Two for the Road

Are two heads better than one? When it comes to leading an organization, whether it’s a large, global enterprise or a small mom and pop shop, the answer seems to be yes. While some co-CEO arrangements enjoy the brief bliss of a Kardashian wedding, most stand the test of time.

Co-CEOs: Are Two Better than One?

Key Takeaways

  • A far-flung global enterprise may benefit from having two leaders on hand
  • The most frequent cause of failure of a co-CEO structure is lack of clarity around the division of roles and responsibilities
  • Data suggests the market responds favorably when public companies switch from a classic single CEO leadership structure to a co-CEO structure

Are two heads better than one? When it comes to leading an organization, whether it’s a large, global enterprise or a small mom and pop shop, the answer seems to be yes. While some co-CEO arrangements enjoy the brief bliss of a Kardashian wedding, most stand the test of time.

We’re not making this up, either. Studies by the University of Missouri (See sidebar, p. 20) suggest the stock market reacts more favorably to the announcement of a shared leadership role than one borne by a sole man or woman, despite the extra compensation two heads require. Sure, there are messy divorces like Citibank’s Sandy Weill and John Reed, but anyone who knows both fellows will readily admit they were classic opposites who charmed each other during the courtship before the marriage tore them apart.

How do companies arrive at a shared governance model? There are many different paths—a merger of corporate equals, the founding of a company by two people, a spinoff into two separate businesses, the twinning of a seasoned CEO on his way to retirement with a younger heir apparent and having two sharp senior leaders share the top spot for no other reason than they each deserve it.

As for the number of co-CEO partnerships, it isn’t earth shattering. Forty-four U.S. companies within the Russell 3000 have currently positioned two people at the top of the pyramid, according to research compiled by GMI, an independent provider of global corporate governance ratings and research. They include such well-known businesses as Chipotle Mexican Grill, J.M. Smucker, Martha Stewart Living Omnimedia, Primerica, Whole Foods Market and Amway, the latter founded by two people who shared the spotlight before giving it up to their sons, who still share governance. Another 48 companies not headquartered in the U.S. also have co-CEOs in charge, the research indicates.

“If a duo hasn’t walked through, mutually agreed upon and communicated their authority, roles and responsibilities, then the team is being led by an unequally yoked two-headed monster.”

That’s less than 100 among 3,000 companies, but even that many opens the eyes. If you compare these figures to a couple decades ago, when co-CEO partnerships were few and far between, this is a thumping great leap. Moreover, these numbers fail to account for the thousands of smaller organizations thriving under two leaders—from family-owned enterprises to law firms. While there are no figures available on the incidence of co-CEOs at small to mid-size firms, studies like “It Takes Two: The Incidence and Effectiveness of co-CEOs” (Marquette University, University of Nebraska and the University of Missouri, 2011) report that the structure is significantly more common among smaller firms. Three companies we spoke with for this article—Automated Social Network, A Squared Entertainment and Kaye/Bassman International—are among the many small to mid-size firms with co-leadership structures.

Making It Work

To find out what it takes for a co-CEO arrangement to succeed, Chief Executive chatted with several successful leadership duos, and those who have studied these relationships or guided them. Not surprisingly, their responses sounded a bit like what a good marriage counselor might advise—a willingness to share the spotlight, divvy up the labor based on each partner’s strengths, communicate as a unit and leave the egos at the door. As Bill McDermott, co-CEO of technology giant SAP ($13.1 billion in 2010 revenue), says, “One plus one can equal three.”

SAP co-CEOs Bill McDermott and Jim Hagermann Snabe

SAP co-CEOs Bill McDermott and Jim Hagermann Snabe

His partner, Denmark-born Jim Hagermann Snabe, does the math. “Bill and I have different backgrounds, experiences and perspectives,” Snabe says. “He has spent most of his career in the field with customers and running businesses for four global brands, and I’ve spent quite some time managing the development of our business software. We play to our strengths—not that we don’t get involved in each other’s area of expertise.”

