Anilu Vazquez-Ubarri, Partner and COO, TPG
Dave Wheeler, Chief Operating Officer, New Balance Athletics
Moderator: Phil Wahba, Senior Writer, Fortune

COO Summit 2024: All Eyes On The Coo - The Evolving Role In A Time Of Transformation

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Why don't we just kick uh get right into it? The panel is called, this uh session is called All Eyes on the CEO the evolving role. How has the coo role changed since the peak of the COVID crisis? I don't wanna say it's over COVID is still running around but you know, we're, we're not at those peaks anymore. So for you, how do you see the profession and the role uh having changed? Yeah. Um Hi, everyone. Um Thanks for, for being with us. Um I think that um the last six years that I've been at TPG, not all of them in my coo role, I've hit on an enormous um level of transformation. Some of it has been COVID and things external and some of it has been our own growth. So I think nothing is the same. Um And I think that the COVID lessons, I think we have absorbed and incorporated and I think that they're here to stay. I think the most fundamental change is that everything happens at the same time. So during COVID, you had to solve COVID, but you were still operating a business. So to me that's, that's the new normal and I operated very differently according to, uh certain. How about, how about you? I think your role changes a lot. Um, certainly has changed a bit. Right. So, it's been a lot of turmoil, certainly since March of 2020. Um, and the two words that we really stick to is agility and speed, you know, being able to detect the issues sooner and the speed to then attack and mitigate those issues. Um And so that's been super important to us. We've doubled, almost tripled in business since then. So it's been a not only managing through geopolitical issues, but also scaling up at a significant rate um and innovating at the same time. So a lot of complexity happening all at the same time. Well, we're gonna come back to, to each of your experiences. Um But, you know, it's, it's uh I cover leadership at uh at Fortune and, you know, you see more and more coo announcements and CEO S who were coo s and for a long time, I think a lot of people would think of the coo role as well. OK, they're getting the stuff done, but, you know, um they're not very big picture oriented, but now what obviously a lot of CEO S have ended up in the corner office. So I'm just wondering, is the role um more strategic now for a company than it used to be or, or should we still sort of see it as it's tactical and it's, you know, the essential stuff getting done. Um And if so, uh how does, how is it blended into how the a company run strategically? I mean, I think that tactical is commercial. Um you know, if you wanna grow, you have to really be very deliberate. So I think that it's been a misnomer to assume that because there is an operational plan that you therefore are not being strategic. I think that that's a myth. I think all of you know that because you know, not like you go through your day and you say now I'm gonna be very operational and let me go to this other meeting and then turn it into strategy. Um It's a lot more dynamic than that. And I think also the, the functions that go under the coo vary for all of us. Um But those have also tended to expand. And so we're all closer to where the business strategy is being created and ID, and it just has to actually be able to be executed on. And I think that was a big disconnect before that when you have a separation of what the infrastructure needs to be and is beyond table stakes is actually what's gonna make you be the firm of five years. You know, I have a rule with my team that no one can come to a meeting with a decision or a solution that works for this year. It has to be something that grows with where we're going as a firm. And I think that that's the reality of our roles today that you're really creating the path for the next 5, 10 years. And how about a new balance when your CEO says, oh, we've got from 2 billion to 5 billion. So make more of it happen and you have to be the reality check or sounds so easy. Yeah. Right. Yeah. No, I think we keep it into two categories similar run the business, transform the business. And so, um you know, we fortunately back in 2019, created five key pillars of our strategy and everything flows from that. We haven't wavered much from there. And so we have key initiatives that spread out across the company. My job is to make sure operations has our fair share and that we're all in unison as we transform the company. Do you bicker with your CFO a lot? Um I would say we make a good business case. We don't always agree on the financing, but fortunately, in a growth environment, it's been a pretty good relationship. Um Well, just to uh to add to that question, how about the role in corporate culture? What is the role of the coo in a corporation? Yeah. Well, I, I have a very biased um answer to that because I actually came to TPG as the C HR O. But the other reason why I'm biased is because we produce nothing other than humans with great ideas and that our strategic partners. So for us, if the base is like where people need to wanna come and work for us as opposed to the many other great alternatives. And for us, culture is strategy, it is the equivalent of strategy. This is not just how people feel about working, but it's actually how we get things done and how we grow. And so for us, there's a lot of intersectionality, you know, you asked about the CFO I cannot get much done without having the partnership with my CFO um or of my general counsel by the time we're completely intertwined and no one can move very far without having a partner that is gonna support them and that is gonna see something that you're not seeing. So for us, um you know, we are also very entrepreneurial culture. And so to your question about like double, we've do more than doubling assets on their management and in people. And so given that the people are the center of what we do, it's very important that we're consistent and persistent about our culture. Likewise, I mean, we're privately owned. So a lot of family values um are important. So I'm kind of in the same box as a CEO and the head of hr I mean, my job is to role model