Delta COO Announces Resignation
August 30, 2007
Over the past several months, pundits and much of the Atlanta business community have speculated about the succession plans at Delta Air Lines.  It has been clear since Delta emerged from bankruptcy that Gerald Grinstein's retirement was imminent.  Observers felt it was a two person race - between CFO Ed Bastian and COO Jim Whitehurst.  Last week, when new board member Richard Anderson was introduced as CEO and Bastian named President, Whitehurst effectively became a short-timer.  Internal heirs who are so visibly positioned as such and are then passed up tend not to stick around - as was demonstrated by the very public race to follow Jack Welch at GE.

What is interesting to note is Anderson's assertion that while he is currently considering the structure of the top management team at Delta, he has no plans to fill the COO role - noting his deep background in operations.  Deep background aside, the airline industry as a whole faces a challenging future - and Delta has only recently begun to enjoy improved financial results.  Given the value that everyone agrees both Grinstein and Whitehurst brought to the turnaround, it is hard to imagine a single executive replacing them both.

COO Appointed to Lead HBO
May 21, 2007
In one of the more bizarre stories of CEO succession, Time Warner announced earlier this month that CEO Chris Albrecht had agreed to resign.  His resignation came just days after Las Vegas police arrested him and charged him assault.  COO Bill Nelson, an HBO veteran, has assumed the duties of CEO while a search for a permanent replacement takes place. 

Albrecht attributed his erratic behavior to a slip from the sobriety he had maintained for over a dozen years.  At the risk of oversimplification, the episode provides an unusual reminder of the fragility of leadership and the importance of having adequate bench strength to make certain that companies don't struggle when their leader's flaws are revealed.

"A Busy Week for COO News"
December 12, 2006
This was a busy week for COO news. At Yahoo!, reorganization plans include the departure of COO Dan Rosensweig. Mr. Rosensweig is one of the COOs who was interviewed for Riding Shotgun. At this point Yahoo! has no plans to fill the COO job opting instead to create a structure with unit heads for each of its three new groups: the audience group, the advertiser and publisher group, and the technology group.

Here in Atlanta, Coca-Cola has introduced Muhtar Kent as COO. Kent is a company veteran and many speculate he is being positioned as the next CEO. The COO job at Coca-Cola has not been used since Steve Heyer— passed over for the top job by Neville Isdell— left the company.

Finally, Citigroup Inc. has named corporate and investment banking head Robert Druskin as COO. Reports are that CEO Charles Prince has charged him with managing the bank's cost structure— a point of contention with investors.

In this one week there are examples of the varied nature of the COO position. At Yahoo!, a re-organization had the effect of essentially desigining the role out of the top management structure. At Coca-Cola, the role has been resurrected as a platform from which to provide a proving ground for a leading candidate for the top job. Because the company left the job vacant after the naming of its last CEO and the then COO's departure it seems clear their use of the position is for grooming. Finally, at Citigroup we have an example of a company installing a COO with a specific strategic imperative— to respond to problems with a specific business issue and an important constituency.

"Coaching for CEO-COO Duos"
September 25, 2006
A recent Wall Street Journal article entitled "CEO and COO try 'marriage counseling'" described the efforts that WaterMark CEO Jim Clark and COO Thomas Fumarelli undertook to make certain they were "on the same page" as a leadership team.  The deliberate effort the two made together is laudable; it serves as an important reminder to CEO-COO duos of the importance of quickly working to establish trust and rapport.  In this particular case, it required a concerted effort because each came to the partnership from very different personal and professional backgrounds. Fumarelli was the first hire made after Clark rose to take the CEO position - they had no previous relationship of any sort and few apparent commonalities - and there were immediate expectations that the two would work effectively together to address a number of strategic challenges that WaterMark was facing. From my own conversation with Mr. Fumarelli, it is clear that the opportunity to work with an independent third party around the issues new partnerships must negotiate was invaluable.  Having that help in working through the development of a joint understanding of what each party needed from the other was a very important first effort in placing the two in step.  As number ones and number twos think about how they can accelerate the development of their working relationship, the opportunities present in the use of coach or similar are certainly worth consideration.

"Ruiz at AMD"
August 21, 2006
Earlier this August, New York Times columnist Joe Nocera profiled the CEO of Advanced Micro Devices, Inc., Hector de J. Ruiz.  Several points in the column are interesting for those wanting to better understand the role of COO.  Ruiz joined AMD in 2000 as COO to the founder, W.J. Sanders III.  As we have noted, taking a COO role from a founder is a daunting assignment.  In fact, both serving as second in command to and then succeeding a founder is quite difficult.  From all reports, Ruiz has managed to pull both of gracefully. Nocera notes that in the battle between AMD and Intel a central challenge for leaders is to balance the pursuit of the next generation of microprocessors and then to "execute flawlessly".  At AMD, Ruiz did so first as the number two to Sanders and now with his COO, Dirk Meyer. At rival Intel, Paul Otellini is flying without a number two.  He has stated that the company is "saving the visoneering for later; these days, it's nuts and bolts time at Intel."  A concern would be that this focus on the nuts and bolts might cause the company to misread the terrain ahead.  Nocera has it right - in an operationally intensive business like this, a focus on both the future and the present is essential.  The CEO/COO structure is one way to structure for that purpose.

"The Impact of the COO"
August 07, 2006
The July 2007 headline from Reuters read "Penn Profit Up, But Shares Dive on COO's Exit".  The story that follows reported that shares in Penn National Gaming fell 11% on the news that the COO, Kevin DeSanctis, was planning to leave to form a new gaming company.  It is hardly unusual for a number two to announce plans to pursue a chance to be CEO. What was unusual was the market reaction captured in the Reuters headline.  Perhaps investors at Penn are at the fore in recognizing the value that a strong COO can add to a leadership team.  When the role is properly designed and executed, the value added is great.  The critical task for boards and CEOs is to understand when and how to use the role. Developing that understanding begins with recognizing the ways in which the role is a unique one in the governance of an organization.