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Goodbye, COO

Posted by: Nanette Byrnes on August 11, 2008

As part of its recent shakeup, coffee house uber-chain Starbucks did away with its chief operating officer, apparently to give founder, and recently returned CEO, Howard Schultz “a direct line of sight” into the struggling stores. Starbucks had only had a COO since last July when former Reebok CEO Martin Coles got the job.

It’s not surprising that in a slow down, or worse, a company would need its CEO to be its chief operating officer says Brian M. Sullivan, CEO of executive search firm CTPartners. In boom times, a CEO may best spend his (or her) time on overseas expansion, strategic partnerships, wooing Wall Street, and the like. But when the going gets rough, the CEO must focus on defending and protecting the business he’s already got. “A CEO in this environment has to focus as a COO or won’t be adding value to the business and will be derelict in their responsibility,” says Sullivan. Sullivan recalls Lou Gerstner’s comment on his first day at IBM when a reporter asked “What’s your vision for IBM?” “He said, ‘The last thing IBM needs right now is a vision.’”

Light on vision, the private equity CEO is the “embodiment of the CEO who is the COO” says Sullivan. Guys like Bob Nardelli at Cerberus-owned Chrysler are roll-up-your-sleeves types digging in to unlock value. Private Equity investors “don’t want a CEO who thinks, they want one who does,” he says. And he means it as a compliment.

Peter M. Felix, President of the Association of Executive Search Consultants thinks that Sarbanes-Oxley may be behind some dwindling in the COO suite as well. With CEO’s now having to attest to the accuracy of their financial statements, says Felix, “delegating operating responsibility may not be a good idea.”

Reader Comments

Wally Bock

August 12, 2008 3:09 PM

All those comments about COOs and "roll up your sleeves" are probably dead on, but what's going on at Starbucks is something else. It's a replay of the popular, "re-arrange the deck chairs" script that companies put on when they don't have a clue about how to achieve the results they've promised. They figure we'll be distracted by activity on the sun deck and not notice that the engines have stopped.

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