Are Two C.E.O.s Better Than One? (Update) | Freakonomics Radio

Episode Overview

• This episode explores the growing, yet still rare, business trend of having two C.E.O.s instead of one, examining whether this model leads to better company performance.
• The discussion features contrasting perspectives from two "CEO whisperers": one who champions the co-CEO model based on his research, and another who argues it's an inherently flawed structure.
• The episode analyzes real-world examples, including the successful partnership at Atlassian and the high-profile failure of the co-CEO structure at BlackBerry (formerly RIM).
• Research on "pair programming" in software development is presented as an analogy, suggesting that collaborative work can lead to higher quality output and greater job satisfaction.

Key Concepts

The episode discusses the pros and cons of a co-CEO leadership structure. Proponents argue that two heads are better than one, allowing for a division of labor, complementary skill sets, and double the capacity at the top. This can lead to better decision-making, higher shareholder returns, and increased job satisfaction. Skeptics, however, argue that the model creates ambiguity about who is ultimately in charge, violating the principle of "unity of command." They suggest it often serves as a temporary retention strategy rather than a true partnership and can lead to disastrous stalemates during a crisis.

Quotes

• At 05:01 - "If you were a hedge fund and I said, 'Hey, I can give you a certainty of a 40% better total shareholder return,' you'd be the biggest hedge fund in the world." - CEO advisor Mark Feigen explaining the dramatic outperformance he found in companies led by co-CEOs in his research.
• At 26:15 - "It was pretty obvious that we were co-CEOs." - Scott Farquhar of Atlassian explaining that the title came naturally after years of equally sharing all responsibilities with his co-founder, Mike Cannon-Brookes.
• At 27:39 - "I think it's one of our superpowers as a company." - Mike Cannon-Brookes of Atlassian describing the benefit of having a trusted partner to navigate difficult situations, like the 2008 financial crisis.
• At 33:12 - "There's a lot of trouble with it. There's role confusion as to who should be the lead spokesperson. Unity of command makes a lot of sense." - Yale professor Jeffrey Sonnenfeld expressing his strong skepticism about the co-CEO model, arguing that a single, clear leader is more effective.
• At 40:00 - "Why would you ever have two people doing something one person could do? That must be twice as expensive." - Computer science professor Laurie Williams describing the common criticism leveled against "pair programming," which her research later showed to be economically beneficial due to higher quality output.

Takeaways

• Consider the model, but choose your partner wisely. Successful co-CEO partnerships, like successful marriages, require individuals who are compatible, have overlapping values, but possess complementary, not identical, skills.
• Crisis reveals the cracks. A co-CEO structure can thrive during periods of growth but may fall apart during a crisis if the partners have fundamental strategic disagreements, as seen with BlackBerry.
• Two heads can be better and happier. Evidence from pair programming suggests that working in pairs can lead to higher-quality work and greater personal satisfaction, challenging the notion that leadership must be a lonely endeavor.