HR & Management

Why running a business as co-CEOs is "like a marriage"

17 min read

16 July 2015

As the battle to grow fast and acquire market share becomes ever more difficult, we find out why joining forces as co-CEOs can have a positive impact on the business – even if it does lead to a few squabbles every now and then.

Too many cooks spoil the broth as the saying goes, and you’d think this would be applicable when considering the top end of a business. Having more than one person as CEO is surely setting up a battle of wills and constant head butting? Not so, according to companies, both big and small, which have found the structure a successful option.

Establishing joint founders and CEOs seems to be an increasingly viable setup. Most recently, Tom and Ruth Chapman stepped down as joint chief executives of luxury retailer MatchesFashion.com – following 27 years working alongside one another. Over the past three decades they turned the business into one generating annual sales of £130m – of which 85 per cent is expected to come from online. A joint role seemed to be a help rather than a hindrance there.

Lindred Greer, an assistant professor of organisational behaviour at Stanford Graduate School of Business though, said the setup “causes conflict”, as well as “hostile mindsets” and can lead to “negative performance by teams“. 

Bigger companies like Citigroup have seen these consequences unfold. Sandy Weill and John Reed were co-CEOs at the company between 1998 to 2000, but soon clashed, reportedly because both were strong people with strong views – as you’d imagine many chief executives are.

So, how do you arrive at the decision to risk two people pulling the strings and how can it work well?

A common route seems to be those who set up a business together in the first place. Phillis Chan and husband Ben set up New York-based ecommerce firm Big Apple Buddy and had “always maintained a dynamic of working together as partners” according to Chan. They felt that running the business as joint CEOs was the best way to accomplish this and would ensure “an equal say” without decisions necessarily being “split along functional lines”.

Chan said this also provided the advantage of allowing both to craft the strategic direction of Big Apple Buddy, rather than one setting the plan and the other implementing. More collaboration is an obvious benefit, while Chan pointed out that “having one person make all the decisions would necessitate a more rigid reporting structure”. Both decide on the direction “and then divide and conquer”.

She does though feel that from a small business point of view, you need co-CEOs with somewhat generalist skills”. At an earlier stage in developing a company, you’ll be more constrained on the resources front and having two generalists may not always be the best option if it comes “at the expense of hiring someone with expertise in the field”.

While one might question the competitiveness a joint position is likely to bring – “Are salaries equal?”, “What happens if there’s a bigger office?” – that’s one area Chan says is out of their control. “We’re a startup so unfortunately everyone shares a small office!”

Another business where duties are shared between two co-founders is navabi, a women’s premium plus-size fashion retailer. The company’s latest funding round was worth €25m in January, led by Bauer Venture Partners. Bahman Nedaei and Zahir Dehnadi started their first business in high school and it made sense for them to extend their working relationship with the development of navabi. “We jointly came up with its unique vision, mission and strategy as a retail brand together,” Nedaei explained.

While different departments can report to them individually, the “core part of the CEOs’ responsibility remains a shared one”, he added, mentioning corporate strategy, team staffing and investor relations as joint responsibilities.

Dehnadi agreed that while both “could do this job alone, together you can do so much more”. When implemented effectively, you essentially have a responsive sounding board who not only responds to your ideas, but helps make them better. “It’s like having an everyday sparring partner,” Dehandi said. “Eventually each one of us comes out of the sparring with less bullshit and more thought through concepts.”

When it comes to making top-level decisions, they tend to be quite in sync, though Dehnadi admitted arguments can on occasion continue “late into the night until we both agree”. Nedaei added that if they can’t agree, there’s a level of trust established that means they both avoid overriding one another and will trust each other’s judgement.

They do both man different areas of the company – one overseeing marketing, while the other is in charge of operations – but decisions relating to external strategy and structure rely on joint agreement.

When asked if it can inspire combativeness, the CEOs are in agreement that it’s “competitive in a positive way”, with Nedaei comparing the situation to that of a “good sports team line up”, with each offering different strengths and abilities.

So, for some companies it’s definitely a successful route to take. So what should you consider if you’re contemplating following suit? Dehnadi emphasised that “you can’t have co-CEOs if one of them is unwilling to openly and frankly communicate sensitive matters to the other” and cooperation on decision-making is a must. “Diverse experiences from both candidates with complementary strengths – and invisible egos – will also go a long way to paving a path to future success.”

Nedaei compares running a business to a marriage, adding that “as long as the two individuals who found a business have had a chance to get to know each other and learn each other’s strengths” it works.

CV-Library was a company which used to have a co-owner setup, until Brian Wakem decided to sell the business. Lee Biggins remains as the managing director, on a mission to take the company global. He feels mistakes can arise in businesses with two leaders when there’s “confusion over roles and responsibilities”, as obviously everyone will have their own ideas on how best to drive a company forward.