and drive culture every single day because that's how we create that entrepreneurial kind of innovative spirit, super important to us and communicate that to everybody in the company constantly. Yeah, really role modeling is the most important. I think it's the most effective for us. And, and I make sure that all of my direct reports and everybody in the team really reflects that, you know, we have integrity, teamwork, total customer satisfaction, everybody gets that. And it's part of the role also to help people in other functions understand the complexity of the operation for sure. Yeah, because it sounds easy, right? You know, like uh double the number of new models you introduce more stores or, right? It, it, it can all sound rather easy. But um you talked about uh you know, coming over from ach ro role. So let's talk a little bit more about the unusual career trajectories that we're seeing. You were C hr O elsewhere, you know, for example, at, at Target, now they've had two coo s who had been the CFO before and, you know, I had my stereotypes, I'm like, how does somebody who's a CFO and is good at spreadsheets and saying no, you can't have that money um good at the technical aspects of coo of being a coo. So um I mean, I think that speaks to the evolving role, but tell me a little bit, let's start with you on, let's talk a little bit about C hr O which you have an idea of what that role is and how it prepares you for what you're doing now. Yeah, I mean, I have the benefit of having, um you know, been interested in doing things that I didn't know much about uh for a while. So I started as a lawyer as a corporate lawyer and then moved into um the human capital world leading into C hr O. So I have personally gotten used to quite frankly having to be a student of that next step. Um And I wish I could say I had planned it all along, but it was really because all the organizations I've been in have been organizations where they allow you to go and explore things. So I think as, as cultures also in our firms, I think it's really important to give exposure to people to areas beyond what they're doing currently because you don't know what that person may end up doing for you. Uh But I think that um those changes and those transitions also put you in a situation where you're gonna have people working for you that know more than you. And that's also incredibly helpful to have those experts and for you to learn and learn how to lead and guide without necessarily having to substitute their expert knowledge on things. Um And David question for you. So um obviously like a lot of consumer brands, uh and we can call you a retailer, you have your own stores as well. Um With COVID, you know, for a while, uh everything was really a mess and then we had the supply chain chaos last year. I mean, there's always something and then you narrowly avoided the port strike drama this week, right? Or last week. So, um for you, how has the role changed? Vis a vis what it might have been before COVID? Yeah, I think it's, um you know, the innovation part of it is um a critical element and that kind of falls I I have a collection of different functions. So it's like traditional supply chain from, you know, planning, sourcing, making delivery, but then also product development, which is very, very important for the effectiveness of my organization because we get to take the design from, you know, pie in the sky designs, really exciting stuff, but actually develop a product that we can manufacture. Um But the innovation portion of it has really escalated from an A I perspective um being able to develop a new er P and supply chain planning suite so that we can better do touchless planning and be more effective and be able to do scenarios where we can anticipate what might happen and therefore be ready with a playbook of Plan B, plan C. Um That isn't something that we did, let's say prior to COVID. Um because it was, let's say relatively stable back then, now we've seen so many different events occur and we just strengthened up on the innovation side of systems as well as overall processes so that we're more resilient and can respond to those issues as they come about. Because as you said, it happens every month, every year now in their big events. So we expect that going forward. Um I'm gonna continue going, but I want to open it up to the audience. We'll have somebody here who has a Mike. So please don't be shy. We're all to new, good group of peers here. So um I'm gonna ask another question, but uh raise your hand and Mike will come to you. Um So just quickly following up on those questions. So um I have to admit the first time I saw TPG, I was like the coo why does TPG need the coo you know, it's like their portfolio companies will each have AC O but obviously your role is different and, and the company just made, the firm just made uh an acquisition. So tell me a little bit about your, what's a typical day for you anyway? Yeah. Um So TPG is an, a firm. We're headquartered in San Francisco and Fort Worth and that's very important to the origin and the culture of the firm, very tech, um oriented, health care, oriented in our private equity business. We are now diversified in acquisition last year, Voice of Angela Gordon, um a credit business and the real estate business. Um And so this is really where this industry is going. So I because of my legal background as a corporate lawyer, I was very involved in the transaction with the D team. And I also lead the integration, which we believe will be a multiyear integration. And it's not just the operational part but actually the growth part. So I spend a lot of time on thinking about growth organically, which has been the majority of the growth of TPG. We have over 200 billion in assets under management. And up until this transaction, all of that was organic, uh which is actually pretty rare. Um and a pretty fast paced way of growing. Um I spend my time in three buckets. I do lead uh one of our investing strategies. So one of those new businesses, so I can identify with someone who comes with an idea. Uh It's a seeding and staking um strategy, then there's the growth part of it and then there's the every day. So on every day I spend my world, you know, kind of revolves around those three main areas and then the occasional