When and How Should a "Start-Up" Appoint a COO? an Interview with Tom Noonan, President and CEO, Internet Security Systems

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Executive Summary

A colleague and I recently completed a project focused on the role of the chief operating officer (COO) in organizations.1 Though our work concentrated largely on this role in mature organizations, it became clear during the project that a very important but not very well-understood subject was the use of the COO role in new ventures. In short, how would a founder, investors, and board members know whether or when it was time to create a COO position to support the growing venture's management team?

Tom Noonan is president and chief executive officer of Internet Security Systems - one of Atlanta's great technology success stories. In this interview, we discuss his decision to create a COO position for the company. Noonan's story at ISS is similar to that of other vibrant technology companies and, as such, his comments provide useful insights to the timing and structure of a newly-created COO role.

Internet security Systems, Inc. (ISS) was founded in 1994 by Christopher W. Klaus. The company made its initial public offering on the NASDAQ on March 23, 1998. ISS is headquartered in Atlanta, GA, and maintains offices in 20 countries around the world. ISS provides security products and services that preemptively protect enterprise organizations against Internet threats. The company is at the leading edge of security innovation, having invented cornerstone technologies in areas like vulnerability assessment and intrusion detection/prevention. The company continues to set standards in the security space with its Proventia Enterprise security Platform (ESP), offering enterprise-wide preemptive protection tightly integrated with existing IT business processes.

Tom Noonan is responsible for the overall strategic direction, growth and management of ISS. He launched the company in 1994, along with Klaus, and has led ISS to a preeminent position in the network security industry. Prior to joining ISS, Noonan held senior management positions at Dun and Bradstreet Software. Noonan holds a mechanical engineering degree from the Georgia Institute of Technology and a certificate of special studies in business administration from the Harvard University executive education program.

Author: Over the past dozen or so years, ISS has seen a great deal of success - and with it a great deal of growth. Can you describe how the structure of the management team at ISS has evolved as the company has grown?

Noonan: We have enjoyed a great rate of growth with the business - in 1994, we were a two- person start-up. Now, we are a publicly traded global business - and arguably one of the world's leading internet security companies. As anyone who has built a company will tell you, it has been very exciting and very challenging. I believe that one of the things that makes successful growth possible is a strong structure - without it, everything else basically comes apart. The management structure and company culture has changed dramatically since 1994.

Author: As you think back, were the processes of structural and cultural change something that simply evolved slowly over time, or was it a more deliberate process?

Noonan: I would say that you could identify five "stages" in terms of the way we managed our structure. As a start-up, the two founders operated the business - that's pretty simple. In this case, it worked because our skill sets each complemented those held by the other - one founder developed software and the other founder focused on marketing, raising capital and selling to customers. That first stage probably lasted from 1994 to 1996. The second stage would have begun in 1996 when the company received outside funding.

Author: So with funding in hand, how did you move forward?

Noonan: This led to what was really our first "structure" - you could label this period the "new venture growth stage" and it probably lasted from 1996 to 2000. Post-funding, the initial management team was built through the personal relationships Kris Klaus and I had developed with others in the high technology marketplace. …