Making friends with your COO
- 14 June, 2013 14:20
One of the most significant relationships at a corporate executive level is that between a company’s CIO and the chief operating officer (COO). While each has a distinct rationale and focus, the two roles are more similar than you’d think and both face increasing pressures to drive innovation and business growth.
The COO role is also one of the most volatile at the senior executive level, according to data from US recruitment firm, Crist Kolder, which reported more than a quarter of COOs in US Fortune 500 companies left their jobs in 2012.
In addition, only 38 per cent of these organisations now have a formal COO position, the survey reported, down 10 per cent over the last decade.
It’s hard to find statistics on the number of COO roles in Australia, partly because job titles and responsibilities are not unanimous, former Chan and Naylor COO, Karnig Momdjian, tells CIO Australia. Momdjian was previously a CIO at Deloitte and now runs a consultancy called Virtual COO, which outsources COO functions for time-poor organisations.
He points out the title of COO covers what was traditionally called ‘general manager’. But as c-level titles become more universal, the COO for a company’s most senior operations role is coming into vogue. Momdjian’s consultancy role gives him the opportunity to take a warts-and-all look at relationships between the CIO and the COO.
One of his most interesting findings is that it’s not uncommon for COOs to have a strong IT background, particularly in technology organisations.
“It depends on the nature of the business, as a COO will usually come from the business line,” he says. “In a retail or manufacturing business, their IT exposure may not be strong, but in service organisations, you can’t make that assumption.”
So there are plenty of COOs who understand technology very well. But does that always make for a strong relationship between the two functions, or is there more to it?
Mentor and champion
According to Momdjian, the COO (along with the CFO) will typically be a CIO’s most critical client. Where a COO is more experienced, they will often also take a business mentor role in the relationship.
“Sometimes you will find the COO needs to drag some CIOs into thinking about technology for business rather than technology for technology’s sake,” he says.
“The CIO may be so focused on the internal priorities, getting the platform and software right then getting the support right, that they need the COO’s help to translate that technology into the operations and business processes, and use those as a guide to set priorities.”
We go through the guts of the activities we are both doing and we treat them as formally as if I were Brett’s direct report and he were mine
The biggest sticking point between a CIO and COO is typically around money. “It is hard for a CIO to cut back on technology because they are aware of what is going on in the technology marketplace and they want that competitive edge,” Momdjian says. “But for the COO, the business benefit needs to be immediate and it cannot be marginal, or they will block it.
“When you have the COO championing that technology solution, your success rate will rise.”
Smooth technology operations are critical for Medibank Health Services COO, Ray Kiley, who is running one of the biggest work-from-home models in Australia’s health sector. Along with dental, eye and other specialist clinics, the company, a substantial offshoot of the health insurer, runs a huge health services call centre.
“We have about 600 nurses across Australia, and about 100 GPs, all working from home taking calls on our 24-hour health advice line for our members,” he explains.
Kiley’s relationship with the company’s CIO, Brett Winn, is his closest executive partnership. The two are peers and both report directly to CEO, Matthew Cullen.
One of the cornerstones of their relationship is weekly one-on-one meetings where priorities are discussed. “This is not just a meet-and-greet for coffee; we go through the guts of the activities we are both doing, and we treat them as formally as if I were Brett’s direct report and he were mine,” Kiley says.
Kiley has a strong understanding of the IT role. He originally trained as a lawyer but also holds a computer science degree and spent many years at Telstra, eventually becoming the director of business integration. “I do have a good understanding of what keeps CIOs up at night and also what wakes them up at night,” he continues. “In our case, that’s outages.”
Communication around outages is critical to the way the IT function is perceived across the Medibank business, yet many CIOs just don’t get it, Kiley claims. “If there is an outage, the CIO should be front and centre,” he says. “We have had outages in the wee hours of the morning, and Brett is always on the teleconference call.”
Actions like that transmit the message that the CIO has a passion for the business and cares about its operations. “That permeates through the whole organisation and communicates back to the business that our CIO thinks it is important to get involved in resolving an outage at 3am,” Kiley says.
“It helps build a culture of responsibility throughout the business.” Typically a CIO can also remind staff to focus on business priorities. “It could be advising staff not to go down that rabbit-hole and to restore the service before you worry about other things,” Kiley adds. “CIOs are in a great position to deliver strong guidance around that.”
Business is 24/7 at Medibank Health Services, Kiley says, and calls can sometimes be about life and death situations.
“Brett is out and about on clinic visits both so he can understand business, and also so the business understands that he cares about it.”
One of the important things that a COO and CIO can work on together is getting the IT function to better communicate with the frontline users in the business. “Usually you find IT is doing a whole lot of good stuff across their entire portfolio – but they’re not great at communicating to the rest of the business,” Kiley says.
He and Winn have set up a weekly communique which goes to all staff. “Sometimes it’s just a simple message to let them know about a software update or technology change, or it might be a tip on using technology effectively; they recently sent out a tip on how to use the Internet toolbar better. What that communication does is bring IT closer to the business.”
