Internal power balance is the key factor of corporate governance. Traditional corporate governance is mostly single core, and strong leaders with independent and decisive characteristics are an important part of internal power distribution. It not only ensures that the internal conflict within the organization will not be excessive, but also conforms to the simple management expectation that "one mountain cannot allow two tigers". Another special institution in corporate governance is the dual-core or co-CEO (CO-CEO) model, which is common in start-ups or mergers. In this mode, dual-core leaders often have different personality traits and resource endowments, and the company divides internal power and job responsibilities according to the characteristics of the two. At the beginning of 2019, a power struggle between The co-ceos of Bitmain, Jihan Wu and Janketuan, brought the dual-core/co-CEO model into public view, and the management changes announced by Kuaofou technology in the past few days have added to the discussion of dual-core/co-CEO model.
The end of the dual-core model?
On October 29, 2021, Kuaishou announced a management change, adjusting the dual-core mode that has persisted for many years, and confirmed that Suhua would no longer serve as CEO, but would continue to serve as chairman, executive director and member of the compensation committee. The CEO role will be replaced by Yixiao Cheng, the company's co-founder, executive director and chief product officer.
In 2013, With the help of Wuyuan Capital, Suhua joined Kuaishou and started a business with Cheng yixiao. According to their own characteristics, they determined the internal management division of the enterprise: Cheng Yixiao focused on the business side, responsible for the product, e-commerce, games and other departments; Suhua focuses on external relations and internal management, responsible for investment and financing, overseas markets, government and public relations, and functional management. The dual-core model gave full play to the strengths of the two of them in the development process of Kuaishou. Cheng Yixiao worked deeply on products, and Suhua helped Kuaishou solve problems such as investment and financing, internal management and team building.
At the beginning of 2018, Kuaishou announced that its daily life exceeded 100 million, and a year later, its daily life exceeded 200 million. In February 2020, it was listed in Hong Kong Stock Exchange and became the first short video stock. However, the changing intention of top management brought by the dual-core model does affect the development efficiency of Kuaishou. In mid-2020, a senior kuaishou employee's article "Talk about our Company's Illness" brought the rivalry between Cheng Yixiao and Suhua to the forefront, and also broke the story of the "disappearing boss". More than a year later, a management shake-up announced in a paper can be seen as a response to the concerns of both internal staff and outside investors.
Similarly, Oracle, Salesforce and SAP, three of the world's biggest tech companies, have all abandoned the dual-core/co-CEO model in the past two years.
Oracle adopted a co-CEO model in 2014, announcing that Safra Catz and Mark Hurd would co-run the company. But when Mark Hurd died of illness in October 2019, the co-CEO position that became vacant has never been filled, leaving Safra Kage, who also serves as CFO, as sole CEO. While co-founder and CTO Larry Ellison had been rumored to be in line to take over as co-CEOS, Ellison made it clear in his December 2019 announcement that he would not be taking over or reappointing co-ceos, Oracle has officially ended its five-year co-ceo model.
Marc Benioff is the founder, chairman and CEO of Salesforce. In August 2018, he named Keith Block as co-chief executive in an effort to improve their overall effectiveness. Benioff is the public face of Salesforce, while Block plays more of a back office role. Salesforce has experienced tremendous growth since Block became co-CEO. But Block left the company in early 2020, at odds with veteran CTO Steven Tamm, and the co-chief executive model lasted 18 months before And after Salesforce declared bankruptcy.
SAP has used the co-chief executive model more than once. In 2010, SAP appointed Bill McDermott and Jim Hagemann Snabe as co-chief executives, a pattern that ended in 2014 when Mr. Snabe moved to SAP's supervisory board. For the next five years, SAP was run single-handedly by Mr Munder. It wasn't until 2019, when Mr. Monderm resigned as CEO under pressure from shareholder Elliot Management and SAP resumed the co-CEO model, Jennifer Morgan and Christian Klein were named co-chief executives. The two were initially expected to be the next generation of co-ceos, but just six months later, Jennifer Morgan announced her resignation as co-CEO due to the COVID-19 outbreak.
The demise of the dual-core/co-ceo model at several leading companies seems inevitable. The difficulties this model brings to corporate governance are obvious. It is easy to lead to problems including (but not limited to) multiple political, high-level decision-making conflicts affect the implementation efficiency; The continuity of decisions at the top is easily challenged, and the relationship of mutual supervision between co-ceos leads to decisions being easily overturned. The difficulty of organization and team coordination increases sharply, and the cooperation between teams reporting to different ceos is not easy to advance smoothly; Unknown corporate culture, lack of spiritual leader, etc. Some studies have even found that when people with high power motivation work in the same organization, there will be destructive power game in the organization, which will significantly affect organizational performance. All of these factors clearly point to the end of the dual-core/co-ceo model.
The demise of the dual-core/co-ceo model at several leading companies seems inevitable, with every indication that the model is coming to an end.
Dual-core model is not poison for corporate management
But are the drawbacks of the dual-core, or co-ceo, model irreconcilable? Is this kind of management still possible?
In fact, successful applications of this model are not uncommon. In July 2020, Netflix (NFLX) announced the appointment of Chief content Officer Ted Sarandos as co-CEO, joining former CEO Reed Hastings to lead the company. In the same year, Ping An China announced the appointment of Yao Bo as the company's co-CEO, forming a collective leadership team together with Xie Yonglin and Chen Xinying. In 2017, SMIC hired Liang Mengsong as co-CEO and former CEO Zhao Haijun to lead SMIC, a pattern that continues today. Meanwhile, in 1997, there were six pairs of co-ceos at Fortune 1,000 companies tracked by Fortune magazine; In 2000, there were 15 pairs of co-ceos in the Fortune 500; By 2019, 13 of the Fortune 1,000 companies had adopted the co-CEO model. And fortune 1,000 companies with co-ceos had an average annual total return of 28% from 1997 to 2019, twice the average for S&P 500 companies over that period.
