After running Spotify for almost two decades, Daniel Ek recently announced that he would step down as chief executive. Instead of naming one successor, he named two. In January, Alex Norstrom and Gustav Soderstrom will take over as co-chief executives of the music streaming app.
“This may sound a little cliché, but I do think that we both make each other much better,” Mr. Norstrom said in a call with analysts on Tuesday. “One plus one equals not three but five,” he said.
Spotify is one of three large companies to name co-chief executives in rapid succession. The day before that announcement, Comcast said Mike Cavanagh would share the chief executive title with Brian Roberts, the cable and media conglomerate’s longtime leader. A week earlier, Oracle said Clay Magouyrk and Mike Sicilia would split the top role, replacing Safra Catz, once a co-chief executive herself, at the tech giant.
Despite the burst, the setup remains rare. Only about 1 percent of the largest 3,000 public companies in the United States are run by two chief executives, according to the executive research firm Equilar.
But some market watchers say company boards may consider naming co-chief executives more often, for a few reasons.
Are two bosses better than one?
Adding a co-leader can help clarify a succession plan, which is how many interpreted Comcast’s move.
Naming two chief executives also acknowledges increasingly complex business conditions, with leaders expected to have a handle on artificial intelligence and geopolitics in addition to sales pipelines and profit margins.
“How can a single human keep tabs on all things?” asked Anup Srivastava, a professor at the University of Calgary’s Haskayne School of Business. Naming co-chief executives could be seen as preparing for a time when a company needs “different sets of competencies which perhaps cannot be managed by one person,” he said.
The pipeline of people able to do everything expected of chief executives is another factor.
“We have a shortage of ready-now C.E.O. players,” said Jane Edison Stevenson, global vice chair of board and C.E.O. services at Korn Ferry, an organizational consulting firm. “One way to try to solve that is to bring in two players with complementing skills.”
The model is more common at European companies with a more egalitarian and consensus-driven culture, said Ryan Krause, a professor at the University of Iowa’s Tippie College of Business. Spotify was founded in Sweden, and Germany’s Deutsche Bank and the enterprise software company SAP have also had co-chief executives.
In the United States, co-leaders tend to be seen in the technology and creative industries, which “have little compunction about throwing off tradition,” Mr. Krause said.
And for a few companies, having co-leaders is the tradition. Henry Kravis and George Roberts ran the private equity giant KKR in tandem from its earliest days. When they passed the baton in 2021, they named two successors: Joe Bae and Scott Nuttall.
“We believed this to be a good model because it had worked for us,” Mr. Kravis explained. He and Mr. Roberts are now co-executive chairmen.
How does it work in practice?
Gensler, one of the world’s largest architecture firms, has maintained the model for 20 years. Since last year, the roles have been filled by the company veterans Elizabeth Brink and Jordan Goldstein.
Mr. Goldstein, who is based in Washington, said he and Ms. Brink, who is based in Los Angeles, are in “constant, iterative dialogue.” Either one can take the lead with clients, and set up meetings on his or her own, although since they are constantly texting, each typically knows what the other is doing.
“We really get the benefit of all of our different perspectives onto a problem and onto the challenges,” Ms. Brink said in a joint interview (naturally) with Mr. Goldstein.
To make it work, both have to be “willing to sometimes bend and compromise,” she added. “That takes a lot of trust and putting your ego aside.”
When two chiefs bring grief
In his research, Mr. Krause of the Tippie College of Business found that American firms with co-chief executives performed better when there was a moderate power imbalance, as measured by pay, a seat on the board or other proxies. (At Oracle, Mr. Magouyrk received stock options worth $150 million more than his co-chief’s.)
From 2000 to 2011, Mr. Krause and his co-authors found, co-managed companies with more equal executive partnerships were less profitable.
But in another study, spanning 1996 to 2020, researchers found that the stocks of companies with co-chief executives had generated a better return than industry indexes, implying that companies with two chiefs performed better on average than those with just one.
Still, given how few companies have co-chief executives — fewer than 100 in both studies — it is difficult to draw sweeping conclusions.
SAP, which had co-chief executives off and on for several years, abandoned that structure five years ago when Jennifer Morgan’s departure left Christian Klein as the sole leader.
At the time, during the early stages of the Covid-19 pandemic, the company said that “the current environment requires companies to take swift, determined action which is best supported by a very clean leadership structure.”
Ms. Stevenson of Korn Ferry said that during volatile times, adding an “additional layer of complexity” at the top could confuse employees and muddy responsibilities. “It could potentially drain their energy as opposed to enhance their energy,” said Ms. Stevenson, who has worked with a pair of co-chief executives.
Continuity also starts with ‘co’
The newest batch of co-chief executives may be adopting a rare title, but their roles may not be so newfangled. All will be running companies alongside founders, or members of founding families, who emphasized continuity when promoting their trusted lieutenants.
Larry Ellison, an Oracle founder, is the company’s chairman and chief technology officer. Mr. Ek is set to become executive chairman at Spotify. And Brian Roberts (a son of Comcast’s founder) will keep his role as chairman in addition to co-chief executive.
At Spotify, the move “simply matches titles to how we already operate,” Mr. Ek explained. Instead of reporting to the board, the co-chief executives will serve under Mr. Ek.
“They’re the ones making the decisions,” he told analysts. “But I will be there as a friend, a coach, a cheerleader, whatever I’m needed to do for the day.”
Jordyn Holman is a Times business reporter covering management and writing the Corner Office column.
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