Co-management: How does that work?

Every time I used to read an announcement about co-CEOs, I always wondered, “How can that possibly work? What happens if they don’t agree?” I was skeptical it could work. Inevitably, wouldn’t a battle of egos emerge, neither one able to seek compromise? CEOs need to make decisions quickly. Wouldn’t they occasionally stalemate, sending the company into a crashing halt, delaying important decisions?

You can imagine my surprise when the person I was recruiting to take over as the CEO of the startup that I had led since inception stated, “You don’t need a CEO, you’re doing a good job.? Maybe you just need an experienced COO.”? I continued to press on that it wouldn’t work so it would just be simpler for him to take over.? He said, “What about ‘Co’?”? I laughed and brushed it aside as a joke, but it turns out he was completely serious.? Over two years later, I’m now a believer in co-management, but it requires a rare set of conditions to work successfully.

The person I was recruiting back in 2020 is Jay Manouchehri , our CEO.? We formally ‘changed’ titles at the end of 2021, but we started working as ‘Co-CEOs’ in December of 2020.? Titles weren’t important to us; the collaborative management approach we developed was all that mattered. Many years of building our startup, along with the typical trials and tribulations punctuated by a global pandemic, and a change of circumstances, caused me to notify the Board in Summer 2020 that we needed a CEO change.? I wrote out a transition plan, an impossible job description, and, with the Board’s permission, started working my network to find someone. Like many things in life and business, serendipity struck. After reaching out to someone I previously tried to hire for a senior role, I was introduced to one of Jay’s bosses when he was running MENA for ABB in the early 2000s. I had a few other candidates in the pipeline so I got the intro to Jay and scheduled a short screening call. I was planning to be on the phone for 30 minutes since I was still in the middle of a pre-vaccine case of COVID-19 and recovering.? That conversation turned into a two-and-a-half-hour call that spanned a broad range of topics.? We talked about technology, our company’s history, Jay’s background, and our values.? It turned out that he was also from New Orleans, which is where we started Fluence Analytics. He even went to Tulane, where our startup journey began as nascent innovations in a lab.??

We started talking regularly after that call.? Initially, we worked together on several ongoing projects I had underway, including a fundraise, a company move, a major product development iteration and a leadership transition.? He said, “You’re doing all of this at the same time? Normally I would do one of these at a time, not concurrently!” I said, “Welcome to startups.? You get dog years of experience for every year in one.”?

As we started working on these projects, we developed a very interesting rhythm.? We started to learn each other’s mental models, processing styles and decision-making approaches.? It was clear that we had very complementary management styles, perspectives and experiences.? The foundation of shared values, mutual respect and some significantly overlapping skills, as well as complementary skills, was very important for what would come.

Jay has a breadth of very valuable experience starting his career in process engineering and advanced process control and working his way up to be an executive in the automation industry.? He was part of launching advanced process control solutions for Honeywell and led turnarounds of business operations in the Middle East and Asia Pacific regions. He also did management consulting and private equity work, in addition to doing various M&A and PMI projects in this capacity and in previous roles.? This diverse mix of experiences was actually the only reason I thought he could survive at a startup at the stage we were with everything we had going on simultaneously, combined with the standard set of limited resources.? Typically, someone who has worked a long time at large corporations, and only large corporations, where they have entire departments to delegate things that fall on the management team at a startup, would not be able to handle the different areas you need to manage as a startup CEO

I would describe myself as a (formerly) young, first-time entrepreneur, firmly bought into the hustle narrative.? Curious, trying to learn fast, quick to act, huge sense of urgency, obsessed with efficiency, speed, and time. Those are all drilled into you, especially when you constantly think of cash, runway, traction and all of the resources needed to get to the next milestone. In fact, nimbleness, speed and embracing calculated risks are big startup advantages so that becomes embodied in the management approach.? I was cognizant of making sure roadblocks are removed so each person on the team is free to execute and not blocked by decisions i.e. “bureaucracy”.? I was always working on the vision, customers and fundraising but needed help growing as a leader.? By the time Jay got to me, I had already done a lot of growing in that area the old fashioned way, by making mistakes. There were additional challenges in getting the team to gel, and the company needed a big change.? One year before Covid-19, I knew we needed to make a move to Houston for various reasons, access to talent being a major one. We had already made the decision with the Board by the time Covid hit.? Then, like everything else in a startup, you shift gears to manage through a new crisis, this time a global pandemic.

Jay’s experience quickly paid off as he is one of the best strategic thinkers that I know.? First was to add a circuit breaker on decisions. Jay inherently approaches many issues from a risk minimization perspective. Slowing down decisions was a major change for someone like me who was constantly processing data and making decisions quickly, primarily focused on the upside as opposed to the downside.? This is great for speed, but isn’t always optimal.? The balance of Jay being conservative and methodical while I pushed to be fast and efficient was tremendous, but not for the faint of heart since it can be frustrating at times.? Our daily morning and evening bookend calls of the things that happened that day, or that we were working on and dealing with, became the first proving ground for our newfound co-management approach.? There were usually a number of major and minor items that were worth getting each others’ thoughts on and that was how we would sync.? What’s on your agenda? XYZ. I also wanted to discuss X and Z and also had ABC.? Then we’d dive in with our current best thoughts on the issue, and the other would weigh in. For big items, we’d sync, usually with fairly different perspectives, discuss a lot, park it and then pick it up at the next morning sync.? Then we’d have one of three outcomes for these key decisions:

1.? ? We both came to the same new decision melding bits from each input – easy! This means it’s the best approach.

2.? ? One person ended up liking the other person’s idea better and often with some additional polishing from the other person we’d end up with a much better approach.

3.? ? We were still not quite convinced either way and needed a little more time to get there – punt the decision to the next sync.

This is important to note, because in a co-management system like this the only way we move is if we both agree.? Hence my original challenge with the approach when I first thought about it.? What if they disagree?? The real result was that most of the time we would end up with #1 and #2. ? In the very rare cases where we couldn’t get to a jointly agreed solution, we would defer to whoever had the better vantage point for the decision e.g. who had the key relationships, more experience with similar situations, etc. This process, while certainly more inefficient than just running and gunning, vastly improved our decision making, strategy and approach to issues.? We calculated qualitatively that our decisions were 1/3rd to 2/3rd improved over one person making it simply because of how different the decisions were on the other side.

Which then brings up a key next point, how many people have the shared values, respect and patience to disagree, adapt to each other’s styles, and continue working on a problem until a joint solution is shared? And only proceeding once everyone is comfortable with it? Patience is a virtue here, because it can take a lot more cycles and effort to get alignment.

Summary of what it takes for co-management

Mutual respect and full trust?

• This means complete respect for each others’ opinions and ideas.??
• No judgment at all no matter how improbable, unworkable or insane the idea proposed by the other person.? In those scenarios it’s simply the other person’s job to indulge it and point that out.?
• A willingness to rely completely on the other person. If they say they will do something, you take it to the bank and don’t think twice unless they ask for help.

Aligned personal and business values?

• Open mindedness, listening to different viewpoints, seeking to be challenged, admitting when wrong and changing course when presented with better data.
• Embracing a collaborative mindset with a free flow of information, promoting teamwork, seeking input and ideas to find the best ones.?
• Empathy for people, alignment on how to treat employees, deal with customers and actively adapt management style when needed.
• A backdrop of curiosity and perpetual learning drives the internal and external dialogue. Jay and I were both raised in similar environments, academic households, where education and learning were highly valued and demonstrated.? Seeking to understand comes second nature. Knowledge, data, information and pursuit of the truth are powerful drivers. This fuels the urge to question and learn.
• Continuous business and personal improvement - sharing books, ideas, articles, meditation practices, you name it if someone thinks it is worth sharing, it is shared.

No ego

• Open and regular communication, typically multiple calls per day. In some cases, depending on the personality and work styles, a lot of this could be done asynchronously with less direct interaction, but we found that real-time interaction and rapid idea iteration yielded the best results.
• Candid feedback and not letting issues fester.
• The primary objective is to constructively search for the best result for the business.

Sharing a common vision for personal and work impact

• A personal design for living thoughtfully.
• Emphasis on creating value internally and externally by focusing on customers, team, culture, technology.
• Working to deliver a positive impact to the world through technology, relationships, mentorship and giving back.

Both complementary, synergistic and overlapping skills

• Being able to step in for each other in various areas where needed without missing a beat.? An example of this was identified early on in the partnership. We worked around the clock through the holidays during Christmas and New Years at the end of 2020, and in the middle of the pandemic, to sync up.? And it paid off right away because my son was born a couple weeks later and ended up in the NICU for 2 weeks.? Because we had invested so much in the sync up, and had enough overlapping skills, Jay was able to step in and take the lead just one month into the role while I worked at a reduced pace in the background and spent time with my family.?
• Bringing different perspectives and viewpoints as noted previously.? The young entrepreneur, industry outsider paired up with the experienced industry insider.? Without all of the conditions above, this partnership would be very difficult to pull off as co-management.??
• From a skills perspective, having complementarity is critical to any partnership to get the full benefit.? However, having overlapping and synergistic skills are underrated for a successful partnership.? Especially in a co-CEO approach where you have to manage all aspects of the business.? Synergistic in this case means that there is some overlap, but the combination of both people gives you a multiplicative output in that area. This is different than a CTO/CEO or other type of co-founder relationship seen in startups.

Startups are hard - sharing the responsibility (and stress) evenly can be a life saver.? ‘Lonely at the top’ is solved in this approach and works better than just relying on mentors and advisors. You also get a lot more leverage out of mentors and advisors when two people triangulate.? One of the hardest parts is managing the extra time and cycles required to perpetually generate alignment.

I could go on and expand this list and provide a lot of examples and details, but this captures the essence sufficiently for now.? When we have more time, we’d like to follow up with more research into co-management.

Conclusion

Our experience was a bit unique and in some ways serendipitous.? I don’t know if there is a formula to replicate it, but in our case it worked and continues to work very well.? The foundation of shared values, passion, respect and vision were critical.? The complementary experiences (corporate + entrepreneur) and skillsets were where we saw the most leverage. Additionally, given the industry we were in and the amount of change we were undergoing, this was a unique approach to navigating a very intense period at our startup.? This combination was the only reason we were able to successfully drive the business forward through a sea of change during a pandemic and eventually exit with the best partner for our technologies and customers.? It wasn’t a straight line and not everyone internalizes this approach so it can take some time for others to adapt to it. It’s not for everyone, but for us the results are far better than either one of us can achieve individually.

#startups #management #managementstyle #comanagement #techinnovation #coCEO #hardtech

Additional Reading on Co-CEOs

https://techcrunch.com/2021/05/24/2-ceos-are-better-than-1/

https://hbr.org/2022/07/is-it-time-to-consider-co-ceos

https://hbr.org/2020/09/is-ceo-a-two-person-job

https://www.entrepreneur.com/leadership/the-pros-and-cons-of-the-co-ceo-model/428759

What does ChatGPT think of co-management?

After writing the piece above, I made a number of queries in ChatGPT regarding co-management just for fun. The results are below.?

“What are some good use cases for a company to use a co-CEO management structure?”

1. When a company is in a period of rapid growth or transition: Having two leaders can help the company navigate changes and ensure that all aspects of the business are given adequate attention.
2. When a company needs complementary skillsets: If the co-CEOs have different strengths and expertise, they can complement each other and provide a well-rounded approach to leadership.
3. When a founder wants to bring in a new CEO: In this situation, the co-CEO arrangement can provide a smooth transition as the founder steps back and the new CEO steps in.
4. When a company is facing complex challenges: Having two CEOs can provide additional resources and perspectives to help solve complex problems and make informed decisions.

NOTE:? We met all four criteria!

“What are some good sources to learn more about co-CEO structures?”

Here are a few examples of studies that discuss the pros and cons of having co-CEOs:

1. "The Co-CEO Structure: A Double-Edged Sword" by Michael Useem, David Wise, and Xiaoyan Zhao in Harvard Business Review (2016)
2. "Co-CEOs or Solo CEOs? The Performance Effects of Top Management Structure" by Kristian R. Moen and Trond Rand?y in Journal of Management (2009)
3. "The Pros and Cons of Having Co-CEOs" by Eric Matuschek in MIT Sloan Management Review (2018)

These studies provide insights into the impact of co-CEO structures on organizational performance, decision-making, and leadership dynamics, among other factors. I would suggest conducting further research to find the most relevant and up-to-date information for your specific needs.

“List the pros and cons of having co-CEOs”

Having co-CEOs run a company can have both advantages and disadvantages.

Pros:

1. Shared Responsibility: Having two CEOs means that the responsibilities of running a company are shared, reducing the burden on any one individual and potentially leading to better decision-making and problem-solving.
2. Diverse Skillsets: Co-CEOs often bring different skills and perspectives to the table, which can lead to a more well-rounded and balanced approach to running a company.
3. Increased Creativity: With two people leading the company, there is often more room for creative solutions and outside-the-box thinking.
4. Better Decision Making: Two CEOs can provide a check-and-balance system for each other, helping to mitigate risks and make more informed decisions.

Cons:

1. Conflicts: Having two CEOs can lead to conflicts over decision-making, division of responsibilities, and power struggles.
2. Lack of Clear Authority: With two people in charge, it can be unclear who has the final say in important decisions, which can lead to confusion and frustration among employees and stakeholders.
3. Difficulty in Building Relationships: When there are two people in the top leadership position, it can be challenging to build relationships with employees, partners, and other stakeholders, as there is no single, clear point of authority.
4. Complex Communication: Effective communication between two co-CEOs is essential, but it can be difficult to maintain good communication and collaboration when both individuals have demanding schedules and competing priorities.

In conclusion, having co-CEOs can have both advantages and disadvantages, and the success of such a structure depends on the specific individuals and the company's culture and goals.