When Two Leaders Share the Throne… Chaos Follows

Two bosses, one mess. The rise of co CEOs Spotify's Daniel Ek is stepping down. Instead of one replacement, he's naming two. Alex Nordstrom and Gustav Saderstrom. They'll join a growing list of co chief executives at big corporations alongside Comcast and Oracle. According to the New York Times. It sounds modern, even collaborative, but it doesn't always end that well. At Charles Schwab, co CEO split the company into rival camps before one quit in frustration. At Deutsche bank and SAP, power struggles and blurred accountability followed. Communication consultants call it a crisis of message discipline. Two leaders can't sound like one voice and employees end up confused about priorities. As one analyst told the Times, shared authority is rarely shared. Clarity. What's the real message here? Can occasionally two CEOs co CEOs work? Yeah, but it's rare. It's really sending a message to shareholders in the rest of the world. We can't make up our mind. We're not really sure who should have the largest voice in our company. So you can kind of guess each day on a case by case basis and that leads to confusion. Okay, again, I don't want to seem too dogmatic. There are companies that have had co CEOs and done extremely well. Netflix, through most of its history, has had co or a long part of its history, has had co CEOs and it's worked out well. Now, there's some times where there's a co CEO, but it's with an asterisk. When you look at a company like Oracle, yeah, they have co CEOs, but the chairman is Larry Ellison and he still owns some 45% of the company. So you can bet your bottom dollar when there's a big decision or something crucial, Larry's making the final. He might not be the one appearing on the quarterly conference calls, but he really is the one where big, big decisions are going to be made. So there's still clarity. Now, look, I don't want to sound like an old codger, an old coot. TJ's an old white man. He wants a top down. One person king. No, I'm very much in favor of inclusion, democracy, more participation. The idea that not one person isn't a genius in all things. However, running a company is a little different. It's not a city, it's not a state, it's not a country. It's not meant to be a pure democracy. Sometimes you need to speak with one voice to let your investors know what's important. Your key stakeholders, the media, your top vendors, your Employees, you sometimes have to turn the ship of what your whole organization is about. It's simply harder to do that with one person with two people at the helm. It also kind of muddles the issue of who's really in charge, who should get the credit when things go well, who should get blamed when things don't go well, who needs to be fired when performance is bad, you automatically toss them out. Now let me share with you some research. Korn Ferry shows did some research showing that productivity drops 15 to 20% when decision authority is split. The intricacies of how they figured that out, I don't know, but. But I'll share with you some more stats. Most successful cases KKR early Google worked only because of clear division of labor was enforced and communication aligned daily. Now, the two founders of Google kind of ran things earlier, but even they were smart enough to realize we don't really know what we're doing. If we want to take this company public, let's bring in an adult like Eric Schmidt to run things and be the one voice so it can work. Occasionally it's a little more common in Europe. And in Europe the whole idea of more voices being a part of company is more acceptable. I mean, in Germany, for example, this blows the minds of a lot of Americans and American investors. But in Germany, it's written into the law that unions have a seat on the board of directors of a company. I mean, most Americans cannot even comprehend that. I do think institutions can communicate as institutions, but I also think that there's nothing like one human voice speaking where you can see that person, whether it's in person at a financial conference, whether it is on a video, whether it's an ad to see one company speaking on behalf of a company or one individual, one CEO speaking on behalf of a company I do think brings clarity. Now, I have nothing wrong with obviously CEOs delegating all CEOs delegate. Sometimes I worry that the title of co CEO is given to someone just to make them feel good, just to make them not feel bad and run away and go to another company. And I get it, if you got top talent, sometimes you gotta do whatever it takes to keep them. If it's a situation where let's say there's a founder and people are kind of saying, hey TJ, you're getting a little old. You're 70 years old. It's time to start thinking about a successor, Sometimes it can make sense. You've groomed top talent and you've got someone who you really want to take over and you're afraid they'll be poached by another company CEO. They're ready to be a CEO, especially if it's a big publicly traded company. There have been times when people say, okay, we're going to name you co CEO. You know, the old guy's still going to be here. He's going to be a CEO as well. But once he retires, you're going to be the sole CEO. That has happened from time to time and that can work out. But I've also seen that happen in places like Charles Schwab where it didn't work. The the old guy all of a sudden didn't like other people addressing the young guy. And it's usually a guy could be a one doesn't like other people addressing the new co CEO. And they do everything they can to sabotage them and they run them out of the company. I've seen that happen. But of course there have been times when the, the founder CEO still has the title of CEO, but the, the other younger person is kind of running things. And then when the person retires or dies, it is a smooth transition. Here's my advice to you. If you're an investor and this show is not primarily about investing advice, I'm not telling you to buy or sell anyone's stock. I do think you should be a little skeptical of a company that all of a sudden goes from one CEO to two CEOs because sometimes it is a sign of we're not really quite sure what to do and our board can't really make tough decisions. Not saying dump the stock, but I am saying dump be skeptical because as noted, Korn Ferry has this study showing 15 to 20% drop in productivity because it does raise the question like well, if two is better than one, why not three CEOs, why not four? Why not a whole committee? And that clearly is not going to be in any company's or investors best interest.