Out Of The Shadow

Dec. 21, 2004
As the complexity and demands of global manufacturing increase, so do demands on COOs.

Fluid. That's the one-word description of today's COO. It has to be in today's complex business world of global operations and flat management structures. The division of labor between the chief operating officer (or chief operations officer) and the CEO, isn't nearly as clear as the conventional Mr. Inside and Mr. Outside labels imply. "We focus on getting the most throughput, at the least possible cost and the highest quality. That's it in a nutshell," says John Christie, describing his operational responsibilities, and the traditional role of the COO. Christie is president and chief operating officer of Worthington Industries, a $1.7 billion metal-processing company headquartered in Columbus, Ohio. Breaking from the norm, Christie spends at least half of his time on the road, meeting with key customers and listening to their needs. It's one of his favorite aspects of the job, and one that's typically reserved for the CEO. But as Christie's approach to his job shows, a COO's actual responsibilities reflect the individual's expertise and inclination. "I'm a generalist," says Christie. "I have not been pigeonholed in finance or marketing or manufacturing. I've been able to cross over all of those and know how each function within an organization is dependent on each other." Many companies use the chief operating officer post to train the next CEO. As heir apparent to the top spot -- whether such a succession is tacitly understood or formally stated in an employment contract -- it makes sense that the COO should be more outwardly focused, like Christie, and develop a range of expertise in preparation for a future position in the hot seat. But sharing responsibilities with the CEO in some form of co-leader arrangement can be tricky, contents Robert Thomas, a senior research fellow with the Accenture Institute for Strategic Change. "Unless the COO and CEO are capable of working together hand in glove, there is a built-in conflict of interest between the two," says Thomas. "If I'm waiting for you as CEO to vacate either by virtue of retirement or a dumb move, in some respects I'm going to be minding the store only until I get the opportunity to leave the store or occupy a more powerful position." Problems also can arise when the responsibilities of the two top executives are ill defined. Like a child going to both parents separately to get what he wants, direct reports have been known to play one executive off of another. At Allied Research, a small, diversified defense and security firm, not working together is not an option. Only eight people work at the company's corporate office in Vienna, Va. Managers of the company's five subsidiaries all report to retired Army Gen. John Meyer, executive vice president and chief operating officer. The company acquired three of its five subsidiaries since Meyer joined the firm two years ago. "Our job is to make those companies successful and help them achieve their management performance objectives," Meyer says. "What doors do they need opened? What problems do they need support with?" As COO Meyer draws on business acumen he developed in the military as chief, public affairs and commanding general of the Army's Community and Family Support Center, a $1.2 billion operation that includes golf courses, libraries, recreational facilities, restaurants and hotels. When asked to single out his biggest challenge today, Meyer points to another area not typically associated with the COO: "Bringing awareness to the investment community, particularly portfolio managers, of the investment opportunity in Allied Research." Listed on the American Stock Exchange (ALR), at $96.9 million in sales for its most recent fiscal year, the company is below the visibility line of many analysts. Meyer sees it as his job, as it is of other Allied Research executives, to raise the company's profile and call attention to its solid record of financial performance. Even at larger manufacturing organizations, where the COO remains operationally focused, the scope of the job itself has become increasingly complex. Today's COO has to be a "horizontal manager," Accenture's Thomas believes -- someone who can translate the company strategy into a plan of action, and pull together all of the divisional and functional pieces of a company. "We're creating more separate units, devolving decision-making authority to lower levels in the organization, asking those people to be more attentive to the outside world, particularly to customers. Therefore, all of the power or decision-making that used to flow to the top is now flowing to the sides," he says. "The task of keeping the organization integrated and moving in the same direction becomes even more difficult." At a tactical level, part of this integration effort falls under the heading of "knowledge management," where solutions to common problems are disseminated across a company's geographical locations. As the cross-functional, cross-operational leader, the COO must establish the appropriate processes, communication networks and management structure to do this. "We do a lot of best-in-class sharing. If we have one facility or operation within a facility running well, we take that and try to best-practice it through other facilities," says Christie. The integration challenge also extends to the development of a company's future leaders. Management succession is a constant concern, Christie confirms. He personally tries to ensure that up-and-coming managers at Worthington Industries follow his lead and spend time in marketing, sales, operations and financial management. As the saying goes, there's no substitute for experience. And as the complexity of global manufacturing operations continues to escalate, tomorrow's COOs will need all of the experience they can get.

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