Corporate leadership is typically associated with a single person. The focus is often on high-profile CEOs such as Amazon’s Jeff Bezos, General Motors’ Mary Barra, and Xerox’s Ursula Burns.
Sometimes, though, an organization navigates a co-CEO landscape. Companies like Goldman Sachs, Chipotle, Whole Foods and Netflix have used this model. Overall, the architecture gets mixed reviews — especially when it comes down to a tie in decision-making. Not every CEO pair is as clever or diplomatic as the Fertitta brothers.
Lorenzo and Frank Fertitta own off-strip casinos in Las Vegas. In 2001, out of love for the sport, they bought the Ultimate Fighting Championship franchise for $2 million. They sold it in 2016 for $4 billion. As equal owners, they needed their version of a coin flip when the two of them disagreed on a proposed path forward. The Fertitta’s solution was to compete in a jiu-jitsu match against one another. Whoever earned the most points won the right to make the executive decision.
Uncommon? Yes. Controversial? Perhaps. But it was a better process than many small businesses have. It is definitely a better situation than the one my flight seatmate, Jocelyn, found herself in on a recent flight to Denver.
Jocelyn just so happened to be going to the same conference I was traveling to. She owns her money management business with her work partner, Cheryl. Both have 50 percent ownership. Jocelyn was heading to the conference to continue her education on client skills and to practice growth.
Cheryl stayed back because she was content with running what we in the industry call a “lifestyle practice.” Cheryl was content earning a good living, not chasing growth and risk upsetting the status quo. In a 50/50 tie, doing nothing won the decision-making process.
Doing nothing meant a no-growth company. No growth meant no employee advancement and, thus, a deterioration in culture. A damaged culture impedes hiring the best staff, which means that clients get better advice elsewhere. Still, Cheryl had a good life and was content with the business eventually winding down.
During our hours long conversation, Jocelyn asked me rhetorically and in exasperation, “How can my company be successful if the leaders can’t agree on a vision?” I proposed that Jocelyn and Cheryl could achieve a mutual outcome even if, from a distance, it initially looked like two separate paths. There are tactics that co-owners can use to each enjoy a piece of their own vision.
Co-owners can collaborate while following their own paths
Co-owners should discuss who is responsible for what and why. For example, Cheryl may lean more toward the status quo for the entire firm, but that doesn’t mean she is lazy or uncaring. Cheryl cares deeply for her clients and feels that a personal relationship is important to them. Thus, Cheryl could oversee improving customer loyalty. This would generate client referrals and allow both owners to share a mutual vision of helping more people, even if it feels like they’re coming from different directions.
Jocelyn, who is more practice-oriented, should oversee introducing new technologies and workflows. Businesses can get stuck in a rut of doing things a certain way for a long period of time just because that’s how they’ve always done it. Improvement in efficiency allows for better advice to be delivered to more clients.
Some decisions, such as major investments or employee termination, should be made jointly by Jocelyn and Cheryl. When those situations occur, both should remain open-minded. The co-owner initiating a proposed change or initiative should be prepared to tell the other why they think it’s a good idea. The initiator should also be receptive to alternative perspectives and show trust in those insights. Co-owner “rules” shouldn’t be so detailed that they feel bureaucratic.
Business decisions often raise many unseen complex issues that get overlooked due to the eagerness of one partner. The responding co-owner can listen intently and point out weaknesses in the proposed project. The responding co-owner can probe to understand and consider if there is another way to think about advancing the initiative or if there is a better way to achieve the desired outcome. That exposure may be enough to kill the idea, or it could be a reality check that some missing components need to be addressed.
Effective co-leadership strengthens your business
This process served me well recently. Overexcited, I informed Stacey Carver, co-owner of Berkshire Money Management, about an ambitious project I felt the company should embark on. The project would technically fall within my purview to pursue via a unilateral decision, but Stacey generously came into the conversation because of the risk involved.
This project was previously discussed among company executives, but I found an opportunity to advance it rapidly. Ambitious plans are always complicated, but when they’re rushed, they can be wrought with operational errors. Errors create risks. I provided some risk context in the conversation; the overall spend would be less than $500,000 over two years. A large number, but not so significant that a total loss would risk the solvency of the company.
Understanding the risk, Stacey then explored the merits of moving up the timetable. She said to me, “Tell me about this. I want to understand more about why this is the right time.” She was able to get me to think through the process without it feeling like a challenge.
As a result of her gentle probing, we were able to assess, for example, the possible drain of employees’ capacity and if that would crowd out other important projects on the calendar. Or if the investment would require us to reduce budgeted spending in other areas. While I assessed the risk of the new project on a stand-alone basis, Stacey was able to help me look at it more broadly.
Instead of two co-owners gridlocking over different concerns and goals, dual perspectives allowed for risk-mitigation and a shared vision to move ahead. Co-leadership roles can be challenging to navigate. It’s often difficult for A-type personalities to collaborate when they’re used to forging ahead and building the proverbial airplane while it’s flying.
Co-leadership can be an advantage when, instead of lamenting the other’s weaknesses, partners explore potential decisions with genuine curiosity and the intent to find the best path forward.
This article first appeared in the Berkshire Eagle on March 15, 2024.