Anilu Vazquez-Ubarri, Partner and COO, TPG
Dave Wheeler, Chief Operating Officer, New Balance Athletics
Moderator: Phil Wahba, Senior Writer, Fortune
Dave Wheeler, Chief Operating Officer, New Balance Athletics
Moderator: Phil Wahba, Senior Writer, Fortune
Category
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TechTranscript
00:00Why don't we just get right into it.
00:02The panel is called, this session is called
00:05All Eyes on the COO, The Evolving Role.
00:07How has the COO role changed
00:10since the peak of the COVID crisis?
00:13I don't wanna say it's over,
00:15COVID's still running around,
00:16but we're not at those peaks anymore.
00:18So for you, how do you see the profession
00:20and the role having changed?
00:23Yep, hi everyone.
00:25Thanks for being with us.
00:27I think that the last six years
00:30that I've been at TPG,
00:33not all of them in my COO role,
00:34I've had an enormous level of transformation.
00:37Some of it has been COVID and things external,
00:40and some of it has been our own growth.
00:42So I think nothing is the same.
00:45And I think that the COVID lessons,
00:47I think we have absorbed and incorporated,
00:50and I think that they're here to stay.
00:53I think the most fundamental change
00:55is that everything happens at that same time.
00:57So during COVID, you had to solve COVID,
01:00but you were still operating a business.
01:02So to me, that's the new normal.
01:04And operated very differently
01:06according to certain industries.
01:08How about you?
01:09I think your role changes a lot.
01:12Certainly has changed a bit, right?
01:14So it's been a lot of turmoil,
01:15certainly since March of 2020.
01:19And the two words that we really stick to
01:21is agility and speed.
01:23Being able to detect the issues sooner
01:26and the speed to then attack and mitigate those issues.
01:30And so that's been super important to us.
01:33We've doubled, almost tripled in business since then.
01:37So it's been not only managing through geopolitical issues,
01:41but also scaling up at a significant rate
01:45and innovating at the same time.
01:47So a lot of complexity happening all at the same time.
01:50Well, we're gonna come back to each of your experiences.
01:55But I cover leadership at Fortune
02:00and you see more and more COO announcements
02:03and CEOs who were COOs.
02:05And for a long time, I think a lot of people
02:07would think of the COO role as,
02:09well, okay, they're getting the stuff done,
02:12but they're not very big picture oriented.
02:15But now obviously a lot of CEOs
02:17have ended up in the corner office.
02:18So I'm just wondering,
02:20is the role more strategic now for a company
02:24than it used to be?
02:25Or should we still sort of see it as it's tactical
02:28and it's the essential stuff getting done?
02:31And if so, how is it blended
02:34into how the companies run strategically?
02:38I mean, I think that tactical is commercial.
02:42If you wanna grow, you have to really be very deliberate.
02:46So I think that it's been a misnomer
02:49to assume that because there's an operational plan
02:53that you therefore are not being strategic.
02:56I think that that's a myth.
02:57I think all of you know that
02:58because it's not like you go through your day
03:01and you say, now I'm gonna be very operational
03:03and let me go to this other meeting
03:05and then turn it into strategy.
03:07It's a lot more dynamic than that.
03:09And I think also the functions
03:11that go under the COO vary for all of us,
03:16but those have also tended to expand.
03:18And so we're all closer to where the business strategy
03:22is being created and ideated.
03:25And it just has to actually be able to be executed on.
03:28And I think that was a big disconnect before
03:30that when you have a separation
03:33of what the infrastructure needs to be
03:36and is beyond table stakes,
03:38is actually what's gonna make you be the firm of five years.
03:41You know, I have a rule with my team
03:43that no one can come to a meeting
03:44with a decision or a solution that works for this year.
03:48It has to be something that grows
03:50with where we're going as a firm.
03:52And I think that that's the reality of our roles today,
03:56that you're really creating the path
03:58for the next five, 10 years.
04:01And how about a new balance when your CEO says,
04:04oh, we've gone from 2 billion to 5 billion,
04:07so make more of it happen
04:08and you have to be the reality check or?
04:10Sounds so easy.
04:11Yeah. Right.
04:12Yeah, no, I think we keep it into two categories.
04:15Run the business, transform the business.
04:17And so, you know, we fortunately back in 2019
04:22created five key pillars of our strategy
04:25and everything flows from that.
04:27We haven't wavered much from there.
04:29And so we have key initiatives
04:31that spread out across the company.
04:33My job is to make sure operations has our fair share
04:37and that we're all in unison as we transform the company.
04:41Do you bicker with your CFO a lot?
04:45I would say we make a good business case.
04:48We don't always agree on the financing,
04:50but fortunately in a growth environment,
04:53it's been a pretty good relationship.
