Jan. 1, 2025--The last
chief operating officer job died today, marking the end of a business era. Once
considered a critical hands-on job that freed chief executive officers to focus
on the broad strategies and relationships of their corporation, the position
had fallen from favor in recent years.
Even at the end of the 20th century, business leaders had begun to wonder if
the role had outlived its usefulness. At General Electric Co. (GE), former chief Jack
Welch had CEOs running each operating unit. Other companies had already killed
the COO slot in favor of teams to execute strategy. ''There are circumstances
where it's just an extra layer of bureaucracy that separates CEOs from their
business,'' explains James M. Citrin, managing director of the global Internet
practice at executive consultancy Spencer Stuart.
LAST GASP. The job enjoyed something of a resurgence toward the turn of
the century, when young tech entrepreneurs often hired seasoned executives to
help bring discipline to their unruly enterprises. Peter M. Felix, president of
the Association of Executive Search Consultants, says entrepreneurs were
desperate for ''a safe pair of hands to run the less glamorous parts of the
corporation.'' Even so, executives with clout usually demanded more exalted
titles to come aboard--such as CEO.
Meanwhile, top brass at larger companies became convinced that one person alone
couldn't manage their increasingly complex and far-flung operations. With the
CEO more externally focused than ever, the stress on the COO had begun to
escalate. Although the position had once been a stepping-stone to the top slot,
the skill sets were too different for a COO to be a CEO-in-training. And the
job was getting tougher in the fast-paced economy. As David A. Nadler, chairman
of Mercer Delta Consulting LLC, says: ''With companies managing a range of
different business models, it's difficult to have all that come together in the
head of one person.'' Others felt that adding another management layer slowed
operations.
Soon, the bodies began to pile up. Instead of a No. 2 handling operations,
full-scale management teams emerged. Together, they filled the COO role: making
spending decisions across businesses, streamlining production, and executing a
strategy that could change day to day. That long-held division of duties--where
the top guy glad-handed the public while the COO managed daily
operations--proved artificial. In a fluid structure, everyone needed an
external focus and operational prowess.
To some extent, the job of COO felt a bit forced from the start. Yobie
Benjamin, a partner and distinguished fellow at Ernst & Young in San Francisco,
notes that the post was a relatively late addition to the 20th century
management hierarchy. As Benjamin puts it: ''Vision is important, but someone
has to show me the money.'' That need never diminished, but the team approach
proved more efficient.
Among the mourners are Robert F. Cotter, himself a COO of Starwood Hotels &
Resorts Worldwide Inc.
(HOT) earlier this century. Cotter says he saw himself as the ''arms and
legs for the vision'' of Chairman and CEO Barry S. Sternlicht.
What killed the COO? The job became a victim of employee empowerment. As
companies decentralized, there was no need to carry on alone. Still alive and
kicking, however, are the COO's responsibilities. An executive team has vowed
to carry on the mandate from here.
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