Oracle, Spotify, Comcast are trying out joint approach – but there are risks, say two experts outlining best practices
Co-CEOs: This unconventional approach seems to be filling the headlines of late.
Oracle, for example, announced that two CEOs will be replacing the departing Safra Catz; Spotify said its CEO Danie Ek will be replaced by two long-time executives; and Comcast’s CEO Mike Cavanagh will be joined by its chairman as co-CEO.
So, what’s behind the emerging trend of co-captains, and when does it make sense?
Anup Srivastava thinks we’re going to see more of this approach, for one big reason: “It's almost impossible for one human being to manage what's going on today.”
The challenges of day-to-day operations have increased multifold, while the future looks very uncertain, says the Canada research chair and professor at the Haskayne School of Business at the University of Calgary.
“Normally, a CEO should be ambidextrous, in focusing on today's bottom line, today's sales, today's margins, market share, et cetera; on the other hand, the CEO should be looking forward to where the company will be three years, five years, seven years from now.
“Both challenges have multiplied in the last year or so.”
Uncertain future challenges single CEO
Whether it’s U.S. tariffs, trade embargoes or geopolitical realignments, leaders are challenged with decisions around issues such as supply chains, customers, markets or production, says Srivastava.
“On the other side, we have this AI which will hardly leave anyone undisturbed. So, whether it's Microsoft, Google... the trillion-dollar companies are not sure whether they'll be around three years from now.”
All this makes it very difficult to plan for the future, he says.
“The real change is this fact that the business environment has become extremely complex, and it's impossible for one human being to manage.”
Nora Jenkins Townson, founder of HR consultancy Bright + Early, agrees that the world of business is unpredictable these days.
“I think [co-CEOs are] trending right now because a lot of different industries are quite volatile,” she says, citing the tech sector as an example.
Whether it’s venture capital funding or rolling technological advances, things are “always accelerating,” says Jenkins Townson about the overall economic market.
“I'm not surprised that we're seeing more of [co-CEOs] in tech, particularly, at this moment… They do tend to be more open to innovative approaches, but that world is particularly tumultuous right now.”
Splitting leadership priorities
In addition, a company may be going through a transition or adapting to changes in the market that require different skill sets, says Jenkins Townson.
“They might just have a need particularly to split focus, whether short term or long term.”
So, for example, one person might be great on the innovation front or external leadership while others do better with operations, she says: “It can help them stay agile and responsive.”
Srivastava agrees that taking the co-CEO route can make sense because of the need for distinct competencies, where there are essentially two businesses that are complementary and can be run in parallel. Take the example of Europe and North America – both are equal markets but co-CEOs could focus on each region, he says; or in finance, for example, one CEO may look after the liability side while the other handles the asset side.
Many startups also have co-CEO model, with two or three co-founders who almost start as equals, says Srivastava.
“They don't even have designations. They're all de facto CEOs: one is bringing technology, one is bringing marketing, one brings financial expertise. They all start together… They don't even have a formal CEO. But when we start seeing trillion-dollar companies having co-CEOs, this is where it becomes surprising.”
Pros and cons to co-CEOs
The results can be impressive: Companies with co-CEOs generated an average annual shareholder return of 9.5%, outperforming their respective indices at 6.9%, according to a 2022 Harvard Business Review study of 87 public companies from 1996 to 2020. These results were achieved by nearly 60% of co-CEO-led companies, and the average co-CEO tenure was about five years, similar to that of solo CEOs.
“Instead of having one person make the final call, it elevates both people to that level. And that can be a positive. Because… it's that sort of split-brain approach where they might have skills or talents or abilities or backgrounds in different areas,” says Jenkins Townson.
However, that can also lead to challenges, she says, “because if you have two people responsible for a final call, they had better be pretty aligned on the company direction, the company values, who's responsible for what, because there's quite a lot of pitfalls there.
“I would actually say this is not a model I recommend for most organizations, even though it is trending a bit right now.”
If the relationship falters, culture can definitely suffer, as there might be conflicting directions, says Jenkins Townson.
“Approval might get slowed if they don't trust each other to decision-make in their areas. Staff might be uncertain about who to go to with what, or they might feel caught in the middle of… disagreements.
“So that can be really challenging and actually slow a company down when the aim of the co-CEO model was to give them some speed in a tough market.”
Srivastava agrees that one of the limitations of this model is slower decision-making because consensus is needed between two leaders.
“Two people have to agree versus one person who can take immediate decisions,” which can be a problem when there's a crisis, he says, citing as an example Deutsche Bank reverting to a single CEO model a few years ago.
Ensuring success with joint execs
Given the challenges of joint command, how can success be better guaranteed? For one, it helps if there’s a history between the two, and they know each other well, says Srivastava.
“They have a chemistry. They can communicate with each other. If required, they can literally talk three times or four times a day. They have a comfort factor. They have trust. They can empower each other… they know each other’s style.”
Jenkins Townson agrees the relationship has to be quite strong, almost like a marriage.
“They really have to have that united front, with thoughtfully divided responsibilities, a really strong shared vision,” she says.
“Without maintaining that relationship and having that alignment, it can really have more consequences than benefits.”
The reporting structure with a co-CEO model would have to be carefully worked out with a particular framework, says Jenkins Townson, looking at who is responsible for what.
“There’s sure to be certain things, like decisions, that they both want to be involved in… that needs to be specifically defined and crafted. And there has to be a process on how those decisions would be made.”
It’s also about showing visible unity in in front of the company and staff, so people see them “moving in lockstep,” says Jenkins Townson, who recommends taking a proactive approach by including paired leadership coaching, “almost like a business couples’ counselor – even if they're not having any challenge – just to stay on the same page.”
It’s also important to design decision-making boundaries, with accountability frameworks, “specifically workshopping those things, like who leads what, and also agreement on how we'll resolve any disagreements that might come up,” she says.
It’s also helpful to have a “father figure,” says Srivastava, meaning someone who can intervene should conflicts arise.
“There are bound to be conflicts. One is trying to take the company to the left; another is trying to take the company to the right,” he says, citing as an example having a founder on standby, such as Larry Ellison at Oracle.
“[They] can settle these conflicts between them, bring some wise advice. And both of those co-CEOs respect that person. They trust their opinion.”
Organizational support for co-CEOs
Of course, with an unconventional leadership model like this, there are bound to be questions and concerns among staff – which is where HR can play an important role in terms of communications.
The messaging will depend on the scenario for the two CEOs and how much context employees already have, says Jenkins Townson.
“If it's a brand new person being brought in as a co-CEO, appointed by a board or something like that, and you have this existing, very beloved CEO, they're going to need a lot of support and internal management or communications management from that existing beloved CEO to encourage trust of the other of the incoming person so that those factions or undesired kind of behaviours don't develop and that trust is built.”
If, however, the new joint leadership involves two brand new people, that requires a different approach, she says: “They're both going to have to build trust.”
There will definitely be a need for over-communication, checking in with people and “building a narrative,” says Jenkins Townson, and “showing a united front to get people comfortable with it.”
Overall, it’s important to give employees as much context and information as possible, she says.
“As with any area of working with humans or working in HR, if people are not given information, they will fill those gaps on their own, and it's better to provide them as much transparency and context as possible if you want to get people on board with a change.”
