Overall, has the COO mandate fundamentally evolved over ten years? “I don’t think it has changed that much,” says the Amrop Board Member. One constant factor is resilience. “I think the COO, of all roles, is the one where you definitely need more grit from the point of view of operational background, mindset, technical competencies. More so than a CEO.” How so? “Because you’re the one who’s really making things happen every day… having the right processes and people in place.”

COO churn rates illustrate just how tough the role can be. BoardEx is a global data company specializing in executive relationship mapping and intelligence. Examining the annual average turnover in the main C-suite functions in the US from 2018 to 2022 it found COO turnover to be the highest of all C-suite roles, at 27%, (followed by CMOs at 22%).³

If the overall COO mandate has not fundamentally evolved, its internal workings have, due to a set of intertwined forces Every COO, irrespective of sector, must not only anticipate and address these intertwined forces, but embrace them.

A - Supply Chain

“Supply chain is a large component of the COO role: being able to manage it, understand the key levers, what needs to be done differently, and learning through the experiences of something like Covid. Supply chain is also a large contributor to the success of the role. And every organization is focused on supply chain,” says the Amrop Board Member.

In 2022 Ernst and Young surveyed the supply chain leaders of large corporations across the Americas in a range of industries.⁴ “End-to-end visibility” emerged as an overriding need. The authors call for COOs to set five priorities⁵, (see the full Amrop article). Underpinning these is the talent question. COOs must address how technology, for example, is re-shaping talent and staffing.

But even the most sophisticated technology cannot eliminate supply chain vulnerabilities. Against a disruptive backdrop, from the recent tsunami of Covid to current geopolitical instability, COOs are having to lock their organization’s processes in. “Every operational risk impacts on this role,” says an Amrop Partner. “Can I get people to run my factories, can I get goods, given all the congestions in supply chains? What’s the cost of delivering, what’s the contingency planning? What happens if I can’t get microchips, can’t get any supplies in at all? What’s the cost of power to all my factories if prices multiply fifteen times? And that’s why supply chain has become such an essential role in so many ways.”

He expects that supply chain management will increasingly become a distinct specialism and offshoring will decrease. “I think supply chain may get divided up from operations. We see tremendous change in supply chains with a lot of aspects moving closer, because control and certainty are becoming so important.” Ernst & Young recently found that 53% of supply chain leaders near- or re-shored some of their operations in the last 24 months, with 44% planning new or additional near-shoring activities in the coming 24 months. ⁶

B – Digitization

The full-scale integration of digital technologies has become the new normal for the COO. What does the future hold? “The smart factory is no big deal” says this Amrop Managing Partner. But interconnectivity, whilst essential, is not obvious: “COOs have to run smart manufacturing, systems, procurement.” It’s a matter of end-to-end digitization in the supply and value chain: “all the way to the furthest sorting point — your suppliers’ supplier your customer’s customer.”

AI is already transforming business operations in a range of sectors. Amrop has highlighted five key areas, explored in the full article⁷ But a deep-learning system may have difficulty explaining how its results were derived, turning the algorithm into a black box. Many AI will face regulatory scrutiny. This means considering financial, legal, ethical and other perspectives. COOs cannot only be smart or reasonable; they must be wise, purposeful and responsible, as we explore in the next section.

C – ESG

The drive for sustainability is infiltrating all aspects of the COOs role. The landscape is extensive and packed with strategic tensions. COOs may become disoriented and distracted. Sustainability priorities must be linked to targets, incorporating measures in day-to-day operations, assigning responsibilities and accountability. Clarity and transparency create momentum. But this is particularly difficult for COOs in organizations with multiple divisions spanning different geographies and running tentacular supply chains.

One answer is to conduct a materiality analysis, as Victor Treviño, the Director of Energy and Sustainability at FEMSA, a beverage and retail global, recently explained to Amrop. ⁸

“How do we reduce the carbon footprint of our organization and the product or the services that we’re producing?” asks an Amrop Partner. “And that in itself is a huge task of the COO.” Decarbonization may spark the emergence of new role species in the operations domain: “Head of Decarbonization, Head of Footprint, all these new areas may evolve, depending on the industry.” As Amrop recently reported, the Chief Sustainability Officer is becoming pivotal for many organizations.⁹

In a recent client case study, Amrop describes how a large pharmaceuticals player established a working plan with each of its many suppliers. “By 2025, all have to meet their sustainability criteria or leave the mechanism.” ¹⁰

Does the wingspan of sustainability call for additional C-suite roles in the Operations domain? In general, Amrop Partners interviewed for this series warn against such role proliferation. Any new specialisms should be evaluated for strategic relevance and if deemed necessary, report into the core functions: in this case, the COO. ESG is no exception. This Amrop Partner confirms that many new species, no matter how important now, will self-destruct over time: “Let’s hope that everyone reaches their goals and moves to net zero by 2050. Then these roles will naturally cease to exist.”

D - Wisdom and Purpose

Shareholder or stakeholder value? Investment in the energy transition, or in short-term returns? What permutations of Planet, Profit and People are most relevant? Such dilemmas land directly on the desk of the COO. To resolve them, COOs need wisdom and purpose – holistically addressing business dilemmas by taking a broader socio-ethical and environmental perspective. Wise leaders do not just create vital economic value, they also build more sustainable and legitimate organizations. They do not just make smart or reasonable choices; they make responsible ones. But a global Amrop study¹¹ found that executives were struggling. Only a third would systematically stop or adapt a decision in the face of counter-evidence, for example.