations.