The Transformation from Chief Operating Officer to Chief Resilience Officer

Rethinking Leadership for a Resilient Future: A Fusion Blog Series

The role of the Chief Operating Officer (COO) varies across industries, company sizes, and the mandates set by Chief Executive Officers (CEOs). However, the COO is focused on what drives distinctive value for an organisation and ensures that that value is delivered optimally and efficiently. The CEO sets the strategy, and the COO provides the operational link to it, facing off primarily with internal business stakeholders. This may include embedding a new operating model, recovering a business, or delivering a digital transformation. The challenge that faces the modern COO is that the stakeholders they work with—the broader C-suite, CEO, and investors—expect them to act and produce results based on short-term plans.¹

However, in today’s global, digital, and consequently interconnected operating environment, such short-term planning does not deliver the results that shareholders, boards, and executive leadership expect, particularly when combined with an increasingly complex and unpredictable threat landscape. Increasingly, organisations are expected to demonstrate their long-term viability in the face of threats that they have little control over. As a result, share prices plummet at the hint that global supply chains will be disrupted, whether through a pandemic, invasion, or trade war. The CEO needs confidence that the business strategy is resilient to impacts outside of the organisation’s control—and this is a mandate that the COO cannot deliver.

This limitation, brought about by a change in how businesses operate, a shift in consumer expectations, and a delicate and fragmented geopolitical environment, is why the Chief Resilience Officer (CRO) is best placed to lead organisations through an uncertain future—and become the natural evolution of the COO.

Services and Products as the Strategic Anchor

The COO typically analyses the business through the lens of its internal operations and processes to identify opportunities for efficiencies, rationalisation, and cost-out. While these functions are crucial, they often focus on the means rather than the end, ensuring that the company’s critical services remain robust, scalable, and adaptable. While the COO traditionally focuses on operational processes, the CRO looks at the business through the lens of its critical services and products.

This is a more strategic, rational, and logical approach to understanding business models and making investment decisions; it is about protecting and investing in the parts of the business that make an organisation viable, impactful, and profitable. This service- and product-centric approach is more effective because it defines more accurately the unique value that an organisation provides to the market (and how it delivers it). Services and products are how the consumer experiences the business, and in this era of customer-centricity and social media amplifying brand risk, adopting this approach is the best way of building trust, competitive advantage, and market share.

Organisational Imbalances: Balancing Growth and Cost Optimisation with Risk

In traditional business models, efficiency and risk management are often viewed as competing priorities. Efficiency aims to reduce costs and maximise productivity, while risk management introduces redundancies and safeguards that can appear inefficient in the short term. However, an overemphasis on either efficiency or risk avoidance can create resilience vulnerabilities. Excessive cost-cutting creates vulnerabilities through fragility, while excessive risk avoidance creates vulnerabilities through stagnation and organisational inertia. Both threaten the long-term commercial viability of an organisation. Resilience is therefore not simply a defensive mechanism against disruptions—it is a strategic framework for long-term business success.

The key to resilience lies in understanding that not all risks are created equal, and nor should be the investment in them. The CRO ensures that organisational decision-making is filtered through the lens of a firm’s critical services and products, balancing commercial opportunity and efficiency gains with resilience measures that guarantee the delivery of critical services and products over the long term. These services and products are what generate the revenue that enables expansion and innovation investment. This investment should be filtered through the lens of resilience because revenue diversification and the capture and protection of market share directly contribute to an organisation’s resilience.

Leading Through Complexity and Change

This self-reinforcing loop of resilience investment (both in value protection and value creation) is what makes an organisation viable over the long term. If a firm avoids risk to the extent that it stagnates or cannot adapt efficiently, it will make itself vulnerable to competition and risk losing market share. The job of the CRO is not to avoid risk—it is to balance stability and growth in a way that builds confidence in the marketplace and ensures an organisation’s long-term viability.

Given the traditional COO has an internally focused mandate over operations, process, and cost optimisation, organisations should evolve this role into that of a CRO to better navigate the interconnectedness and fragility of today’s business, risk, and geopolitical environment. Such internal focus is inadequate when the fundamentals of the business model are external (the services and products provided to the market and the global ecosystem of vendors that underpin them) as well as the threats to them (conflict of all forms, cyberattacks, third-party failures, pandemics, and the fragmentation of the post-WW2 order).

Organisations that take this approach will need to define clear boundaries between resilience and risk functions to avoid duplication of responsibilities. Additionally, measuring the performance of the resilience executive will take creativity; it is more difficult to quantify the value of well-managed disruption than it is to measure cost savings. These challenges, however, pale in comparison to the complex and ever-changing path ahead for businesses operating in this fragmented, yet intractably connected, world.

¹https://www.mckinsey.com/capabilities/operations/our-insights/stepping-up-what-coos-will-need-to-succeed-in-2023-and-beyond; https://www.mckinsey.com/capabilities/operations/our-insights/delivering-the-strategy-the-coo-agenda