Larry Ellison, the CEO of Oracle, is stepping down. His replacements certainly are a couple of co-CEOs, company insiders Mark Hurd and Safra Catz.
While unusual, this arrangement isn’t unusual. It happens frequently in smaller businesses. When two friends take up a company, oftentimes, deciding who ought to be in control is challenging. Neither friend feels empowered to take the lead. In the end, they are doing this together. They are equals. It just is practical.
Billionaire Entrepreneur Larry Ellison Steps Down as CEO of Oracle
Inside our experience, co-CEO arrangements or 50/50 partnerships could work, however they are fraught with danger.
One obvious problem is that if the joint leaders cannot acknowledge a way forward, the business enterprise stalls. This happened with Premier Pet Products, a pet-supply manufacturer. Sharon Madere, a visionary entrepreneur, started the business enterprise in her guest bedroom. Madere developed something called the Gentle Leader — a bridle for dogs that allowed the dog owner to control the pet without hurting it. On the effectiveness of this product, the business enterprise grew in to the tens of millions in revenue.
Madere then made a decision to get a related business that made coats for dogs, that was owned by Chuck Mann. In merging their businesses, Madere and Mann became equal partners. Things went along fine for some time. Eventually, differences begun to surface. The partners had different visions for the business.
The impasse on vision resulted in conflict on smaller issues. Unfortunately, as 50/50 partners, there is no chance to break the deadlock. Premier Pet Products literally ground to a halt. Ultimately, Madere and Mann figured the best plan of action was to sell the business enterprise.
However, we’ve seen businesses flourish with co-leaders. When Capital One was spun faraway from Signet Bank in February 1995, Rich Fairbank and Nigel Morris headed it. Fairbank and Morris divided the titles. Fairbank was the chair of the board and CEO. Morris was president and COO. When employees were present, the pair was frequently seated hand and hand at the top of the table. They ran Capital One together and it thrived.
THE NICE, the Bad and the Ugly on Partnering TOGETHER WITH YOUR Partner
Clearly, some co-CEO arrangements and 50/50 partnerships work very well. Others fail. In the event that you enter such a relationship, the three tips below can help make sure that your business will be among the ones that flourish.
1. Set up a clear division of responsibilities. Our very own management consulting business, Whitestone Partners, is a 50/50 partnership. Both of us utilize the title principal. We are equals. For all of us, dividing the responsibilities is a key to success. We play to your strengths.
For example, whenever using clients, Doug handles the strategy, operations and finance. Polly targets human resources and folks management. We divide administrative duties aswell. Doug does the accounting. Polly manages the employees. However, as a married couple, if we can’t decide for our business, we’ve bigger problems.
2. Each employee should are accountable to only 1 person. We’ve seen businesses make an effort to have employees are accountable to both co-CEOs. Invariably, employees get caught between a rock and a difficult place. When the leaders give different directions, what does the employee do? When the co-CEOs want the same scarce resource, to which does the employee give it? Don’t put employees in this untenable situation.
3. Have a tie breaker. Premier Pet Products became deadlocked, in large part, because there is no mechanism to adjudicate disputes between your co-owners. Conversely, when Fairbank and Morris reached an impasse regarding the strategic direction of the business, the board of directors made the decision.
Alternatively, your small business might divide ownership between partners on a 49/49 basis, awarding the rest of the 2 percent to a reliable advisor who cast the tiebreaking vote when necessary. Nevertheless, you do it, be sure that you will find a clear mechanism for resolving disputes.
Co-CEO arrangements and 50/50 partnerships could work, but there are dangers. The tips above can help you, and the brand new leaders of Oracle, navigate safely around the potholes and bumps in the street.
Putting Two Leaders set up