From the very beginning, the two established different roles as they had distinctive skill sets and wanted to make use of them. “Brian’s role focused on the development side of the website and technical propositions,” which essentially put him in a CTO position, while Lee’s strengths were in sales, marketing and what he called “a broader CEO role”. This was, he thinks, a good way to avoid any obvious competition or areas where the two could clash and provides another option for companies thinking about considering co-CEOs.

It’s a similar concept at smart heating company climote, where the co-founders assume specific roles despite the joint title. Derek Roddy focuses on product development and the future road map for the business, while Eamon Conway handles the commercial and financial functions. Conway feels this focus is “so important in any startup” as it enables each person to remain focused and the business can be progressed where each individual’s strength lies.

“We’re managing ourselves in the best possible way for the success of the company,” he explained.

Read on to hear more from Conway and why one founder stepped down and hired to MDs.

Conway feels there’s a real balance when it comes to their day-to-day opportunities – they even have the exact same-sized office, though he said it “wasn’t designed because of ego or anything like that!”. Everyone sits together, which he believes has made for a more productive environment.

When it comes to bigger businesses, the hierarchical structure may be more ingrained –though at food specialist BaxterStorey there’s a specific setup to ensure all operations are linked back to the joint CEOs, to ensure smooth progress all round.

The company employs 7,800 people across 745 locations – with John Bennett and Noel Mahoney sharing the position of chief executive. They started as joint MDs, with both at the company for around ten years prior to that, and had known each other for 20 years previously.

Areas across UK and Ireland are divided between five managing directors, each running a region of the business, with Bennett and Mahony splitting the individuals between them, though those overlap. Mahony feels this arrangement gives them an added level of “breathing space” that other co-CEOs may not have.

Where having two executives works particularly well for BaxterStorey is that they pride themselves on delivering business success built on connections. Mahony said: “Winning and retaining business ultimately comes down to how much you’ve nurtured the relationship.” It enables them to “spend more time talking to clients and teams having two of us means that we’re able to get around the company more easily”.

Bennett added that this extra time spent out and about means they’re also able to “stay up-to-date in all the latest developments in the fast-moving food sector – everyday someone comes up with a new idea on the high street and unless you’re aware, you’ll lose market share”. He pointed to the creation of a barista school, investing heavily in chefs and chef trainers, where “we might not have had these insights if we hadn’t been on the ground” and finding out what interests customers in the food market.

The longstanding knowledge of each other and their respective abilities has meant that the two have an understanding in the workplace as well as a conciliatory attitude. Bennett remarked that a friend asked “who wins when it comes down to it?” but if they had that attitude, “we’ll both fail in our positions”. Both are shareholders in the businesses and “inextricably linked at the hip”.

The option of appointing two successors is becoming an increasingly appealing one for some – seeing the opportunity to utilise double the brainpower and potentially double the skill sets, if there’s certain knowledge one has the other doesn’t. Mark Mason, the co-founder of mobile consultancy and developer Mubaloo, thought just that when he recently decided to step back from the company. He has appointed Gemma Coles and Sarah Weller as joint MDs. The business has been moving away from solely providing app development to other technologies including the internet of things, while expanding its strategy consultancy practice, so Coles and Weller will be focusing on specific parts of growth.

Decisions here will be made by consulting one another, as well as the board directors – who have the final say when it comes to important matters. Coles said Weller is more focused on marketing, sales and business development, while her strengths lie in strategy, the service offering and operations. While it has been a recent development, Cole believes it has been a sensible move, particularly for a company focused on growth as it means that the person at the top isn’t being “stretched too thin”.

For interim management recruitment firm Russam GMS a big plus point is that co-CEOs Jason Atkinson and Ian Joseph get on well socially – “we often make our decisions while running or over a glass of wine”. Their different backgrounds have also meant “there’s a lot of cross learning going on” and “don’t mind playing second fiddle to each other which is why it works”.

They regularly defer to one another depending on the situation. A recent dinner they hosted originally had Atkinson pencilled in to speak, before they decided Joseph would be a better fit.

Read more on CEOs:

This flexibility is essential as they’ve become increasingly aware that “the buck really stops with us”. Meticulous precision is therefore necessary with most decisions – they pointed out that “things have to work nine out of ten times to ensure profit and success”.

We have seen the model work at big names like Chipotle and Whole Foods (though the former came under fire when it was revealed the CEOs make considerably more than other chain restaurants), while numerous startups are fond of the setup – particularly when it stems from a co-founder situation. Yet, the long-term forecast for joint CEOs is trickier to predict, as big disagreements on certain approaches could quickly disintegrate the workable setup – even among two people who pride themselves on not being egotistical.

The structure looks less sustainable when the two involved don’t have clearly separated responsibilities and agreed upon strengths, though fundamentally, there needs to be a fully open flow of communication and the ability to be be conciliatory when the inevitable friction does crop up. If maintained, there’s no reason why co-CEOs can’t be a positive option to consider, allowing the business to benefit from “a diversity of ideas, knowledge and skills” as Chan said.