thing that surprises you. Um And, and how to communicate about it. The crisis, sometimes, sometimes only a few times I've, I've come across actually, you know, I think that that's, you know, one thing that people don't talk as much about in terms of the role of the CEO O because you're involved in so much that you can probably see a crisis coming. Um You probably understand who you need to pull in, who you need to be the connector to make sure that everyone that needs to help has their marching orders and have the support that they need to act fast and one more follow up for David. So um for you, what's the, you guys are doing a lot? You're getting much bigger, you're going further into apparel, you're doing more DTC, more of your own stores. you also produce about 20% of what you sell stateside. So for you, what's the biggest operational challenge for the company operational challenge? I think now expanding is, is as challenging as shrinking. It's just more fun. I would say, you know, it's like, how do you make sure the product has the right quality that we stick with our ESG goals? Um So many different issues, right? Um So growth is a challenge. No question. I would say policy is also a big one for us trying to stay abreast of what's coming around the corner. Like you think about all the European policies that are coming at us. How do we make sure that we're compliant so that we can continue to sell and be a good corporate citizen? So policy is huge for us. So at the in February, I wrote a story based on research from Spencer Stewart. Um you know, we're a little, we like drama in the media and, and, and it was like they were finding that coo S had come back and supplanted CFO S for uh in terms of the other c speakers who end up uh in the corner office most often. And, you know, we had quite a few coo s in the last 12 months that who became the CEO S of the company Costco for one uh Netflix, um the one of uh the CCO one of the Boeing units also became a CEO somewhere. And so I'm just wondering, uh does this make sense to you? Um What's, what do CEO S have that others, don't, do you think? Good question. Do you want to take that one? Yeah, I was gonna say, um I'm pretty happy with my current role. I'll say that. So I'm not aspiring to become the next CEO if it happens, great, but certainly just knowing how product is made and having overall purview of that is um you know, something that not all executives have in, in the various C suite um roles. And um yeah, I just think it takes a certain uh a mindset and a personality to make it successful. And if you're successful as a coo you could be a successful CEO I'm, I'm not surprised because of the scope of the role. I think that the most important thing is not whether that's the new trend or not, but is the possibility. Uh And I think that it comes back to how each of us do uh our current job um and making sure that it can be that exposure to if that is what's best for the firm that at least people are positioned to do that. I think, importantly, thinking about the generation underneath us because it might not be us, but it could very well be someone who is training uh with us. And I think that that's the most important thing, right? You're a leadership uh focused person and we don't know where the next CEO could be, it might be right underneath us. And if we have that responsibility, that in fact, we're training that future leader, we should be as expensive as possible. Um I mean, it's worth noting too. Uh you know, that article just kind of looked at the last job they had. But when you look, take for example, the new CEO of Costco, he had been the chief merchant too. And I, so I think basically the takeaway is, is you, you need to get skills in all sorts of different areas. And then uh that, that runs you out as an executive. So speaking of skills, what does the CEO of today, uh what new skills does the CEO of today need uh that might not in the past have been uh cultivated as automatically or that are required. I, I think um being a quick listener um and gather information quickly and they're all kinds of way from A I to actually talking to people and not losing that balance. I think that the pace of growth and the pressure on CEO S to grow is generally so in their face that, um, they need to have a way to separate the noise from what they really need to focus on and execute pretty quickly. Yeah, I, I would totally agree with that. I think leading with hearts and minds sometimes gets lost in the mix because there's so much pressure, so much going on, you got to keep that front, front of mind. And I think also going to the geek side of things being a data geek, being an A I geek, not being afraid to roll up your sleeves and getting into the detail because the more, you know, um, the better your teams will dig in as well and make it happen and take some risk, you know, and I think risk taking is super important in today's tech world. No, I, I mean, absolutely. And, and I think, um, um, you know, we've seen a lot of companies get into trouble by not having what you can call left brain, right brain. You know, I think some, some brands in retail got too obsessed with uh operational efficiency and forgot about the core product and making people want it and then sometimes it, so it's, uh, it's gonna be interesting to see. You have to have a new balance. Sorry, you have to have a new balance. Yeah, exactly. There you go. Um, um, I was gonna make a joke about one of your competitors but I won't. Um, so we can stay friends. But, um, last question in these, in these uh, final seconds, how often do you see your CEO, does it? And does it ever feel like you're being called to the principal's office? I mean, we have constant communication, even if we're not in the same place, we travel a lot and we try to divide and conquer. But it's constant whether it's in person, phone, text messaging email. I mean, it is all the time. So you're on speed dial. Likewise, texting constant multiple times a week. In fact, our owner Jim Davis, he's the chairman that's weekly as well. So he's 80 plus years old. Super involved very much into the manufacturing innovation. How do we make more product locally? And so that keeps us busy. Ok. Well, stay busy. Busy is good. So, on that note, join me in. Thanking Andy Lou and David.