One of the most significant relationships at a corporate executive level is that between a company’s CIO and the chief operating officer (COO). While each has a distinct rationale and focus, the two roles are more similar than you’d think and both face increasing pressures to drive innovation and business growth.
The COO role is also one of the most volatile at the senior executive level, according to data from US recruitment firm, Crist Kolder, which reported more than a quarter of COOs in US Fortune 500 companies left their jobs in 2012.
In addition, only 38 per cent of these organisations now have a formal COO position, the survey reported, down 10 per cent over the last decade.
It’s hard to find statistics on the number of COO roles in Australia, partly because job titles and responsibilities are not unanimous, former Chan and Naylor COO, Karnig Momdjian, tells CIO Australia. Momdjian was previously a CIO at Deloitte and now runs a consultancy called Virtual COO, which outsources COO functions for time-poor organisations.
He points out the title of COO covers what was traditionally called ‘general manager’. But as c-level titles become more universal, the COO for a company’s most senior operations role is coming into vogue. Momdjian’s consultancy role gives him the opportunity to take a warts-and-all look at relationships between the CIO and the COO.
One of his most interesting findings is that it’s not uncommon for COOs to have a strong IT background, particularly in technology organisations.
“It depends on the nature of the business, as a COO will usually come from the business line,” he says. “In a retail or manufacturing business, their IT exposure may not be strong, but in service organisations, you can’t make that assumption.”
So there are plenty of COOs who understand technology very well. But does that always make for a strong relationship between the two functions, or is there more to it?
Mentor and champion
According to Momdjian, the COO (along with the CFO) will typically be a CIO’s most critical client. Where a COO is more experienced, they will often also take a business mentor role in the relationship.
“Sometimes you will find the COO needs to drag some CIOs into thinking about technology for business rather than technology for technology’s sake,” he says.
“The CIO may be so focused on the internal priorities, getting the platform and software right then getting the support right, that they need the COO’s help to translate that technology into the operations and business processes, and use those as a guide to set priorities.”
We go through the guts of the activities we are both doing and we treat them as formally as if I were Brett’s direct report and he were mine
The biggest sticking point between a CIO and COO is typically around money. “It is hard for a CIO to cut back on technology because they are aware of what is going on in the technology marketplace and they want that competitive edge,” Momdjian says. “But for the COO, the business benefit needs to be immediate and it cannot be marginal, or they will block it.
“When you have the COO championing that technology solution, your success rate will rise.”
Smooth technology operations are critical for Medibank Health Services COO, Ray Kiley, who is running one of the biggest work-from-home models in Australia’s health sector. Along with dental, eye and other specialist clinics, the company, a substantial offshoot of the health insurer, runs a huge health services call centre.
“We have about 600 nurses across Australia, and about 100 GPs, all working from home taking calls on our 24-hour health advice line for our members,” he explains.
Kiley’s relationship with the company’s CIO, Brett Winn, is his closest executive partnership. The two are peers and both report directly to CEO, Matthew Cullen.
One of the cornerstones of their relationship is weekly one-on-one meetings where priorities are discussed. “This is not just a meet-and-greet for coffee; we go through the guts of the activities we are both doing, and we treat them as formally as if I were Brett’s direct report and he were mine,” Kiley says.
Kiley has a strong understanding of the IT role. He originally trained as a lawyer but also holds a computer science degree and spent many years at Telstra, eventually becoming the director of business integration. “I do have a good understanding of what keeps CIOs up at night and also what wakes them up at night,” he continues. “In our case, that’s outages.”
Communication around outages is critical to the way the IT function is perceived across the Medibank business, yet many CIOs just don’t get it, Kiley claims. “If there is an outage, the CIO should be front and centre,” he says. “We have had outages in the wee hours of the morning, and Brett is always on the teleconference call.”
Actions like that transmit the message that the CIO has a passion for the business and cares about its operations. “That permeates through the whole organisation and communicates back to the business that our CIO thinks it is important to get involved in resolving an outage at 3am,” Kiley says.
“It helps build a culture of responsibility throughout the business.” Typically a CIO can also remind staff to focus on business priorities. “It could be advising staff not to go down that rabbit-hole and to restore the service before you worry about other things,” Kiley adds. “CIOs are in a great position to deliver strong guidance around that.”
Business is 24/7 at Medibank Health Services, Kiley says, and calls can sometimes be about life and death situations.
“Brett is out and about on clinic visits both so he can understand business, and also so the business understands that he cares about it.”
One of the important things that a COO and CIO can work on together is getting the IT function to better communicate with the frontline users in the business. “Usually you find IT is doing a whole lot of good stuff across their entire portfolio – but they’re not great at communicating to the rest of the business,” Kiley says.
He and Winn have set up a weekly communique which goes to all staff. “Sometimes it’s just a simple message to let them know about a software update or technology change, or it might be a tip on using technology effectively; they recently sent out a tip on how to use the Internet toolbar better. What that communication does is bring IT closer to the business.”