I recently met with the CEO of a start-up to discuss strategies for growing the business. Or, at least I thought I was meeting with the CEO. I quickly discovered that although the corporate documents designated him as the CEO, he was really one of two co-CEOs in that the CEO does not make an important decision without the approval of another employee. The two co-CEOs have a long, strong personal relationship and possess complementary skills.
Two heads are better than one, right?
I don’t think so.
There are of course large, successful companies (such as Whole Foods) that have co-CEOs. Many co-founders are friends, and immediately think that 50% ownership and joint decision-making sounds like a good plan, but I think that the co-CEO structure, while successful in a small minority of large businesses, is almost universally a mistake for start-ups. I look forward to readers posting counter-examples, but I would be very surprised if any significant percentage of successful start-ups used the co-CEO structure.
I’m not endorsing uninformed corporate dictatorship! A good CEO should of course delegate responsibility, should invite discussion and criticism of his or her own actions, and should seek consensus. But, a CEO should also feel fully empowered to act (subject to the limits imposed by the company’s board of directors) without the approval of any other employee. When push comes to shove, the CEO gets to decide; anyone who doesn’t like that decision can choose to seek employment elsewhere.
As I argued in my previous post on Checks & Balances, I believe that committees are conservative, while executive authority permits transformation. Start-ups are always in transformation mode; growth, almost by definition, is transformative. Co-CEOs are essentially committees of two, and, thus, will tend to preserve the status quo rather than to implement change. Furthermore, well-structured committees general have odd numbers of members (to enable decision-making by voting), and two is, in this context, the worst possible even number. Disagreements between co-CEOs will almost certainly become to some extent personal, unlike a 5-5 tie on a 10-member committee.
So, my advice to the CEO: before working on growing the business, he should live up to his title. To do that, he needed to inform his co-CEO, gently but firmly, that as CEO corporate decisions were his and his alone.