We’re commonly asked about the number and selection of business owners and partners, especially in start-ups. In addition, people often share the latest business idea they’ve heard about and how they’re trying to apply it in their business – without thinking it through.
For example, I recently came across the article “Why 5 CEOs Are Better Than 1.” While multiple CEOs isn’t conventional wisdom, there are always eye-opening exceptions to the rule and we need to understand why. This particular management team is made up of brothers and high school friends with each heading up a different functional area of the business. Their approach seems to work, especially for visibility, communication, and employee accessibility. I can see where their energy would rub off on their workforce.
However, I believe those management teams aspiring to copy this approach should understand it better first. A clearly documented operating agreement is a must and I’m betting this team has one. They appear to have a shared vision and strategy as well as a clear understanding of roles, responsibilities and the decision making process. These brothers and long term friends also have a strong team foundation with complementary and required skill sets.
In contrast, we’ve experienced local partners joining forces somewhat randomly with redundant or missing skill sets. Strategy and decision making authority are unclear. Investments and compensation in the business aren’t documented. Recruiting and vetting processes are overlooked. Friends, family, and love interests are involved, because they are “people we can trust.” Unfortunately, these latter teams can find themselves stuck in the entrepreneurial quicksand of “management by committee,” management by emotion, or both. Some have even ended up in court over differences. The damages included:
– Setbacks measured in years
– Damaged owner relationships
– Loss of reputation with customers and suppliers
– Family, marriage, and financial stress
– The death of the business entity itself
– Credit damage from defaulted loans and/or bankruptcy
Should your business have 5 CEO’s or partners? I doubt it. Are there lessons here for you and me regarding teamwork, leadership, and leadership processes? Absolutely. As always, learn and glean from others – do what’s best for you.
Edward Livesay
