What was designed to be a low-profile role, earlier now seems to have taken center stage. According to the latest study by McKinsey and Company, the role of the COO is in demand. In 2000, 48% of Fortune 500 and S&P 500 companies had a COO; by 2018, that number had dropped to an all-time low of 32%. But all this is a thing of the past now, COOs are making a comeback. As of 2022, 40% of leading companies had a COO, with the financial and energy sectors leading at 48%.
The report further stated that one of the reasons the role is in demand is that COOs have the ability to anticipate change. As per the report, it has been years since operating environments were relatively stable and organisations could build five to ten years plans, but not anymore. “Every month or two brings some surprise. COOs need to get better at anticipating regulations that could affect the business, for example. It could be any driver, but they need to know how to see it coming, get in front of the marketplace, and gain an advantage,” the report said.
According to the report, increased cross-functional engagement is critical for COOs to succeed—especially when it comes to sales and marketing. “Operations leaders must
have a thorough understanding of the customer value proposition and what it will take for operations to deliver on it,” it stated. Further, the report revealed that close collaboration between the marketing and operations functions can help provide a better customer experience and increase customer satisfaction and loyalty.
Engagement is yet another factor. As per the report, COOs need to engage effectively with boards. Following the pandemic, boards of directors have incorporated a greater appreciation of the need to collaborate with top-management teams on new and improved ways of working, it said. In a McKinsey survey, more than 90% of respondents reporting an effective collaboration between the board and management said their board’s response to the COVID-19 crisis was effective—compared with only 60% of all other respondents.
Lastly, another part of the survey said, COOs need to drive operational excellence culturally
and technologically. Today’s volatile environment makes achieving operational excellence much more difficult than in years past. Widespread supply chain disruptions, global political and environmental upheavals, and radical changes in the workplace highlight the need for operations leaders to be agile and responsive on many fronts, the report stated.
One more area is to manage talent creatively. The landscape has tremendously changed post-pandemic and leaders to work had to adjust and drive growth. As per the report, leaders need to provide pleasant working conditions, meet employee needs, ensuring diversity and equity in the workplace, and creating an appealing corporate culture are just a few of the many challenges the COO of the future will confront.