Operations

I developed a reputation in my MBA program as being "operationally sound" businessperson. There are good and bad connotations, but in a nutshell I enjoy thinking through details and enacting strategy with executable business actions.

Imagine my surprise when a Fortune magazine advertisement by Manpower referenced a study they surveyed over 1400 CEOs and HR professionals that depicted Operations as the most likely source of corporate executives:

The paper, called Why Global Leaders Succeed and Fail, also surveyed competencies required for corporate positions:

The top four competencies for CEO were Creating a Strategic Vision (91.7%), Inspiring Others and Maintaining Leadership Responsibility (62.3%), Developing an Accurate and Comprehensive Overview of the Business (56.9%) and Decision Making (54.5%). This analysis helps explain why CEOs are more likely to come from Operations and secondarily from Finance. The CEO role shared two critical competencies with the COO and one critical competency with the CFO position. The COO position emphasized Developing an Accurate and Comprehensive Overview of the Business and Decision Making, which are two of the four critical CEO competencies. The CFO position had only Developing an Accurate and Comprehensive Overview of the Business as critical. The fact that only one or two competencies overlap may also suggest why succession, even from these “closest” functions, may fail.

In other words, the factors identified as most important for the top corporate executive (CEO) overlap more with the factors identified as most important for the top operations executive (COO) than other top executive positions:

I'll add my two cents that are not directly represented in the article. Operations is at the heart of the execution of strategy, so a solid understanding of what to do and how to do it are fundamental. Logistics are frequently more determinant of a successful business than the strategy. A well-run ship will hit the destination more often than a ship with the best navigational equipment and worst coordination. Another benefit of Operations is the perspective of the inputs and outputs of the other business functions. Sales may know what customers want, but Operations sees what customers do. Marketing creates a brand image, but lacks the perspective of an actual product that Operations must always keep in mind. Finance may know the most fiscally sound decisions to increase profitability, but Operations is the group that delivers the managerial decisions that increase profits. Essentially, I view Operations as already possessing a more comprehensive perspective and more able to provide organizational level management than other functional areas that have a more narrow functional perspective.