04:57Well, just to add to that question,
05:00how about the role in corporate culture?
05:03What is the role of the COO in a corporation?
05:06Yeah, well, I have a very biased answer to that
05:09because I actually came to TPG as the CHRO,
05:13but the other reason why I'm biased
05:15is because we produce nothing
05:17other than humans with great ideas
05:20and that our strategic partners.
05:21So for us, if the basis,
05:24like where people need to wanna come and work for us
05:26as opposed to the many other great alternatives.
05:29And for us, culture is strategy.
05:32It is the equivalent of strategy
05:34because it's not just how people feel about working there,
05:37but it's actually how we get things done and how we grow.
05:41And so for us, there's a lot of intersectionality.
05:44You asked about the CFO.
05:45I cannot get much done
05:46without having the partnership of my CFO
05:50or of my general counsel.
05:51By design, we're completely intertwined
05:54and no one can move very far
05:56without having a partner that is gonna support them
05:59and that is gonna see something that you're not seeing.
06:02So for us, we are also very entrepreneurial culture.
06:07And so to your question about like double,
06:09we've more than doubled in assets under management
06:12and in people.
06:13And so given that the people are the center of what we do,
06:17it's very important that we're consistent
06:19and persistent about our culture.
06:22And how about under balance?
06:23Likewise, I mean, we're privately owned.
06:25So a lot of family values are important.
06:29So I'm kind of in the same box as a CEO and the head of HR.
06:33I mean, my job is to role model
06:36and drive culture every single day
06:38because that's how we create that entrepreneurial
06:41kind of innovative spirit.
06:43Super important to us.
06:44Okay, and communicate that to everybody in the company,
06:46right? Constantly, yeah.
06:47Really role modeling is the most important.
06:49I think it's the most effective for us.
06:51And I make sure that all my direct reports
06:54and everybody in the team really reflects
06:57that we have integrity, teamwork,
06:59total customer satisfaction.
07:01Everybody gets that.
07:02Okay, and it's part of the role also to help people
07:04in other functions understand the complexity
07:07of the operation?
07:08For sure, yeah.
07:10Because it sounds easy, right?
07:11You know, like double the number of new models
07:13you introduce, more stores, right?
07:16It can all sound rather easy.
07:18But you talked about, you know, coming over from a CHRO role.
07:23So let's talk a little bit more
07:25about the unusual career trajectories that we're seeing.
07:28You were a CHRO.
07:31Elsewhere, you know, for example, at Target now,
07:34they've had two COOs who had been the CFO before.
07:38And, you know, I had my stereotypes.
07:40I'm like, how does somebody who's a CFO
07:44and is good at spreadsheets and saying,
07:46no, you can't have that money,
07:48good at the technical aspects of COO, of being a COO?
07:52So, I mean, I think that speaks to the evolving role.
07:55But tell me a little bit, let's start with you, Annie.
07:57Let's talk a little bit about CHRO,
07:59which we have an idea of what that role is,
08:01and how it prepared you for what you're doing now.
08:03Yeah, I mean, I had the benefit of having, you know,
08:08been interested in doing things
08:09that I didn't know much about for a while.
08:12So I started as a lawyer, as a corporate lawyer,
08:15and then moved into the human capital world,
08:18leading into CHRO.
08:20So I have personally gotten used to, quite frankly,
08:23having to be a student of that next step.
08:27And I wish I could say I had planned it all along,
08:31but it was really because all the organizations I've been in
08:33have been organizations where they allow you to go
08:37and explore things.
08:38So I think as cultures, also, in our firms,
08:41I think it's really important to give exposure to people
08:44to areas beyond what they're doing currently,
08:47because you don't know what that person
08:48may end up doing for you.
08:50But I think that those changes and those transitions
08:54also put you in a situation where you're gonna have people
08:56working for you that know more than you.
08:59And that's also incredibly helpful to have those experts
09:04and for you to learn and learn how to lead and guide
09:07without necessarily having to substitute
09:10their expert knowledge on things.
09:13And David, question for you.
09:15So obviously, like a lot of consumer brands,
09:19and we can call you a retailer,
09:21you have your own stores as well.
09:24With COVID, for a while, everything was really a mess.
09:28And then we had the supply chain chaos last year.
09:30I mean, there's always something,
09:31and then you narrowly avoided the port strike drama
09:34this week, right?
09:35Barely.
09:35Or last week.
09:36So for you, how has the role changed vis-a-vis
09:41what it might've been before COVID?
09:43Yeah, I think it's, you know,
09:46the innovation part of it is a critical element.
09:49And that kind of falls,
09:50I have a collection of different functions.
09:53So it's like traditional supply chain from, you know,
09:56planning, sourcing, making, delivery,
09:58but then also product development,
10:00which is very, very important
10:03for the effectiveness of my organization,
10:06because we get to take the design from, you know,
10:09pie-in-the-sky designs, really exciting stuff,
10:13but actually develop a product that we can manufacture.
10:18But the innovation portion of it has really escalated
10:22from an AI perspective,
10:25being able to develop a new ERP
10:28and supply chain planning suite
10:30so that we can better do touchless planning
10:33and be more effective,
10:35and be able to do scenarios
10:37where we can anticipate what might happen
10:41and therefore be ready with a playbook,
10:43a plan B, plan C.
10:46That isn't something that we did, let's say,
10:48prior to COVID,
10:50because it was, let's say, relatively stable back then.
10:54Now we've seen so many different events occur,
10:57and we just strengthened up on the innovation side
11:00of systems as well as overall processes
11:03so that we're more resilient
11:05and can respond to those issues as they come about.
11:08Because as you said,
11:09it happens every month, every year now,
11:11and they're big events,
11:13so we expect that going forward.
11:16I'm gonna continue going,
11:17but I want to open it up to the audience.
11:19We'll have somebody here who has a mic,
11:20so please don't be shy.
11:22We're Entre Nous, a good group of peers here.
11:24So I'm gonna ask another question,
11:27but raise your hand and a mic will come to you.
11:30So just quickly following up on those questions.
11:33So I have to admit,
11:35first time I saw TPG, I was like,
11:37the COO, why does TPG need a COO?
11:40It's like their portfolio companies will each have a COO,
11:43but obviously your role is different,
11:45and the company just made,
11:46the firm just made an acquisition.
11:48So tell me a little bit about your,
11:51what's a typical day for you at Entre Nous?
11:53Yeah, so TPG is an out firm.
11:57We're a headquarter in San Francisco and Fort Worth,
12:01and that's very important to the origin
12:03and the culture of the firm.
12:04Very tech-oriented, healthcare-oriented
12:07in our private equity business.
12:09We are now diversified in acquisition.
12:11Last year was of Angela Gordon,
12:13a credit business and their real estate business.
12:17And so this is really where this industry is going.
12:20So I, because of my legal background as a corporate lawyer,
12:24I was very involved in the transaction with the deal team.
12:28And I also lead the integration,
12:30which we believe will be a multi-year integration.
12:33And it's not just the operational part,
12:35but actually the growth part.
12:37So I spend a lot of time
12:40on thinking about growth organically,
12:42which has been the majority of the growth of TPG.
12:45We have over 200 billion in assets
12:50under management, and up until this transaction,
12:53all of that was organic, which is actually pretty rare
12:56and a pretty fast-paced way of growing.
13:00I spend my time in three buckets.
13:03I do lead one of our investing strategies,
13:05so one of those new businesses.
13:07So I can identify with someone who comes with an idea.
13:11It's a seeding and staking strategy.
13:14Then there's the growth part of it,
13:16and then there's the everyday.
13:18So on every day I spend, my world kind of revolves
13:23around those three main areas,
13:25and then the occasional thing that surprises you,
13:29and how to communicate about it.
13:31There are crises sometimes?
13:33Sometimes, only a few times I've come across.
13:36Actually, I think that that's one thing
13:39that people don't talk as much about
13:41in terms of the role of the COO,
13:43because you're involved in so much
13:47that you can probably see a crisis coming.
13:50You probably understand who you need to pull in,
13:53you need to be the connector to make sure
13:55that everyone that needs to help has their marching orders
13:58and has the support that they need to act fast.
14:02And one more follow-up for David.
14:04So for you, what's the, you guys are doing a lot.
14:07You're getting much bigger.
14:10You're going further into apparel.
14:12You're doing more DTC, more of your own stores.
14:15You also produce about 20% of what you sell stateside.
14:19So for you, what's the biggest operational challenge
14:22for the company?
14:23Operational challenge, I think, you know,
14:26expanding is as challenging as shrinking.
14:29It's just more fun, I would say.
14:31You know, it's like, how do you make sure
14:33the product has the right quality
14:35that we stick with our ESG goals?
14:38So many different issues, right?
14:41So growth is a challenge, no question.
14:43I would say policy is also a big one for us.
14:48Trying to stay abreast of what's coming around the corner.
14:50Like, you think about all the European policies
14:53that are coming at us.
14:54How do we make sure that we're compliant
14:55so that we can continue to sell
14:58and be a good corporate citizen?
14:59So policy is huge for us.
15:02So in February, I wrote a story based on research
15:05from Spencer Stewart, you know, we're a little,
15:09we like drama in the media, and it was like,
15:12they were finding that COOs had come back
15:15and supplanted CFOs for, in terms of the other C-suiters
15:20who end up in the corner office most often.
15:23And, you know, we had quite a few COOs
15:25in the last 12 months who became the CEOs
15:27of the company, Costco, for one, Netflix.
15:32One of the, COO at one of the Boeing units
15:36also became a CEO somewhere.
15:37And so I'm just wondering, does this make sense to you?
15:43What do CEOs have that others don't, do you think?
15:47Good question.
15:47Do you want to take that one?
15:48Yeah, go ahead, I'll follow.
15:50Yeah, I was gonna say,
15:53I'm pretty happy with my current role, I'll say that.
15:55So I'm not aspiring to become the next CEO.
15:57If it happens, great.
15:58But certainly just knowing how product is made
16:02and having overall purview of that
16:04is something that not all executives have
16:09in the various C-suite roles.
16:12And yeah, I just think it takes a certain,
16:14a mindset and a personality to make it successful.
16:18And if you're successful as a COO,
16:21you could be a successful CEO.
16:24I'm not surprised because of the scope of the roles.
16:29I think that the most important thing
16:30is not whether that's the new trend or not,
16:32but is the possibilities.
16:35And I think that it comes back to how each of us
16:37do our current job and making sure
16:40that it can be that exposure to,
16:42if that is what's best for the firm,
16:45that at least people are positioned to do that.
16:48I think importantly,
16:49thinking about the generation underneath us,
16:51because it might not be us,
16:53but it could very well be someone who is training with us.
16:57And I think that that's the most important thing, right?
16:59You're a leadership-focused person,
17:01and we don't know where the next CEO could be.
17:04It might be right underneath us.
17:06And if we have that responsibility,
17:08that in fact we're training that future leader,
17:11we should be as expansive as possible.
17:14I mean, it's worth noting too,
17:17that article just kind of looked at the last job they had.
17:20But when you take, for example, the new CEO of Costco,
17:22he had been the chief merchant too.
17:24And so I think basically the takeaway is,
17:26is you need to get skills in all sorts of different areas.
17:31And then that rounds you out as an executive.
17:34So speaking of skills,
17:35what does the CEO of today,
17:39what new skills does the CEO of today need
17:42that might not in the past have been cultivated
17:45as automatically or that are required?
17:48I think being a quick listener
17:53and gather information quickly,
17:56and there are all kinds of way from AI
17:58to actually talking to people
18:00and not losing that balance.
18:02I think that the pace of growth
18:04and the pressure on CEOs to grow
18:07is generally so in their face
18:10that they need to have a way to separate the noise
18:15from what they really need to focus on
18:17and execute pretty quickly.
18:20Yeah, I would totally agree with that.
18:22I think leading with hearts and minds
18:23sometimes gets lost in the mix
18:25because there's so much pressure, so much going on.
18:28You gotta keep that front of mind.
18:30And I think also going to the geek side of things,
18:33being a data geek, being an AI geek,
18:35not being afraid to roll up your sleeves
18:38and getting into the detail
18:39because the more you know,
18:41the better your teams will dig in as well
18:43and make it happen and take some risk.
18:46And I think risk-taking is super important
18:48in today's tech world.
18:50No, I mean, absolutely.
18:52And I think we've seen a lot of companies
18:55get into trouble by not having
18:57what you can call left brain, right brain.
19:01I think some brands in retail got too obsessed
19:04with operational efficiency
19:06and forgot about the core product
19:09and making people want it
19:09and then sometimes it lurches.
19:11So it's gonna be interesting to see.
19:13You have to have a new balance.
19:15Sorry?
19:16You have to have a new balance.
19:16Yeah, exactly.
19:17There you go.
19:18That was good, that was good.
19:22I was gonna make a joke about one of your competitors
19:24but I won't so we can stay friends.
19:26But last question in these final seconds,
19:30how often do you see your CEO?
19:33And does it ever feel like you're being called
19:34to the principal's office?
19:37I mean, we have constant communication.
19:40Even if we're not in the same place,
19:41we travel a lot and we try to divide and conquer
19:43but it's constant, whether it's in person,
19:47phone, text messaging, email.
19:49I mean, it is all the time.
19:52So you're on speed dial.
19:53Likewise, texting constant, multiple times a week.
19:57In fact, our owner, Jim Davis, he's the chairman.
20:00That's weekly as well.
20:01So he's 80 plus years old, super involved,
20:04very much into the manufacturing innovation.
20:07How do we make more product locally?
20:09And so that keeps us busy.
20:11Okay, well stay busy.
20:12Busy is good.
20:13So on that note, join me in thanking Anilu and David.