It can be seen that the application of "dual core" model or co-CEO model is not the "poison" of company management, and even this model has advantages that other models do not have:
Give full play to the advantages and expertise of dual core/co-CEO. Mr Zhan, Bitmain's co-chief executive, is in charge of chip design, while Mr Wu runs the digital currency business. Zhan Ketuan led the technical team to develop the "Ant mining machine" once occupied 70% of the global digital currency ASIC mining machine market. Wu is believed to have led bitcoin's most famous "fork," which led to the creation of BCH, a new digital currency (ranked among the top 10 digital currencies in terms of market capitalization). Between 2013 and 2018, bitmain's co-CEO system worked well, and the company's market value kept climbing, at one point exceeding $50 billion.
Share the stress of work. At Netflix, for example, one of the reasons ted Sarandos was promoted to co-CEO was to share the management burden of reed Hastings. Adopting the co-CEO system gives Sarandos more time to focus on Netflix's content production and oversee the company's vast portfolio of original programming and entertainment, while Hastings will have time to focus on overall strategy and technology.
In the form of combination, facing the challenges of The Times. In a survey of 150,000 leaders and 795 investment institutions, Korn Hay found that collaboration and trust in others are essential qualities. The correlation between independence, aggressiveness, decisiveness and control in the traditional competency model and the overall enterprise performance is gradually weakened. In the era of VUCA, the requirements of leaders for business success have become very complex and changeable. It is great to find leaders who are perfect in all aspects, but it is undoubtedly a feasible strategy to face the changeable market environment together in the form of combination.
Reduce leadership risks. Common leadership risks include independence and assertiveness, risk-taking, unpredictability, perfectionism and so on. The "dual core" model or the co-CEO model can reduce the emergence of leadership risks and the derailment risk of enterprises through the mutual restriction and supervision of ceos.
How to build a benign dual CEO model?
Dual core/co-chief executive mode is not a corporate governance system, do not try to look from the market data used these dual core/co-chief executive mode of the company's performance is not bad, also have successful application cases at home and abroad, at the same time it still has a lot of can't realize the advantages of single core mode.
The choice of corporate governance mode is not the decisive factor of enterprise performance, but the important thing is that enterprises should choose the appropriate management mode at the appropriate stage of development. For enterprises that practice dual-core/co-CEO mode, there are six suggestions for reference and discussion before or during implementation:
Flexible application of dual core/co-CEO mode according to enterprise characteristics. According to Research by Matteo Arena, a professor at Marquette University, the market tends to respond well to the adoption of co-chief executives in family-run start-ups or mergers. For example, Meituan and Dianping set up joint chief executives at the initial stage of the merger, who were independently responsible for relevant businesses to stabilize internal and external confidence.
Implement the dual core/co-CEO model periodically. The dual core/co-CEO system is often suitable for specific development scenarios, such as the early stages of a merger, periods of high volatility in the market environment, or periods of talent disruption. Companies need to constantly judge whether they need to implement the co-CEO system and how long they should maintain it based on their development conditions. According to Fortune magazine, the average tenure of co-ceos of Fortune 1,000 companies is 2.1 years, which is shorter than the average tenure of ceos of Fortune 500 companies, which is 4.9 years.
Pay attention to the unity, uniform quality of enterprise culture. There are five core elements in the composition of corporate culture, which are corporate environment, values, heroes, cultural rituals and cultural networks. Compared to single-core companies, dual-core companies need to be consistent in unifying their values and creating a common hero.
Values are the deep criteria that drive decisions and actions. Dual-core companies need to find the congruences between their values and then generalize them to all levels of the company. Hero is the model of enterprise culture, which embodies the essence of enterprise culture with specific images. In a single-core company, the hero and the head of the company tend to be one. In a dual-core company, the management team needs to think about how to create the hero to promote and form a corporate culture that permeates all levels.
Identify dual core/co-CEO roles and scope of authority and communicate them clearly to employees. The clear division of role positioning and power scope is on the one hand to clarify the ownership of the highest decision-making power of relevant matters, on the other hand, to avoid the occurrence of "joint responsibility, no responsibility". At the same time, the relevant information is clearly communicated to employees at all levels, so as to avoid employees to fall into the trap of "multiple management" without meaning.
Determine in advance how to deal with and promote problems when the concepts of dual core/co-CEO are different. When the decision content is task-centered, each management role can judge the ownership of authority and responsibility through clearly defined responsibility boundaries. However, when the top management is faced with a problem-oriented problem, there may be a fuzzy area of what solution to adopt and what authority and responsibility each management role assumes. Dual-core/co-CEO companies need to be clear in advance about how they will operate as they move into uncharted territory, especially the extreme question of how the organization will move forward when the dual-core is at odds with each other.
Ensure that the dual core/co-CEOS communicate with each other in a timely and candid manner to reduce discord caused by information deviation. Explaining the background and thought process of your decision to others may not be in the habit of senior leaders, especially those at the CEO level. However, only with high frequency and all-round communication can the contradictions caused by information from both sides be avoided as far as possible in dual-core mode. Furthermore, according to the leadership quality survey of Brilliance Hay Group, the core leader's collaboration ability is highly correlated with the ability to build trust and the overall performance of the enterprise. Improving leaders' willingness to communicate and fixing communication methods through mechanisms can improve the success rate of dual-core mode.