Sunday, October 25, 2009

Chief Operating Officer (COO) Core Competencies

There are many books and articles written about CEOs, their responsibilities and what they need to do to be successful. We have published a number of these articles here based on personal experience as a CEO. However, despite the critical role that the Chief Operating Officer (COO) plays in company operation, there are very few articles written about them. As Director of the East Bay Northern California Chapter of the COO Business Forum, I have become intimately acquainted with COOs who are very effective in what they do. This purpose of this article is share some of the insights that have been gleaned from interactions with COOs and some of the articles that have been found.

The COO position entails running the day-to-day business operations of the company, freeing up the CEO to fulfill responsibilities as specified by the Board of Directors. In functional respects, the COO will be a vital member of the CEOs core staff, working with the CEO to develop and implement Company’s long-term strategy. The COO will also interact extensively with department heads to provide leadership and direction for all business activities and will be responsible for all major operational decisions. In many companies, the COO is responsible for making the numbers via the business units.

1. Vision: With the CEO, the COO leads strategic, long-term planning, vision and goal-setting using the ability to “look around corners” to anticipate future opportunities or problems. They take strategic and pre-emptive action.

2. Develop and Leverage Relationships: Possesses exceptional relationship-building and interpersonal skills, since diverse functions report to them and the smooth interworking is critical. High emotional and social intelligence makes the COO function more effectively.

3. Communication: Communicates passionately, effectively, and persuasively across a diverse set of stakeholders. The COO must also be able to create processes and structures to facilitate effective communication both internally and externally.

4. Building and Managing Teams: Inspires, motivates, coaches, and develops others. Listens well and continuously learns and seeks advice and feedback from others.

5. Results Oriented: Relentlessly pursues improvement and results. Flexible, with a strong work ethic and an entrepreneurial spirit to accommodate high level of responsibility and multiple priorities. Creates a culture of mutual accountability.

6. Analytical Skill: Analyzes and problem solves at highly developed level. Outstanding organizational skills and high attention to detail are critical to success.

7 Management style: Demonstrates an ability to manage conflict, build consensus, and facilitate problem-solving and collaboration among various parties.

• Advise the CEO on strategic business development and key corporate planning issues and make recommendations on major business decisions.
• General oversight of all operational and business functions, including manufacturing, research and development and regulatory affairs administration and operations.
• Keep the CEO informed about business activities, potential threats, opportunities, and recommended actions.
• Follow-up on decisions made in management meetings and ensure proper execution.
• Take charge in high-priority crises of an operational nature.
• Shape and develop department strategy and organization. Ensure proper staffing and report structure within departments. Help determine resource allocation among departments. Facilitate resolution of issues between departments.
• Encourage managers to evaluate and take actions that are consistent with company’s overall strategy which will lead to high performance. Challenge basic assumptions underlying each department’s operation. Act as a sounding board for department managers.
• Set performance goals which are tailored to each department. Develop operational goals for each department which are aggressive and tied to long-term goals.
• Monitor department performance against performance goals to ensure that progress is being made and collective action, if necessary, is taken. Ensure adherence to annual budgets.
• Lead program to build organizational capabilities. Develop a group of well-rounded, capable managers in each department.
• Institute processes that facilitate effective and efficient work flow.
• Travel, as required, to customer locations, supplier facilities and other executive matters.

The COO's job is quite extensive and good ones make the CEO's life much more pleasant and the company much more profitable.



John Maver
Maver Management Group
(925) 648-7561
Maver Management

View John Maver's profile on LinkedIn

Wednesday, October 21, 2009

Turnaround Cost-Cutting Techniques

While it appears that the economy is starting to show signs of life, we are a long way from health. Many businesses are struggling and we are providing turnaround expertise. Some will take the advice and be saved. Others may not make it. More than ever, cash is king. Businesses don't go bust, they simply run out of cash. We have written before about cash flow and its importance. Cost cutting has to be effectively married with good planning and effective investment in revenue.

Here are turnaround, cost cutting techniques for you to employ as you bring your business back to health.

1 Start with the plan.
Review your business plan and make sure that it is concise and focused. Build on your core competencies and be ruthless in insuring that only the projects and resourcing in the plan are being pursued. Do not allow business plan creep.

2. Cut cost from the top down.
Starting your cost saving strategies with directors and above first is imperative. This is much more than eliminating bonuses or perks. It is eliminating directors. Each senior person brings with them a set of projects and priorities that need to be resourced if the director is going to do their job. Take a judicious look at what actually has to be done and how many senior staffers are required. Each one removed will take with it significant other savings. But make certain that the cuts follow the plan above. These steps are tough but it sends the message loud and clear to the rest of the company.

3. Get staff buy in.
Cost-cutting is unpopular with staff at all levels. By now, they have been faced with it, not only within your company but with family, friends and others that they know in other companies. There can not be a series of continuing cuts. Follow your plan and make this one last cut and tell the employees that it is the last one. Get them to participate knowing that it can mean solid employment for all who remain. Treat those that must leave with respect.

4. Improve your forecasting accuracy.
Being able to accurately forecast sales by unit keeps inventory levels low and cash free. Many companies forget that as business improves it requires inventory increases to satisfy the new demand and that will tie up cash. Accurate forecasting also enables you to be able to budget for revenue generating spending. This is critical in the turnaround period.

5. Reduce Accounts Receivable.
You are not a bank. At least most of you are not banks and therefore having your customers using your money in the form of unpaid invoices for products in their hands is unacceptable. They are in effect using your cash! Do not hesitate to ask for your money. Clearly, this may be awkward at times but persistence and creativity can pay off. You don’t want to lose the customer but you do want to lose the debt. Get your cash.

6. Cut the Cost of Debt.
Your company may have been forced to extend its debt load during this recession. Now is the time to review it and determine how you might reduce the payments and conserve cash. Credit is still very tight but it is available. Go talk to your banker.

7. Capitalize on technology.
Be open with your clients and establish if your attendance in person is really required. Many companies are using video conferencing or webcams for both client meetings and internal work. Not only does this save travel expenses, it increases the productive hours of each employee.

8. Upgrade processes.
Many companies are still doing business in the manner that they did pre the recession. That won’t work any more. Review your basic processes and streamline them. Eliminate ones that no longer bring a high value to the organization. You will be amazed at the “deadwood” that exists. Automate wherever possible. Better business and better cash flow will result.

9. Outsource.
Outsource when it is not a core competency. There are many other companies in various parts of the world that have the core expertise and can do it faster and cheaper than you can internally. Look for these opportunities and make them part of the business plan.

10. Increase use of consultants.
Many articles advise companies to cut or eliminate consultants, believing that they can be a false economy. This is not necessarily true. We recommend bringing in consultants to do a specific job and capitalizing on their expertise. They can get things done faster and less expensively and make a positive impact on your cash flow. Don’t go for the big names with a lot of overhead. Find the smaller, less expensive but well experienced consultants that fit your budget.

This is turnaround time for companies. The wise will survive and will apply these cost cutting techniques effectively.

Let us know how we can help you improve your cash flow and bring your company to health.



John Maver
Maver Management Group
(925) 648-7561
Maver Management

View John Maver's profile on LinkedIn