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Recall that most businesses have three major areas: operations, marketing, and finance. In some companies, information technology is central enough to be considered a fourth major area but may fall under operations, depending on the organization. Each area usually has a single leader who reports to the chief executive officer (CEO); as a group, they comprise the senior leadership team, or C-suite.
| CEO | COO |
| Long-term focus | Short-term focus |
| Ideas | Process |
| Takes risks | Minimizes risk |
| Determines strategy | Implements strategy |
| Face of the company to the outside world | Face of the company leadership to staff |
Note that this does not mean that the CEO and COO are in conflict; rather, they balance one another. The CEO and COO roles form a cornerstone of effective organizational leadership. Their functions are complementary, with the CEO focused on strategic vision, external relations, and overall company direction. In contrast, the COO excels in operational efficiency, execution, and internal management. This dynamic partnership ensures a harmonious balance between strategic planning and tactical implementation. The CEO's visionary leadership is paired with the COO's ability to translate strategy into actionable plans, fostering a high-performing and results-oriented organization (Bennet & Miles, 2006).
Gordon is the CEO of the e-bike business he founded. He sets the overall strategic direction for the company and identifies potential opportunities for his growing business. Gordon’s COO, Maria, takes Gordon’s vision and develops operational plans. This can include the feasibility of new models Gordon wants to develop, determining the resources needed, and setting timelines to ensure the company’s and Gordon’s goals are met. Maria will also look at internal resources, such as staff, and the company’s manufacturing capabilities to implement operations strategy. Maria will work with other executives at Gordon’s company, such as engineering, design, marketing, and finance to make Gordon’s strategic direction and vision a reality. Maria will also be responsible for the day-to-day operations and tactical plan execution to meet the larger, organizational goals. This might involve ensuring production schedules are met, inventory needs and raw materials are available, and overseeing shipping to ensure the product arrives on time at various retailers.
The chief operating officer and the chief marketing officer, like the CEO and COO, have complementary roles.
Marketing is generally responsible for market research and market strategy development. The CMO might perform research to understand market trends and consumer preferences. Based on this, the CMO creates a market strategy. The COO will review to ensure production, distribution, and supply chains are in place to support the market strategy. Both roles will require constant communication between the individuals and the marketing and operations teams to ensure marketing is synchronized with operations and production.
The CMO and COO roles, though distinct, are intricately intertwined for organizational success. The CMO, focused on brand, marketing strategy, and customer acquisition, provides the vision and direction for the company's external face. In contrast, the COO is the operational backbone, ensuring efficient processes, resource allocation, and execution.
A strong CMO-COO partnership is essential. The CMO's insights into market trends and customer desires inform the COO's operational strategies, ensuring resources are aligned with strategic goals. The COO's operational efficiency and cost effectiveness enable the CMO to maximize marketing impact. This complementary relationship drives growth, enhances customer satisfaction, and strengthens overall business performance.
As noted earlier, Gordon as the CEO creates a vision and decides overall company strategy. Gordon talks with both Maria as the COO and Akassi, the CMO, about his overarching vision. Akassi would then look at potential new e-bike markets that will meet Gordon’s revenue goals and discuss the viability of these goals with Maria. Then, once the COO and CMO have determined a strategic market direction, Maria as the COO would determine what is needed in terms of production resources to meet these marketing goals, which ultimately meets Gordon’s goal of increased revenue, such as more staffing or machinery.
The COO and the CIO (chief information officer) roles are intricately linked, forming a cornerstone of effective organizational leadership. The COO, responsible for overall operations, relies on the CIO to deliver the technological infrastructure and solutions essential for business efficiency and growth.
The CIO leverages the COO's deep operational knowledge to align IT strategy with business objectives. This symbiotic relationship fosters innovation, improves decision making, and drives operational excellence. Successful collaboration between these roles is crucial for organizations to navigate the complexities of the digital age and achieve sustainable competitive advantage.
Since production and manufacturing often use various technologies, the two roles work together. Operations might use various technologies such as enterprise resource planning systems, supply chain management software, customer relationship software, and manufacturing execution systems. Because the role of the CIO is to manage the information and technology in the organization, both roles work closely to identify tools needed to improve organizational operations. The CIO will likely also oversee a team that helps staff with technology glitches and issues.