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Distilling the noise
Mid-tier law firm, Sparke Helmore, has more than 600 staff working from eight offices across Australia, a situation which brings its own challenges, says CIO Peter Campbell. “I’ve been here for seven years and I do find a partnership a very interesting structure to work in,” he says.
As with many Australian firms, the c-level roles have the same responsibilities but very different titles at Sparke Helmore. The COO role is known as the national executive officer (NEO), while the CEO role is titled national managing partner.
Campbell works closely with both roles and said that working relationship is crucial in getting context around his own priorities. “They might give me information about the broader context of some change happening outside the firm, a change we’re going to go through, or something on the horizon that hasn’t really been talked about widely yet,” he says.
“Colleagues who are elevated above the level of departmental responsibility have a wider breadth of stuff they look at. It forces me to distil the noise out of something I need to communicate and target it down to a small amount of information but with a lot of background in case it’s needed.
“We focus on the business because that’s the priority. We don’t talk about the nitty-gritty of IT.”
Campbell says his staff are somewhat bemused when they see the information he presents to senior executives. “One of my engineer’s members saw a proposal I was putting to the board about a project he had been working on and said: ‘There’s no content left in this, how can they make a decision?’
“I said, ‘They don’t make decisions on the features you’ve based your decision on, they’re making a decision on the business benefits and this is what I’ve told them about here’.”
While working together is important, CIOs need to remember a good relationship with the COO can’t replace their relationship with the business, Campbell says. “You can’t make your COO the go-to person for your instructions on what to do, what to focus on and adjudicating all those sorts of issues because you’re going to miss ideas.”
He points out a lot of the information to resolve business problems or to prioritise technology comes from further down the ranks. “I get ideas from within the business about how they want to improve the way they do things, then feed that back up,” Campbell continues. “If I haven’t got the right support in the business, there’s no point in going to talk to the COO about it.”
Another key to the COO relationship is trust, and that’s something built up over time. “Top of the agenda is trying to understand what’s keeping my COO up at night,” Campbell explains. “It’s not usually IT-related, and I don’t want to talk about IT, but there is eventually some connection I’ll make that means we can add more value.”
Presenting pie-in-the-sky proposals is also counter-productive. “I don’t take the approach of presenting three or four things and hoping they’ll choose one or two,” Campbell says. “I restrict the amount of options I present, distil it down to the essentials.
“The few times when I have to say, ‘Look, you need to trust me on this’, that works because I haven’t come up with a dozen lame-brained ideas along the way.”
Playing the facilitator
CIO at Calibre Global in Perth, Jason Cowie, agrees the relationship with his COO, Andrew Rowe, is extremely important in ensuring IT and the business work together as one. “IT more than ever can improve business process and enable growth, irrespective of the industry you are in,” he says. “The CIO must develop strategies to take the business to the next level rather than keeping everything running.
“To do this, however, you need information to ensure your strategies will benefit the business as a whole, are in line with the overall business strategy and appropriate for the current market conditions for now and the term of your plan. There is no one place better to provide you this than the COO.”
The core ingredients for a good relationship with your COO are open communication, trust, sharing ideas and a willingness to listen. “A strong relationship becomes mutually beneficial, and a good strategy allows the CEO to achieve his or her goals which then puts more faith and trust in the CIO for future plans,” Cowie says.
For those CIOs who haven’t achieved the same level of mutual respect, Momdjian’s advice is to understand the COO’s primary pain point. “Every operational problem will end up on the COO’s desk – they are usually the bottleneck. Go to your COO with technological solutions that solve his big operational problems.”
The two roles have the potential to make a great partnership, he says, and together can develop the best and most effective technology solution focused on business priorities.
“The COO is the person you want on your side when you are trying to get technology embraced and supported and adopted at grassroots level,” he adds.
Do you understand your COO?
An organisation’s COO often defies a one-size-fits-all description. Ernst and Young’s recent report, The DNA of the COO, argues those in this position continue to fight to justify their existence, despite having a clear rationale. The consulting group also identified several particulars about the COO role:
• The COO is one of the c-suite’s toughest roles. The need for a figurehead in the operations role is more pressing than ever. One in three COOs strongly agree that their role is among the most difficult in the management team. Their peers in the c-suite are even more certain: Half of them think that few other roles are as tough.
• COOs thrive on the adrenaline of complexity and change. For COOs, the inherent challenges of the job are part of its appeal. Overall, six in 10 say the complexity and diversity of the role makes it worthwhile.
• It’s a stepping stone to the top job. Forty per cent of COOs aspire to be promoted to CEO within the next five years. Among respondents from rapid-growth markets, the proportion aspiring to become CEO is as high as 54 per cent.
• As a role, the COO is not yet strategic enough. Beyond the mastery over operational issues, which is a given, COOs have a clear opportunity to help define the strategy that underpins a CEO’s vision, and to then take the lead in implementing it. Seventy per cent of their peers also consider the ability to participate in strategic discussions a vital skill for the job.
The Ernst and Young report was based on analysis of a February 2012 study of 200 COOs, and a survey of 306 COOs and senior operations professionals across Africa, the US, Asia, Australia, Europe and the Middle East in April 2012. A further 43 respondents from across the c-suite were polled.