Co-CEOs: Potency and Peril

Blog Topic: 
Shared Insight In Action

Co-CEOs -- as RIM, Deutsche Bank, and SAP have today -- can mean redoubling the creative and productive energy of the top seat in the organization. It can improve the Board's confidence in the likelihood of immediate and well-informed action, and it can provide vital leadership balance for members of the executive team. On the other hand, it can also create a sense of diffusion around the messages and intent of the top job. More, it can compromise the agility of the leaders to respond and speak in moments of turmoil. It can even expose the position to manipulation, just like the age old "playing the parents" scenario. In the final analysis, Co-CEOs' success rides on the same factors as any business partnership: communication, clarity of accountability, follow-through, and... did I say commmunication?  By Katrina Pugh, AlignConsulting, October 19, 2011.

Co-CEOs exist at some of the world’s leading companies, such as Deutsche Bank, SAP and Research in Motion (RIM). Having two resources in the top job can improve the potency of the CEO position, reduce burn-out, and even improve CEO creativity.

For example, at Deutsche Bank, Anshu Jain heads operations and Jurgen Fitschen is the international statesman. Jain has deep experience in managing operations and pulled the bank through the current recession, and Fitschen is well-regarded for his German roots and international connections.

From a Board perspective, Co-CEOs can be both an asset and a liability. They can get the best of several worlds, such as legacy bank experience and hard core MBA operational skills. Boards can be assured that two strong executives are reporting directly to them. Participating in Board meetings and receiving messages unfiltered, the Co-CEO will carry out the Board’s bidding with the same passion and power as might have a single CEO.

From the executive team point of view, Co-CEOs could be nothing more than an elevation of a standard practice, such as having operations and strategy peers.

From the Co-CEO perspective, the arrangement could be remarkably practical. In times of massive transition, top leadership could be spread too thin, and burn out a risk. (Case in point: BP during the Horizon disaster.)

Employees levels down from the executive team may be immune to this shift in power. They may find some challenges adjusting to two leadership personalities, but, provided that roles are crisply divided, two separate voices may even improve the memorability of messages.  More importantly, a CEO team could convey that collaboration begins at the top. Their model could inspire employees to seek out partnerships – ones that better innovate and produce more diverse and better targeted products and services. 

On the other hand, there is a risk of perceived diffusion of responsibility. As organizational animals, we crave the clarity of knowing where the buck stops. Employees in a Co-CEO shop could receive regular communications from two senders, whereas single-CEO organizations would have concentrated this. This diffusion could weaken employees sense of stability and even open the door to dysfunctional behaviors like “playing one parent against the other.” A whiff of such diffusion could also spread to partners and customers.  Even with the best of structures, a plaintive customer might whine, “Is there anyone in charge?”

Splitting the top job requires adept communications and accountability planning with all of the relevant stakeholders. Roles need to be crisply defined and communicated. This may be easier said than done. We talked about the division between statesman and chief of staff or operations head.  How do Co-CEOs act when the issue is an operational disaster, such as RIM’s outage last week?  Founder Mike Lazaridis is responding strongly to this, but reputation is so much at stake that Jim Balsillie is also being held to make amends to customers and partners.  In cases such as these, each of the two partners needs to be part of one consistent message stream. 

Each Co-CEO needs to have the ability to act on his own, and act as one.  A blueprint for handling these types of issues needs to be in place, so that just where complex problems require the most rapid response, intense collaboration can result in the most intelligent response. Lazaridis needs to be interchangeable with Balsillie when the press calls RIM into account, acting swiftly to resolve customer concerns. But RIM cannot afford to risk that either has a blind spot. Perhaps they need a Blackberry  to stay sync’d?

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Katrina Pughis author of Sharing Hidden Know-How(Jossey-Bass, Wiley, 2011), on the faculty of Columbia University’s Information and Knowledge Strategy Masters program, and president of AlignConsulting.  Formerly she was VP at Fidelity Investments and First VP for Finance at JPMorgan Chase. Connect with Katrina Pugh on Twitterand LinkedIn.

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