In modern business, no single element acts alone. As a result, the role and importance of stakeholders has continued to increase. Nowhere is this more true than for the COO. In this role, the COO must look beyond the operation, both internally and externally, and foster productive relationships with a broad group of stakeholders. To do so requires a thorough understanding of, and a deliberate approach to, each stakeholder’s objectives, incentives, and expectations.
In a previous piece, we outlined the importance of crafting a COO agenda and its discrete elements (focuses of this post in italics):
- Vision—clear articulation of the overall aspiration of the operation, consistent and supporting the overall business strategy, and the COO’s role in delivering it
- Plan and execution—specific plan with clear actions and milestones to achieve the vision, anchored by a robust operating model to drive excellence in delivery
- Stakeholder engagement—deliberate approach to effectively align and engage with a broader set of internal and external stakeholders
- Organization and talent—proactively unlock the capacity of the organization by engaging and activating the skills and talents of the entire workforce, and future-oriented succession planning
- Personal operating model—manage personal effectiveness, including time, energy, and leadership style
COO stakeholder engagement
A COO interacts with a broad set of important stakeholders, both internal and external. Each is unique and can often have competing demands that a COO must balance and manage. Several COOs we interviewed stated that they were unprepared for the increased demands of stakeholder engagement and advised new COOs to prepare.
Key internal stakeholders include the following:
The CEO. The CEO is the most proximate stakeholder, and it is essential to understand the working relationship and expectations. The COO must clearly understand why their own role exists in the organization, how the CEO perceives that role, and how best to work together. Often, a COO is selected to complement the CEO’s working style.
The COO should understand how best to collaborate with the CEO. For example: What decisions should the COO take autonomously? What type, and depth, of information does the CEO want and need for decisions and for reassurance? What issues need to be escalated, and how?
The C-suite. Nearly all executives we interviewed agreed that increased cross-functional engagement is critical to COO success. The COO is uniquely positioned to help familiarize other C-suite executives with a business’s operations, particularly if the other C-suite executives have come from another industry. This, however, requires them to communicate the “full operational picture,” as one COO described it, including the long-term implications of decisions and investments. Another COO cautioned, “While it is important to teach other leaders about operations, you must also learn to speak their language.” Taking the time to understand others’ objectives and challenges will pay dividends toward fostering genuine collaboration and avoiding disagreements. Among the key C-suite stakeholders are the following:
- The CFO. There is tremendous opportunity in closely aligning with the CFO, especially on planning, budgeting, and top-of-mind investor issues such as working capital, large capital expenditures, and productivity. The COO, like the CFO, has a bird’s-eye view of cross-business and cross-functional opportunities. They can educate each other on best practice in procurement, for example, and even share talent on key short-term projects.
- The CMO. COOs we interviewed noted that the relationship with sales and marketing is particularly important. Operations leaders must have a thorough understanding of the customer value proposition and what it will take for operations to deliver on it. Furthermore, successful collaboration between marketing and operations functions can help deliver a better customer experience, increasing satisfaction and loyalty.
- The CIO. Technology is at the heart of how we do business today and the relationship between the COO and CIO, as well as other digital and data leaders, is essential to ensure operations sees the right return on its investments. Technology investment and deployment present unique opportunities to transform businesses, but this requires deep partnership. For example, daily operations produce an enormous amount of data that, when collaboratively governed and managed, can yield insights that unlock the next S-curve of impact.
The board. Board engagement is one area where many COOs expressed dissatisfaction, with some describing board interactions as “scripted presentations.” The best CEOs use the collective experience of the entire board to help solve problems or give advice. Several COOs encouraged seeking this kind of relationship, ensuring that their exposure to and engagement with the board consisted of focused meetings and problem-solving sessions versus presentations.
External stakeholders. Regulators, suppliers, organized labor, investors, and other external stakeholders are also important. The final and perhaps ultimate external stakeholder is the customer.
The customer. The COO is the operational link to the strategy, so they should know the market. At least one executive we interviewed strongly believed that every COO—both those new to the organization and those coming up from within—should have market-facing experience. This helps when collaborating with the marketing function, and provides the COO the ability to factor customer experience early into any decisions.
Stakeholder engagement is a “COO only” topic that is essential to operational excellence in support of the strategy. COOs who prioritize key stakeholders (for example, those with the ability to influence the success or failure of the plan) and are thoughtful in how they engage them have a far greater likelihood of success than those who don’t.