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BW Businessworld

Surviving In The Shadow Of The CEO

A CEO must be tolerant and patient; has the COO buy-in on his vision and strategies; communicate in letter and spirit all his plans and goals

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In the hunt for a suitable successor to a chief executive officer, the choice usually falls on the chief operating officer, who, many believe can step into the giant shoes. Some companies however oscillate and face the dilemma of either having an insider COO or an outsider CEO.

There have been examples galore of Jeft Immelt, now retired from General Electric (GE), Satya Nadella and quite a few others, who were not COOs but still were groomed from within because of their potential and the confidence that their Boards and specifically, the Chairman vested in them. They have all turned out to be wise choices and are doing remarkably well for themselves and their companies.

However in one of the corporates, where I was on the Board, they decided to make succession planning easy for themselves by carving out a position of a COO that was previously non-existent. But the big question was - what are the skills required for the shadow-CEO, oops, the COO?

Someone tried to differentiate between the two closely-linked roles by saying that the COO would manage internal factors, whereas a CEO's skills would be more applicable to managing external stakeholders. Luckily for this company, Board members agreed and the issue got resolved to everyone's satisfaction.

Another company (larger size), where I am on Board is still discussing whether to get a COO or not, and they have not been able to close that decision because of a strong resentment from the CEO. The Board also doesn't want to upset the apple cart by making the incumbent CEO uncomfortable and a tad insecure, while he's still in the hot seat. It's easy for everyone to see why the CEO is feeling threatened by the creation of a COO position.

History testifies that there have been instances galore of COOs taking over from CEOs with aplomb but not vice versa. One of the reasons that COOs don't have any contenders is that people from different functional roles ascend to that position. The skills identified for COOs could be generic, but are non-transferable. Even within the company, the role of a COO is often so fluid that it cannot be strait-jacketed into any particular skill compartment. Often, COOs straddle all domains from production to marketing, sales, supply chain and sometimes, finance.

A question arises that with such diversity how can the job remain meaningful and keep on adding value to the organization? In my view, he can with proper role alignment. As Nathan Bennett and Stephen A. Miles note in a Harvard Business Review (HBR) article, Second in Command: The Misunderstood Role of the Chief Operating Officer "While other jobs are primarily defined in relation to the work to be done and the structure of the organization, the COO's role gets defined in relation to the CEO as an individual."

In some cases, COO, as a close business buddy, assist in sharpening a CEO's vision; he's a sounding board for his strategy. As his Man Friday, he supposedly protects him. As his publicist, he builds up the CEO's media image. As his fall guy, he takes all affronts upon himself; and in short does everything to make the CEO more effective. For discharging this role, the COO must closely align with the CEO force, and throw his might behind him.

In that sense, we've seen COOs playing this role of a change agent, an executer, the other (better) half, heir apparent, and disaster manager with aplomb, even though he derives all his authority from the CEO in making all, or most of his decisions.

The most critical factor for a successful CEO-COO pairing therefore is that the CEO reposes total trust in his chief commanding officer, the COO. The empowerment flows from there.

Another critical factor is that CEO must be convinced that the COO shares his vision and is not a threat to him. The CEO also has to be convinced that the COO will get his thoughts executed in letter and spirit.

A major difference in their roles, as noted earlier is that although an heir apparent, a COO is generally entrusted with the management of only the internal factors of the organization. External factors, don't usually fall in his jurisdiction. External stakeholders viz the environment, the society, and government handling does not come under his purview, or at the most, he plays a supporting role in these issues. Dealing with individual Board members also does not come under his purview. Yet a CEO has to invest a lot of his time talking and convincing Board members separately or together about this vision, direction and strategies, where he cannot always solicit help from his deputy.

The long and short of our discussion is while a COO may come across as a shadow-CEO, if their roles are well-differentiated, it would be good for the organization. Some of the skills critical to the survival of the COO are - unquestionable loyalty to the man-in-charge; an ego that is firmly kept-in-check; some degree of satisfaction in playing second fiddle to the CEO; prompt execution of orders; coaching and co-ordination skills.

A CEO likewise, must be tolerant and patient; has the COO buy-in on his vision and strategies; communicate in letter and spirit all his plans and goals, and last but not the least, their communication has to be in sync so that collectively, they can do last level of decision-making.
But all said and done, for a COO to be truly successful, the CEO's trust is most critical, or he can rock his own boat.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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Dr Yasho V Verma

Dr Yasho V Verma is a Management Thinker & Philosopher, a Mentor and a Strategy Consultant, an Academician and a Veteran in consumer durables and retail. He was formerly associated with LG Electronics as its COO and Director. Currently he is consulting with World Bank. He is also a member on Board of Dena Bank and an advisor to Videocon. Besides, he is in the board of few other business houses across various industry verticals and consults them on plans and policies.

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