Co-CEOs: Are Two Heads Better Than One?
While still rare, a dual leader model can benefit organizations that are looking for ways to maximize capacity at the top.
One day in the early ’90s, when I worked at a large telecommunications company, I arrived at the office to major news. Two industry giants planned to merge, and for the first year, the two CEOs would lead the new company. I was skeptical it could work.
My instincts were correct. The leadership styles and company cultures were so different that the CEO partnership lasted only a few short weeks before one of the leaders left for an “early retirement.” It raised the question of whether co-leadership can ever work well in an organization, especially at the top.
In recent years, however, we’ve seen a co-leader model work extremely well at companies like Oracle, Whole Foods, Samsung and Chipotle. Whether pairing two CEOs, CEO and president, CEO and chairman, or CEO and founder, organizations are looking for ways to maximize capacity at the top.
The co-CEO model is rare, but it can work effectively with proper planning and execution. Given the growing use of private equity and venture capital by companies, more founders and investors are intent on scaling the business with someone from the outside. Companies that find a way to include the founder and new CEO in a co-leadership structure seem to manage the transition best—under the right circumstances. Here are a few key principles to help this leadership model work successfully:
The need is clearly defined. In organizations where the co-leader model works, there is clarity around why both leaders are necessary and how they contribute. The founder’s role may be to carry the torch of the corporate culture, history and brand, while the professional CEO leads strategy creation, and systems and leadership development. Chipotle is one example of this model. Shortly after its founder, Steve Ells, promoted then-COO and President Monty Moran to co-CEO, Chipotle’s annual earnings jumped 67 percent as the two combined their talents to develop a better operational system.
The leaders have differentiated roles. In most cases, there are lines of demarcation between the co-leaders based on their skills and interests. For example, one leader may be more operationally focused and manage the delivery functions of the organization; meanwhile, the other might be more commercially oriented and oversee marketing and sales. The organization should be structured so that staff reports to the appropriate leader based on the functions aligned with these skill sets. The co-leaders also must spend time together and jointly draw conclusions on strategy and direction for the organization. What may be lost in efficiency is often gained back in broader problem-solving, strategic options and innovative thinking.
Co-leadership can be a powerful concept for companies looking to transfer power and those wanting to scale.
Decision-making powers have been negotiated. Even in the best cases of collaborative co-leadership, there is still a need for mutually agreed-upon rules of order so that both leaders understand which decisions they own and those they must agree upon together. In the case of a tie, one of the co-leaders must have the right to make a final decision with no renegotiation. These decision rights can be formal and informal, but in all cases, it must be clear who has the final say.
The co-CEOs of the accelerator TechStars have said that knowing who has the decision-making authority is crucial so that employees don’t feel obliged to get sign-off from both of them. Co-leaders often employ “what’s said here, stays here” rules that allow them to debate one another privately, but they always present a united front to the organization.
The executive team is supportive. In successful co-leadership situations, the surrounding team supports the arrangement. Less productive outcomes can emerge if there are challenges to—or subversion of—one or both leaders. When members of the management team try to play the co-leaders off one another, the co-leaders must remain united and resist the temptation to become competitive.
For companies contemplating co-leadership, considering these principles in the change management and communications planning will help. In situations where the co-leadership situation has evolved over time, it would benefit the organization to evaluate itself based on these principles to ensure the challenges have been managed effectively. Boards can also provide support and consider metrics to determine whether the co-leadership relationships are effective or not. Annual 360-degree feedback for the co-CEOs is recommended to ensure key stakeholders such as investors, employees and customers are not confused or stuck between the two leaders.
While co-leadership may not become the preferred strategy for all organizations, it can be a powerful concept for companies looking to transfer power and those wanting to scale. For those that take this approach, planning, role clarity and investment in the interpersonal dynamics between the two leaders can make a positive impact on the structure’s success.
This article originally appeared in the November/December 2018 issue of Middle Market Growth. Find it in the MMG archive.
Corinne Mason, Ph.D., is a principal consultant at Summit Leadership Partners LLC. She brings over 25 years of executive leadership and management consulting experience in the fields of assessment, executive coaching, leadership development, talent strategy, analytics and capability building.