Suppose Maria, the COO at the e-bike company, has identified a new technology that will help streamline operations and eliminate waste. Maria would go to the CIO, Amit, and discuss the options for software. Amit would perform research, a needs assessment, and make recommendations to Maria on the types of software available to meet the needs. Once they decide, as a team, to implement the software, Amit would be responsible for procuring and implementing the software for Maria’s operations team. Amit and his team would also likely provide training on the software and address any technical issues with the software when it is implemented, and update the software as needed.
The role of the CFO (chief financial officer) is to create financial strategies that will support the company goals. The CFO performs forecasting and budgeting information in order to ensure the company is on track to meet financial goals. The CFO also identifies financial risks and puts plans into place to mitigate financial risk for a company. The COO and the CFO work closely together to determine and implement operations strategies that will provide financial benefit to the company. Conflict can sometimes occur between these two roles because of differing viewpoints.
For example, a COO might see great benefit in implementing new technology to streamline production processes, but the CFO may be concerned about high upfront costs of the technology, which were not budgeted for. The COO and CFO would then work together to determine the best way to move forward, such as through a demonstration of the technology on a smaller scale (which means less cost), so the COO can prove the financial viability and expected cost savings the new software would bring. Think of these two complementary roles as a constant negotiation between the two parties to receive budget allocations to improve processes. Often, in these situations, the burden is on the COO to prove the cost effectiveness of solutions that require a financial budget to implement.
The COO and CFO form a critical partnership within an organization. The COO, focused on operational efficiency and execution, provides the backbone for the business. The CFO, in contrast, ensures financial strategy aligns with operational goals. This dynamic duo drives growth and stability. The COO's insights into resource allocation and performance metrics complement the CFO's financial modeling and risk assessment. Together, they create a more comprehensive view of the business, enabling informed decision making and optimal resource utilization.
In order to meet the goals Gordon has put into place, Maria determines an expansion to the existing e-bike production facility is needed. Maria would work with the CFO (chief financial officer), Sophia, to help determine the financial implications of the expansion. Sophia could conduct a cost-benefit analysis, return on investment, and other calculations to determine the financial viability of the expansion. Maria would provide Sophia with all the information around resources needed, such as infrastructure and new equipment to perform this analysis. The goal is for the two to work together to identify any financial challenges and ensure both operations and financial strategies are aligned.
As you may recall, in our first challenge in the course, the COO is considered a top-level manager, along with various roles such as director of operations, vice president of operations, and senior operations managers. In order to earn one of these top-level roles, people usually start as operations analysts, program managers, project managers, production planners, or supply chain managers. In order to move into top-level management, a wide variety of skills are needed.
While the skills needed to be a COO will vary greatly by industry, the skills needed, regardless of industry, include the following (Cook, 2023):
Some smaller organizations might utilize the services of a fractional COO. A fractional COO is a part-time employee or contractor who works for a business on an as-needed basis. If a company is smaller, they may not be able to afford a full-time COO, so a fractional COO can fill this gap. This role might help develop strategic operational goals that support the organization's vision, engage in strategic planning and process improvement, and take on the many roles of a traditional full-time COO. This method is cost effective and can support the CEO in terms of freeing up time to allow the CEO to focus on higher-level tasks (Petitpas, 2023).
Source: This tutorial has been adapted from Saylor Academy and NSCC “Operations Management”. Access for free at https://pressbooks.nscc.ca/operationsmanagement2/. License: Creative Commons Attribution 4.0 International.
REFERENCES
Bennet, N. & Miles, S.A. Second in Command: The Misunderstood Role of the Chief Operating Officer. Harvard Business Review. hbr.org/2006/05/second-in-command-the-misunderstood-role-of-the-chief-operating-officer
Cook, Sam (2023, August 16). What is Operations Leadership? MentorCliq. www.mentorcliq.com/blog/operations-leadership
Pepitpas, M. (2023, September 5). What is a Fractional COO? And do you need one for your agency? Parakeeto. parakeeto.com/blog/what-is-a-fractional-coo-and-do-you-need-one-for-your-agency
