A great piece of content that was originally posted at CFO.com about what CFOs need to know if they want to take a leap (or a small step) to the chief operating officer role written by Jeremy Van Ek.
It was a dark and stormy night when I was on the phone with the board and executive team. The company was in trouble, and I had a splitting headache. After much discussion, we came to a pregnant silence at the end of the call where everyone expectantly waited for me to speak.
I had just accepted my first job as a chief operating officer.
Here’s what I learned from making the jump from CFO to COO.
What’s in a name (or title)?
Titles and responsibilities vary across industries, and even within them. The jump from one title to the other may be a small step or a giant leap.
A CFO role or a COO role may include responsibility for finance, accounting, planning and analysis, technology, human resources, legal, facilities, insurance, tax, production, supply chain management, and other areas. As a CFO, you may be responsible for a few or a number of these things. And as a COO, you also may be responsible for a few or a number of these things.
What does it mean to be a COO?
Beyond functional responsibilities, a COO is typically the second-in-command of an organization — the person who runs things in the CEO’s absence. With a CEO who is on the road a lot, this can be a frequent responsibility.
In Gino Wickman’s Entrepreneurial Operating System philosophy, it takes two people to run a fast-growing company: a visionary and an integrator. He has said, “The Visionary needs someone who is detail-oriented, who knows how to keep the team harmonious and productive, who is great at resolving conflict, and who can execute detailed plans for maximum results. Enter the Integrator.” In my view, the COO is the integrator.
Why do you want to be a COO?
Well, for all the fame, fortune, and glory of course! Do a little soul-searching first to define what you want. A COO is generally expected to be a broad-gauge business strategist. There’s no “that’s not my area” anymore. Do you want that stress or are you more comfortable sticking to what you know?
Why should you be a COO?
As a CFO, you have a lot of business sense. People need what you have. You help bring order to chaos, ensure that projects are profitable, and make certain that initiatives are aligned with strategy. Lots of companies out there need more of that, and chances are your company needs more of that.
How does one transition from CFO to COO? There is no magic formula. It happened to me like Ernest Hemingway described going bankrupt: “Gradually, then all at once.” I offer the following bits of advice from my own experience.
Curiosity. As a CFO, you are exposed to a lot of adjacent disciplines. Nearly everything in the business world has a financial component to it. Unleash your natural curiosity. Ask questions and become better informed about everything you can. Don’t let something cross your desk without understanding it fully.
You’re not a finance person looking to get your piece done, you are a business stakeholder who wants to achieve the best overall outcome for your organization. You can’t do that without a thorough cross-disciplinary understanding.
For example, as a CFO you likely often review contracts for financial terms like pricing, payment terms, etc. Do you read the whole contract or just the relevant part? Do you understand all the other sections and what they mean for your business? Do you know what the alternatives and tradeoffs are related the standard positions on terms and conditions?
Personal brand. If the people you work with had to describe you in just a few words, what would they be? I submit that there are two aspects to every CFO job: running the finances and being a strategic partner. Those who gravitate toward the latter are best suited for a COO role. As much fun as it is to be described as a financial wizard, your goal is to be described as a trusted adviser or go-to person.
For example, when a new cross-disciplinary initiative comes up, are you thought of as the ideal one to lead it? If another member of the executive team leaves the organization, will you be the person tapped to fill in during the interim?
Problem solving. Don’t just solve problems. Find them, understand them, and prevent them according to the problem-solving continuum:
- Problem Solving: lowest-level skill. You are able to come up with solutions to problems when they jump out and bite you.
- Problem Finding: the ability to find problems before they find you. Monitoring, cross-checking, and double-checking are all skills of the competent problem finder.
- Problem Understanding: getting to root causes. This is about deconstructing the problem and addressing the underlying issues so that you can stop them from recurring.
- Problem Prevention: the ability to create a control and risk-management environment in which problems are unlikely to occur. You think broadly about data, process, and externalities to create a smooth-running operation. For example, what was the last big problem you encountered? How was the problem uncovered? What was the solution? Do you understand the root cause of the issue? Can you take steps to ensure the problem doesn’t happen again? Is your monitoring environment sufficient to detect or prevent similar problems before they happen or become a material issue?
Point of View. Challenge yourself to form opinions, especially on non-financial questions. For example, what is the best way to manage human capital performance? How can a company in our industry best harness the benefits of cloud technology?
If you have been sufficiently curious, you’ve asked questions and read up on these topics to form a foundation of knowledge. Take the next step to coalesce your understanding into a point of view. Your goal is to have a point of view on many areas: business approaches, technology trends, the economic climate, etc.
And finally, be prepared to advocate intelligently for your point of view among the organization’s other leaders.
For example, what are the key economic, technology, and cultural factors impacting your company? Do you understand them? Do you have a point of view on the right approach to address them?
Vision. Vision is the aggregation of many points of view into an overall strategy — vision for the future, how things should be, what we want our company to be like. Connect your points of view into an overall theme and approach to doing business.
You are not necessarily the inventor, entrepreneur, creative force, or the visionary in that sense. But you do have a signature way of working and an intellectual structure that drives your points of view through consistent execution.
For example, do you have many points of view? Are your points of view consistent as part of a coherent strategy? Would one of your business partners describe you that way?
A COO in Action
At the conclusion of the splitting-headache, stormy-night board call, we had a plan. I was thankful for the previous curiosity that helped me form points of view on key business questions as part of an overall strategy and approach, and I drew on that to address what I felt were the key issues.
I met the first challenge head on — and, as you can see, lived to tell the tale.
Jeremy Van Ek is chief operating officer of the American Marketing Association and was previously CFO of Trisect, a retail and digital marketing agency.