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Arindam Chaudhuri, Editor-in-Chief, 4Ps B&M Chief Consulting Editor's Desk
Rajita Chaudhuri
A.Sandeep Editor's Desk
From The Editorial-in-Chief's Desk

Editor, 4Ps B&M
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Does having two Co-CEOs work for a company?
How good is a co-ceo for a company’s sales, profits, marketshare, and shareholders? I found out the answers, and wasn’t at all surprised...
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In the weeks that followed the first signs of infertility in the US home mortgage market in the new century, panic gripped boardrooms in America Inc. According to the US Government’s Department of Commerce, these dates correspond to the Aug-Sept months of Q3, 2008. Then, the shock was expected, accepted and came with reasons. [Till Q3, 2009, the US economy continued going downhill with GDP growth recorded in the four quarters leading to Q3, 2009: -2.7%, -5.4%, -6.4% and -0.7%]. Corporations which till then had been a symbol of America shining, had fear in their minds – they wanted to avoid losing the pounds gained since 2001. And those who had been doing quite the opposite, sensed a threat to their very existence. One of them was Motorola.

Motorola then, had become a shadow of its glorious past. Between 1994 and mid-2008, Motorola’s global market share in the mobility devices market had plummeted from 45% to 9.5% (Gartner). The company had clearly missed the leap from analog to digital. It failed to introduce digital phones, missed out on customer interests when their attention turned towards more software-than-hardware handsets, and its plodding culture and bureaucracy within the ranks resulted in non-exciting launches in the decades leading to 2008 (except for the RazR). At the company – largely regarded as a victim of innovator’s dilemma – cancellation of projects and firing became the order of the day. Finally, after having lost 76.29% of its m-cap since Jan 2000 (from $109.14 billion on Jan 2, 2000 to $25.88 billion on Aug 3, 2008), on Aug 4, 2008, it planned a boardroom surgery. Two men were chosen to rule the fast-disappearing island kingdom and better what Edward Zander had tried with the RazR launch. Sanjay Jha and Greg Brown were the two co-CEOs. The move backfired.

Since Motorola became a victim to the co-CEO leadership practice, its decline accelerated. Until Q4, 2010, the company’s share in the worldwide mobile market – despite an 888.8% rise in sales of Android handsets (which was Motorola’s bet) – had fallen to 2.1%. And how did the co-CEOs do worse for the company than the much criticised authoritarian-and-bureaucracy-promoting CEO Zander? While under Zander (between Jan 2004 and Jan 2008), the company had gained 1.2% in market share (to touch 17.5% for Q4, 2007), with its m-cap too appreciating by 24.0% to touch $39.01 billion (as on Dec 31, 2007), under the two co-CEOs, within just a year-and-a-half (between Q3, 2008 and Q4, 2010), the company besides losing 7.4% of the global market share, eroded more than half (55.56%) of their shareholders’ wealth – to touch a lowly $9.26 billion as on December 31, 2010. While everyone – from a near-dead HTC to the ever declining Nokia – moved ever so swiftly to capture opportunities in the 4G market, Motorola, under the duo remained every so dedicated to its engineering and careful to market culture [rather, slow – proof is the delayed launches of its Droid Bionic and Xoom 4G update]. This co-CEO arrangement suffered from delays in decision-making. In an interview with BusinessWeek, Jha had confessed that he takes about “90 days to assess a situation before taking any final decision.” Naturally, much time is spent in convincing the other co-CEO – Brown. 90 days to take any call in the world of mobility beats any logic. The Economist, in a Mar 2010 piece titled, ‘The Trouble with Tandems’, puts the problem with co-CEOs theory rightly: “Joint stewardships are all too often a recipe for chaos. Rather than allowing companies to get the best from both bosses, they trigger damaging internal power struggles as each jockeys for the upper hand. Having two people in charge can also make it tougher for boards to hold either to account. At the very least, firms end up footing the bill for two CEO-sized pay packets.”
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