When their arranged marriage was determined in 2008, New Yorker McDermott didn’t blanch. “Our chairman told me the other co-CEO would be Jim, and I said ‘Perfect,’” he recalls. “The two of us had worked well together for years. Our core values are fundamentally aligned and we share the same vision and unified strategy.”

Their dialects may differ, but McDermott says both men speak with “one voice.”

Biting the Dust

If only all co-CEO arrangements worked as well. Mark Faust, principal at turnaround consultancy Echelon Management, says the most frequent cause of failure in a shared governance model is lack of clarity around authority. “If a duo hasn’t walked through, mutually agreed upon and communicated their authority, roles and responsibilities, then the team is being led by an unequally yoked two-headed monster,” Faust explains.

Few people who worked at Citibank during the two-year Weill-Reed era would disagree with this analogy—not even Weill. “John Reed and I convinced ourselves that the people at Citi knew him and the people at Travelers knew me, and we were both hopefully old enough and mature enough to be able to work together to build something,” Weill says, reflecting on the experience. “I think we honestly believed that, but it didn’t end up that way at all. We were driving the people who worked for us crazy and not making decisions, or making decisions they didn’t understand. Eventually, one of our senior managers at a management meeting [said] something about this, and that became the cry that led to us having a board meeting to make the decision that we needed one North Star. There had to be one North Star, and we had two North Stars.”

The takeaway? For a dual leadership structure to work, the two individuals need to hammer out their respective turfs. “John and Sandy each were equipped to do the job; but when they had to share power they tripped over each other,” says George Bradt, managing director at consultancy PrimeGenesis. “There was no agreed-upon division of labor in line with each leader’s complementary strengths, and employees found it hard to figure out who wanted what. It wasn’t an additive partnership.” That’s a common pitfall for merger-inspired co-CEO arrangements, when talk of the new entity benefiting from the capabilities of two experienced leaders is a flimsy veil for the real goal—pushing a deal through. “Time Warner is a perfect of example of two companies that merge and then the respective leaders of each company share the CEO position,” says Ana Dutra, CEO of Korn/Ferry Leadership and Talent Consulting. “The problem is that each CEO now is gunning for the other.”

More modern examples of failed co-leadership structures include Research in Motion, maker of the once-supreme BlackBerry smartphone. Headed by two chief executives, Mike Lazaridis and Jim Balsillie, a renowned technologist and businessman/philanthropist, since 1992, the company recently appointed an insider to take sole possession of the CEO role. The change followed a poorly managed leadership debacle in the wake of a major service outage. “When the problems were happening, you had one guy off doing his philanthropic work and the other guy working at corporate,” says Terry Jackson, Ph.D., managing partner at WEpiphany, an executive coaching firm. “There was no clear strategy to address the outage—no clear communication to the public— which resulted in it dragging on for more than a week. They weren’t in unison and lost their rhythm.”

Mastering the Marriage

However, there are plenty of examples where two heads are indeed better than one. “It seems contra-intuitive,” Paul Winum, senior partner and global practice leader at management consultancy RHR International. “but the single CEO, ‘bucks stops here’ model is not the only model that works.”

Take the case of Automated Social Networking, a $1 million provider of social networking services. Its two founding CEOs say they agree on strategy and more tactical decisions and speak with a single voice. They also have a way to resolve disagreements that do arise, says Len Schwartz, co-CEO (with Matt Loop). “We conduct a ‘split test’ to see which produces the better result,” he explains. “Recently, Matt and I disagreed about whether or not an audio piece should play immediately once someone logged onto our website. He wanted it; I wanted a little presentation instead. So we tested it, recording how long people listened to the audio before clicking onto something else. He won, and I supported him.”

“We take pride that we don’t always have the same opinion and view. If we did, we’d lose the tremendous value that our diverse backgrounds and unique perspectives bring.”

