Posted by The Bowdoin Group on September 29th, 2021
Just as each ship needs a captain, every company needs a leader to navigate operations day in and day out.
Smaller businesses often rely on their own inertia and the watchful eye of the founder(s) to keep operations on track. But as any organization grows —and especially when it builds a sales and marketing department—the ability to make operations not only consistent but consistently better takes precedence, while becoming increasingly difficult.
The right leader must oversee this effort. For most companies, that’s either a Chief Operations Officer (COO) or a VP of Operations. These roles may sound interchangeable, but each has a distinct purpose inside an organization, and it’s important to install one or the other (and in some cases both) based on your needs and goals. We explore the key differences between a COO and a VP of Operations, providing everything you need to make an informed decision.
The Harvard Business Review once published an article titled, “Second in Command: The Misunderstood Role of the COO.” The title alone offers two key insights about this executive. First, they often work in close coordination with the CEO. To the extent that the Chief Executive has a right-hand person, that individual is often the COO. What they do in this partnership can vary widely.
While wearing several different hats, the COO will typically take a long-range and big-picture perspective on operations. This person will be tasked with anticipating how strategic plans and market forces will affect operations in coming months and years, thus preparing to keep operations running smoothly within a changing company. Another key responsibility will be setting higher standards for operations – in terms of efficiency, quality, cost etc. – and devising plans to make these targets a reality.
Of course, a COO will also work in close coordination with other executives. As the head of operations, the COO will provide important insights about what a company can (and can’t) accomplish. Turning the C-suite’s strategic vision into an actionable set of plans and policies will be a core responsibility as well.
“The VP of Operations”
The VP of Operations plays a much more hands-on role with the operations team and the work they do every day. If the COO is looking towards the future, the VP of Operations is overseeing the day-to-day.
In this role, someone will be paying close attention to performance goals for the operations team, then actively managing the various supervisors and stakeholders responsible for meeting those goals. On top of ensuring accountability, the VP of Operations will institute new policies, technology, equipment, workflows or whatever other changes can positively impact the present.
One way to think about this leader is the liaison between executives and the rest of the team. It’s important for the VP of Operations to convey the strategic vision to the team and build consensus for any changes that are in the works. But information should also flow through the liaison from the bottom up. A good VP of Operations will effectively communicate the perspectives of the team to the upper ranks of the organization.
Which Should You Choose?
There are some organizations that utilize both a COO and a VP of Operations, but these tend to be larger and/or more complex businesses. Most companies run smoothly with just one or the other – provided they choose the right one. With that in mind, here are some criteria that can help determine which executive to hire.
- Strategy – What do you intend to do in the years ahead: double down on your existing strategy and strive for excellence at what you already do? Or put transformative changes in place that will rewrite how you operate? The former suggests you need a VP, the latter indicates a COO.
- Scale – If the company is growing quickly or evolving rapidly, having a COO on board can bring operations to scale as quickly and comprehensively as circumstances require. However, if the size of the company looks stable in the near term, A VP of Operations may be the better choice because they can focus on improvement rather than change.
- Market – Since operations are a key competitive differentiator, the momentum of the market and the movements of key rivals will influence what kind of operations you need. If you’re in an industry undergoing disruption or transformation, a COO who can adapt is more appropriate. However, if your market is more crowded and competitive, selecting a VP can help you carve out whatever advantages may be available.
- History – What is the track record of your operations department? Are you known for excellence? In which case, you may want to hire a COO who can add vision to the mix. Or do operations excel at innovation but lack in efficiency and consistency—initiatives a VP of Operations knows how to institute?
Which executive hire adds the right boost to your organization? We welcome your thoughts and feedback.