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Two is often better than one — dollars, days off, slices of pizza — but what about CEOs?
The co-CEO structure is having a bit of a moment these days, writes BI’s Tim Paradis and James Faris. Oracle, Comcast, and, most recently, Spotify, announced plans for dual CEOs within the past week-plus.
Having two leaders on top to divide and conquer can be beneficial, experts told BI. On the other hand, problems can arise when there isn’t one person who can ultimately be held accountable.
Here at BI Today, we’re always open to new ideas.
In the spirit of the co-CEO structure, I asked BI’s Joe Ciolli, author of our upcoming money newsletter, First Trade, to co-write this section with me.
Dan: The idea of dual CEOs immediately reminded me of the episode in “The Office” — as is my God-given right as a millennial — where Jim Halpert and Michael Scott become co-managers. However, according to one study, companies with two CEOs actually posted better average annual shareholder returns (9.5%) than single-leader companies (6.9%) from 1996 to 2020. That’s not nothing!
Joe: I get the main argument against co-CEOs, which is that a company might struggle to function with too many cooks in the leadership kitchen. But as a markets guy, it’s hard for me to deny those numbers. That said, you can’t just throw any two people together. There needs to be chemistry, deference, and clearly defined role boundaries. Those weren’t exactly Michael’s strengths, which is why (spoiler alert) that situation didn’t work out.
Dan: Totally agree. Just look at the most high-profile current example of co-CEOs: Netflix. Greg Peters and Ted Sarandos have been running the show together (and doing it well) for a few years. Sarandos has said the key is having a set of CEOs who are committed to the model.
You also need someone willing to be in the spotlight and, more importantly, someone willing to take a backseat. That seems to have worked out well for Sarandos and Peters, but it’s obviously not always the case.
Joe: The Comcast situation is particularly interesting because (like with Michael and Jim) there’s an up-and-comer (Mike Cavanagh) being slotted in alongside an incumbent (Brian Roberts). I could see there being an inherent power imbalance. How can the new appointee ever truly shake the “new” tag? I’d imagine that’s why this structure is still pretty rare.
Dan: Speaking of power imbalance, I think that’s why Oracle makes the most sense. Whether you have two CEOs or 10, the top dog at that company is always going to be Larry Ellison. So in that case, there’s a real benefit to having power in numbers.
Joe: One last consideration is what a dual-CEO situation might mean for a company’s succession plan. It’s always a sticky subject, and feelings can get hurt. Come to think of it … I could get used to writing for BI Today.
Dan: OK, we’re done.
Dan DeFrancesco, deputy executive editor and anchor, in New York. Hallam Bullock, senior editor, in London. Akin Oyedele, deputy editor, in New York. Grace Lett, editor, in New York. Amanda Yen, associate editor, in New York.
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