The ability to resolve the inevitable conflicts that occur is essential to a healthy co-CEO structure, agrees Nicholas Turner, co-CEO (with Jeff Kaye) of online executive search firm Kaye/Bassman International, an executive search firm with $14 million in annual revenues. “We do disagree on occasion,” he says. “Since there are certain core components within the organization that are primarily my responsibility, such as recruiting and program creation, Jeff typically will defer to me in such instances. When it comes to his skills— he comes up with these amazing ideas on a cocktail napkin—I tend to do the same.”

“Frankly, it’s like a marriage,” Kaye chimes in. “To resolve a problem in a marriage, it’s not a choice between right and wrong but a collaborative approach towards solving a problem. We’ve learned not to ‘bring old soldiers to new wars.’ Who won last time has no bearing on the current discussion.”

For Andy and Amy Heyward at A Squared Entertainment marriage was a primer for sharing leadership. The husband-and-wife team jointly lead a Los Angeles-based provider of children’s entertainment programs. A Squared has partnered with four high-profile people—Warren Buffett, Martha Stewart, Marvel Comics’ Stan Lee and model and United Nations Ambassador for Environmental Awareness Giselle Bundchen—to deliver video content on the Web. For kids fascinated with business, a cartoon Warren Buffett offers advice on the “Secret Millionaires Club.” Fashion-minded but environmentally sensitive kids can log onto To learn a craft, try

“We’re competing in the children’s entertainment market against Disney, Nickelodeon and others, so we pursued a different approach—forming partnerships with people who have established brand recognition,” says co-CEO Amy Heyward. “Kids three to seven years old aren’t watching TVs like we did as children; they’re going to online destinations, such as YouTube and Google. So we decided to produce three-to five-minute Webisodes, creating, producing and marketing the content ourselves.”

A Squared is only three years old, but it has already pumped out dozens of Webisodes and 26 half-hour episodes of the “Secret Millionaires Club.” It has 20 full-time employees and a contingent workforce of more than 100 designers, editors and composers.

A United Front

When asked what makes their co-CEO arrangement work, Amy chalks it up to their different areas of expertise. “He’s the creative force, yet he can also pick up a 50-page contract and distill its points,” she explains. Andy says, “She’s the marketing executive who really understands this very specialized consumer market.”

He adds, “Running the company is like parenting. People here understand they can’t go to one of us and if they don’t like the answer go to the other. There is no court of appeals.”

This direction is an important one, says Katrina Pugh, president of AlignConsulting and author of Sharing Hidden Know-How. “Employees in a co-CEO-led company could receive communications from two senders, a diffusion that could weaken their sense of stability and open the door to dysfunctional behaviors like ‘playing one parent against the other,’” she explains. “This could spread within the company and to customers. A plaintive customer might whine, ‘Is anyone in charge here?’”

There is no such whining at SAP today. “We take pride that we don’t always have the same opinion and view,” Snabe says. “If we did, we’d lose the tremendous value that our diverse backgrounds and unique perspectives bring.”

When the co-leaders do disagree, they respect each other’s point of view and move quickly to a decision they can stand behind before executing. “That’s the end of the debate,” says Snabe. “We then move forward as one.”

Co-CEO Prerequisites

Effective shared-governance models have these features in common:

  • Two leaders with complementary sets of skills, which also helps to create a “go to this CEO and not that one” structure for employees.
  • Dividing the responsibilities of running the business, based on each other’s strengths (see above).
  • Crystal-clear role definitions to avoid tripping over each other, e.g., one in charge of M&A opportunities while the other leads organizational restructuring.
  • Mutual and expressed respect for each other’s opinions.
  • Unified support behind all decisions, i.e., speaking with one voice to all stakeholders. “Nothing accelerates failure of these models faster than statements such as ‘if this were my decision, we would have done something different,’ says Ana Dutra, CEO of Korn/Ferry. “If the decision proves not to be the best choice, there should be no ‘that’s why I didn’t want to do this in the first place.’”

If all of these conditions are not in place, says Paul Winum, senior partner and global practice leader at management consultancy RHR International, “don’t do it. Co-CEO arrangements are usually pooh-poohed as it’s rare that the context and personalities fit all of these requirements.”


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