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What’s the Difference between a CEO and COO?

Q:  Can you please clarify the distinction between the roles of a CEO and a COO?

I had my own impression of the roles of a CEO, which included managing and motivating the team as a whole and ensuring the execution of day-to-day tasks.

However, after speaking with a mentor, who has been a CEO and a COO of Fortune 500 companies, he informed me that the CEO’s roles are first and foremost, obtaining financing (a large majority of the CEO’s time), along with setting the vision, followed by finding talent and creating alliances. Additionally, the CEO should guide top-level management, but not be very involved in the day-to-day.

The COO is supposedly responsible for ensuring the execution of all of the day-to-day tasks necessary to achieve the company’s vision, managing the company’s non-senior level employees, and "making things happen."

Can you please confirm or refute the roles as defined above, and provide an explanation? Additionally, can you please mention some of the necessary skill sets that each role requires (e.g., CEO: strong grasp on finance, general knowledge of all aspects of a business, etc.).

A: (Jason) There isn’t really a definitive answer to your question.  In my opinion, you are both right.  There are two components which weigh heavily into what the CEO / COO distinction is, but there are others too.

The first question to ask is "what stage is the company in its lifecycle?"  Many early stage companies don’t have COOs, so the CEO is doing "all the above."  See Brad’s recent post on why he doesn’t like COOs in early stage companies.  In later stage companies (especially Fortune 500 companies) you’ll usually see the CEO as the "front man"  in organization with investor relations, overall culture, vision and strategic direction being very important, while the COO, or other operations person (CFO or General Counsel) responsible for more other day-to-day tasks.

The second question is what "style" the CEO employees, as well as what his/her previous area of expertise is.  Some CEOs are master delegators to their executive staff.  Some are detailed orientated and want to be involved in every decision.  This is purely a factor of management style.  Furthermore, depending on where a CEO "grew up" experience-wise (sales, tech, marketing, finance, etc.) you may see them be more or less involved in certain functional areas. 

So there is no "one size fits all" CEO job description.  And because of this, there really isn’t a "necessary skill set."  I think for all CEOs it is important that they are good communicators, create a healthy culture at their companies and are someone who inspires – both employees and the outside word alike.

March 25th, 2008 by     Categories: Uncategorized    
  • http://www.mydesignin.com Ramsay

    Great Post. Inspiring and helpful for founders and aspiring CEOs.

  • Michael

    HBR did a piece entitled “Second in Command: The Misunderstood Role of the Chief Operating Officer” in May 2006. The authors did a nice job of laying out the reasons different companies choose to have a COO role and the varying forms the role can take. Like most HBR content, the article is most applicable to very large firms, but none the less insightful for small companies. Worth the $6.50 to those without a subscription.

    I am inclined to believe (with clear bias as a former COO of a small company) that roles and titles should be defined based on both the needs of the company and the abilities of the available talent to address them. There's no one-size fits all. Brad Feld's anti-COO post inspired a nice range of comments I found accurate in depicting a range of experiences with COO roles.