John Ward is a co-founder of The Family Business Consulting Group, Inc., and is co-director of The Center for Family Enterprises at Northwestern University’s Kellogg School of Management (Chicago, USA) where he is Clinical Professor of Family Enterprises. Ward teaches and studies family enterprise continuity, ownership, governance and philanthropy.
Did you know that about 30% of all family businesses say they are considering co-CEOs in the future?
While not recommended by management textbooks, the idea has worked well sometimes. For example, the German Miele white goods producer has had co-CEOs for generations!
The split up of Motorola this week into two companies ends a co-CEO situation that has existed over the past several years. In separation they were asked how the co-CEO model had worked. They said several things:
It was tough for both of them.
They knew being sole CEO will be much more focused and fast.
It can work well for a limited, purposeful period of time.
To work requires lots of communication, communication, communication.
Tony Leahy, the retiring CEO of the UK’s largest retailer, Tesco, offered great insights to what’s different about family firms. Though Tesco is no longer a family business, he explained, “Tesco began life as a family business and one of our strengths is that we’ve not forgotten the values and approach we inherited from our founder.”
He goes on [the underlining is mine]: “We have a stable management.” In fact, he and many of his top management colleagues spent their entire careers at Tesco. “Our employees are encouraged to own a stake in the company; and there’s a willingness to take risks and to plan for long-term value creation… they enjoy the benefit of loyalty, long-term thinking and the courage to make bold decisions. Add to that a slim line, tight management and the stability families can bring and you have laid strong foundations for a powerful company.”
He closes with a profound observation about the distinction of family company ownership when he asks fund managers who invest in listed companies to consider, “Next time you’re in a meeting with management from a company…try referring to them as ‘we’ rather than ‘you’.”