Ran across this 2004 article in Entrepreneur.com by Asheesh Advani that poses the question as to whether your start-up or small company needs a COO. Of course I'm going to be somewhat biased on this question since my past three assignments have been in an operations role. From the article:
At my company, the COO (what we call vice president of corporate development) is in charge of managing business relationships with key suppliers and ensuring that our products and services meet standards of quality and cost effectiveness. He frees up my time so I can focus on investor relations, business planning, media outreach, and major sales and marketing efforts. How would having a COO help you?
The job description of a COO varies by company, but in almost all cases, it doesn't include sales, marketing or external public relations duties. Typically, the responsibilities of the head of operations are comprised of quality control, order fulfillment, employee/HR matters, and managing internal systems and business processes.
Now in two of my past three "operations" assignments, I will say that business development, sales, and anchor account management have been major functions of the job in addition to handling backoffice functions (e.g., legal, finance). I agree with the article that such a span is probably more the exception than the rule though for an operations person. Many companies are probably better off splitting the outward-facing and inward-facing functions if only to prevent task swapping (e.g., seeking a lower-level resource for inward-facing functions if controllable costs not highly leveraged). In partial defense of my past functions, however, I will say that some companies can benefit a great deal when those in business development functions have better than average facility with legal, finance, and product management issues.
Update (9/29/05): Zoli Erdos has some additional thoughts and personal experiences here in a more focused context of a start-up contemplating VC funding. Zoli makes some interesting points about distinguishing real business reasons for having CXO/VP/President roles and the needs to structure things properly with a (potential) VC in the picture. Regardless of VC money, most parties that want to win want clear accountability and metrics to keep a company on track - no convoluted organizational structures or incentive structures. To take this on a bit of a tangent, I will say that I had about 4-5 sets of business cards in one venture. First I was Director of Operations and Strategic Intiatives (the concept being that I filled a sweeper position to unclog whatever bottleneck [other than R&D] that the company needed to move forward). Then I happened to close a large enterprise deal and secure corporate venture capital financing (from targeted cold calling based on a magazine article related to a company in the integration space). Was able to choose whatever title I wanted from there having earned my stripes as a non-founder. I didn't care, I could have been called Assistant Toilet Scrubber if it helped to build shareholder value. From there, I became VP of Operations. Then VP of Finance and Business Development (a weird one, OK). Then finally stayed as VP of Business Development roughly coincident with trade sale of certain intellectual properties. Bottom line: still wore many hats in a start-up. Title and role got narrower over time as drew down money. I will briefly say that title can have some real impacts as to how one treated by customer prospects, partners, prospective VCs, wild dog negotiators, etc. outside of the firm. Some of the title and role changes tried to deal with that partially, especially as the tactical focus of the business shifted over time. Maybe more on this for another post.