The C-suite presents a complex ecosystem, demanding distinct skillsets for each role. However, the Chief Operating Officer (COO) to Chief Executive Officer (CEO) transition remains one of the most well-trodden paths.

In this blog, Lance Bateman, Partner within the Procurement, Supply Chain & Operations Practice at Eton Bridge Partners, explores the pathway from COO to CEO, sharing insights on why this transition is common and what it takes to thrive in both roles.

Why is the transition from COO to CEO common?

Eton Bridge Partners’ 2024 CEO Pathways report revealed that the most common pathway to becoming a CEO, was through COO positions with 23% of newly appointed CEOs having previously held a COO title, closely followed by 20% having previously been Chief Financial Officers.

In 2023, Netflix’s former COO, Greg Peters, was promoted to work alongside Ted Sarandos as the Co-CEO. According to Fortune, the trend continues in 2024, with Ron Vachris, formerly COO of Costco, assuming the CEO position in January, and Keurig Dr Pepper’s COO, Tim Cofer appointed CEO in April of this year.

Data from our Pathways report shows that 54% of CEO appointments are internal candidates, highlighting the value of their deep company and industry knowledge. Chief Operating Officers (COOs), who often step into the CEO role, possess proven leadership and management skills, along with an intimate understanding of business operations. They oversee ongoing operations, implement strategic initiatives, and ensure operational efficiency across various departments. This hands-on experience equips them with a holistic view of the company’s inner workings, making them well-suited to guide strategic decisions and drive the company’s objectives as CEO.

What are the essential skills needed for COOs stepping into the role of CEO?

While the COO background provides a solid foundation, the transition to CEO requires additional competencies. Transitioning from COO to CEO demands an all-encompassing skill set.

• Strategic vision: CEOs need a future-oriented perspective. Whilst COOs focus on execution, CEOs need to define the long-term direction and ensure the business is positioned to capitalise on upcoming trends.
• Leadership and communication: The CEO’s role as a visionary leader is crucial both within the organisation and in engaging with external stakeholders. While COOs typically manage daily operations, the CEO must inspire and lead the entire company, galvanising it towards ambitious goals and fostering a culture of innovation and excellence. This requires strong leadership skills, including building and maintaining a high-performing executive team, communicating a clear vision, and nurturing a positive company culture. Effective communication is also essential for engaging with board members, investors, and external partners.
• Financial acumen: A strong grasp of finance is crucial for CEOs. They need to understand financial statements, make sound investment decisions, and effectively communicate financial performance to stakeholders. While this is true for CEOs, it is equally important for COOs. Often, COOs manage some of the largest P&Ls in the business, depending on the industry, and must allocate their substantial budgets efficiently. However, a CEO must broaden this financial oversight to encompass the entire organisation and shareholders, balancing the need to maintain operational stability with the imperative to drive business growth.
• External focus: Unlike the internally focused role of a COO, CEOs need to be able to cultivate strong external relationships with investors, partners, and industry leaders. Additionally, the CEO must also have a strong and collaborative relationship with the Board of Directors, including the Chair and Non-Executive Directors (NEDs). While COOs also develop strong external relationships, typically with third-party suppliers and operational partners, the CEO’s external network involves a different pool of people. This includes stakeholders such as potential investors, strategic business partners and key industry leaders, all of which are crucial in steering the company’s strategic direction and ensuring long-term growth and sustainability. This distinct focus on broader strategic relationships differentiates the CEO’s role from the more operationally centred external interactions managed by the COO.

Identifying your next COO

When a COO transitions to CEO, a critical question emerges; who will fill the role of the Chief Operating Officer? It is essential for the newly appointed COO to maintain operational effectiveness whilst ensuring continuity in leadership for employees.

The CEO-COO partnership forms the backbone of a successful leadership team. When considering COO candidates, look for someone who complements your skillset and brings a fresh perspective to the table. A strong COO can free you up to focus on strategic initiatives while ensuring smooth daily operations, even more important during challenging markets such as this. Remember, the C-suite is a team, and fostering collaboration and clear communication are essential for achieving long-term success.

Here are some key aspects to consider:

• Promoting internally: Promoting an existing senior leader demonstrates your belief in the company’s talent pool and fosters a strong internal succession plan. Look for someone with strong operational experience and leadership potential. Interestingly, 54% of CEO appointments from 2022 to 2023 were internal promotions according to our Pathways report.
• External hiring: Bringing in an external candidate offers fresh perspectives and innovative ideas that can drive growth and address specific business needs. Experienced executives from other sectors can introduce new approaches to technology, customer engagement, or process optimisation, which is essential to stay competitive. This can also allow you to target specific skill sets that align with your business priorities, helping to overcome operational deficiencies and pioneer new strategies that set your company apart.
• Consider an interim: An interim COO can provide valuable support during the transition while a long-term solution is identified. This allows the new CEO to focus on strategic priorities. According to Google Trends data since 2004, the number of searches for “Interim COO” is on the rise. Companies are seeing results and a positive ROI from interims. This demand is not limited to just COOs, but also extends to other key roles across the c-suite such as CEOs, CHROs, and CFOs.

Ultimately, the best choice depends on the company’s specific needs and the skillset available internally and externally.

Strategies for transitioning from COO to CEO

New CEOs must adapt quickly, prioritise organisational success over personal glory, listen carefully before acting, and focus on strategic high-impact initiatives. The first months are critical for setting the tone and direction for any CEO tenure. The COO to CEO path offers a unique springboard for leadership, but it requires continuous development.

To prepare effectively for this role, expanding your strategic capabilities is imperative. While operational excellence is foundational, diversify your skills by actively engaging in strategic discussions, pursuing educational opportunities in finance, and shadowing senior leaders involved in high-level decision-making. This approach will enrich your perspective and enhance your readiness to make informed decisions as CEO.

Nurturing relationships with stakeholders is crucial for thriving in the CEO role. Begin cultivating these connections early by interacting with investors, board members, employees, and external partners. Building trust and fostering collaboration now will establish a robust support network essential for future leadership success.

Stepping into the public sphere is also pivotal for CEOs. If you’ve been accustomed to working behind the scenes, embrace opportunities to enhance your visibility. Consider speaking at industry forums, participating in media engagements, and refining your communication skills. Effective communication is fundamental to inspiring confidence and conveying the company’s vision under your leadership.

Another source of invaluable insight could be gained by seeking guidance from an experienced mentor who has successfully navigated the COO-to-CEO transition. A mentor can offer strategic advice, share their experiences, and help you navigate the nuances of the CEO role with confidence and clarity.

By integrating these proactive strategies into your professional journey, you’ll be well-equipped to transition smoothly from COO to CEO, positioning yourself for long-term success in executive leadership.

Conclusion: Lead from strength to strength

The COO to CEO path is a natural progression for many talented executives. Their deep understanding of the business, proven execution ability, and strong stakeholder relationships provide a solid foundation for success in the CEO role. However, to truly thrive, aspiring COOs must cultivate additional skills like strategic vision, leadership, financial acumen, and external focus. By continuously developing their skillset and fostering strong relationships within the organisation, COOs can effectively navigate the transition and lead their companies to new heights.

The CEO role demands a well-rounded leader. Embrace the opportunity to learn and grow beyond your operational expertise. With dedication and strategic planning, the COO to CEO journey can be a transformative experience, not just for the individual, but for the entire organisation.