Why More Operations Executives Will Become CEO’s

10/27/2017 01:43 pm ET

The days of blind brand loyalty are over. Our children will laugh at us when they hear stories of how we camped overnight for an iPhone release or got into heated altercations over the last pair of Air Jordans on the shelf. Today, rather than buying into brands based on reputation, customer demand is based on how quickly and conveniently they can get their hands on the products they want. This shift means one thing for companies: speed is everything.

As these expectations become the new standard, companies are reorganizing in response. They are looking to their executive team with one pressing need: delivering quickly and reliably in order to survive the changing tides. To this end, when filling open CEO positions, board members are increasingly turning to leaders who have made careers out of translating the big picture and thousands of moving parts into executional reality. The next class of CEOs stepping in to save companies are emerging from operational executives.

The era was ushered in by leaders like Tim Cook. Other great operational visionaries include: Mike McNamara of Flex; Gerry Smith of Office Depot; Jim Rowan of Dyson; Dave Mosley of Seagate; Peter Carlsson of Tesla and now Northvolt; Kevin Johnson of Starbucks; James Quincey of Coca Cola; Jeffrey L. Harmening of General Mills; Dirk Van de Put, incoming CEO of Mondelez; and John H. Hammergren of McKesson, to name some heavy hitters.

Previously, CEOs were traditionally promoted from sales or finance because investors over-index on shorter-term economic metrics and predictable stock movements. But today, corporate value is driven far more by satisfied and repeat customers, which requires the “technical” ability to navigate a myriad of constraints to maximize the customer experience. And operations executives have spent decades of their professional lives bridging brand promises and technological innovations with brutal reality to ensure store shelves are full and that customers get their hands on the products they want.

In order to understand the challenges COOs and CSCOs overcome on a daily basis, it’s crucial to understand the nature of most global operations: organizationally cumbersome, siloed, and not designed for rapid execution. In fact, most companies only control about 20% of their operations since they mostly work with external suppliers, carriers, and contract manufacturers. In a world where customers want things at the push of a button, it is important to have a CEO who knows all the existing levers to execute quickly despite these limitations. COOs and CSCOs don’t need to spend as much time gathering information and getting up to speed on the forces at play. They’ve been immersed in this complex world long enough to already know the levers that will get things moving.

Moreover, many CEOs who don’t have operational experience expect that delivering on heightened customer expectations is founded in process: repeatability, predictability, and sustainability. COOs and CSCOs know that processes need to be approached with flexibility and skepticism. It’s not enough to simply have a plan B. Or a plan C. Or a plan Z. What companies need is ultimate agility, to react in real time to the problems that arise. Consider the interdependent nature of a typical company’s global operations. There is an endless series of variables that can impact a “perfect plan” from many directions. A port strike. An unexpectedly powerful weather system. An upstream materials shortage with an third or fourth tier supplier. Or perhaps a design defect or misshapen part from a major manufacturer. There’s no deficit of things that can — and do — go wrong. Operations executives know that perfect planning is meaningless. Perfect agility is everything.

Lastly, it’s important to remember that while most people are only now cluing in to the pain of delivering to customers quickly, operations executives have been dealing with this question for years. Despite working with broken systems and immense organizational friction, they have never been measured by their good intentions; only the outcome of their efforts. And to that end, no one faces reality in the raw, unbridled way COOs and CSCOs do every day — turning cumbersome, sprawling, and sometimes ugly truths into physical deliverables that delight customers. By dealing with this dissonance on a daily basis, they’ve spent their careers acquiring a unique appreciation for the nuances and interdependencies of operational complexity and honed an incisive ability to abstract it into actionable strategies that shape the very core of the companies they work for.

In short: the days of “get in the back room and just make sure it gets there on time” are over. In the coming decade, the fastest path to the top in global companies will be deep experience in the dynamic intricacies of operations.

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