These eight famous pairings present a spectrum of the unique qualities and dynamic teamwork necessary for the effective management of innovative organizations. >>>
Sherlock Holmes had Dr. Watson and Michael Jordan had Scottie Pippen. The rest was history, of course. And while many mammoth corporate success stories are often the vision of a single captain of industry—a Henry Ford, a J.P.Morgan, or a Larry Ellison—in a few instances they are the work of a tagteam of individuals who complement each other’s strengths and may, just as importantly, sharpen each other’s instincts for distinguishing opportunities.
Such is the case with the iconic business duos presented here. These eight famous pairings—one of them infamous for its failure in the final act—present a spectrum of the unique qualities and dynamic teamwork necessary for the effective management of extremely innovative, complex organizations. A variety of top-tier combinations reveal several variations on the theme that two heads are better than one: some, like Richard Sears and Julius Rosenwald, were marriages of necessity; others, such as Sanjay Jha and Greg Brown, co-CEOs of Motorola, were partnered in hopes of salvaging an ailing organization; still others, like Warren Buffett and Charlie Munger, seemed fated to cohabitate in the same corporate host.
The delicate balance required for a successful top-level tandem power structure is no easy achievement, as evidenced by a string of dissolutions; keeping two big personalities in harmony requires a set of unique personality traits on both sides. “It all depends on how they behave and if they can keep their egos in check,” says Harvard Business School Professor Joseph Bower, author of The CEO Within. “It works remarkably well if you also have strong board members who are able to make it work.” The challenge, as Bower sees it, is living up to the age-old adage of “diversity in counsel, unity in command”: however many leaders a company has, it has to move forward decisively. But while having a single visionary at the helm is often just what a company requires, the breadth of experience and wisdom offered by a pair of equally guided leaders can also have its advantages. “As long as there is cooperation, a pair will bring greater assets than can come from one person’s intellect,” adds Bower.
“Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.” – Warren Buffett, chairman and CEO, Berkshire Hathaway
Today’s activist shareholders urge boards and CEOs to seek a second opinion or appoint a devil’s advocate that can result in what some believe is a bifurcated structure, as evidenced by the recent push for splitting the roles of CEO and chairman. One of the common arguments for not splitting the roles is that it creates confusion about exactly who is in charge. Another is that it hinders the company’s leadership to communicate with one, clear voice. Yet another is that the two get in each other’s way, one reining in the other, forcing a compromised and dulled strategy. However, great business duos learn to sidestep these traps and work together for the greater good of the organization. They improve each other’s ideas without watering them down. They move in concert without stepping on each other’s toes.
The question of what is the optimal executive leadership structure is one the board must answer and be answerable for (though many of the following examples took place before the boardroom had the significance it has today); a director could not find a better starting place from which to view the issue than by looking at the following examples of tandem business success.
“Communication is the cornerstone,” says Belmont University Prof. Jeff Cornwall, who studies business organizational structure. “Successful partners are able to feel comfortable tackling difficult issues without being afraid of hurting each other’s feelings.” Certainly, when addressing high-impact challenges on a day-to-day basis, the best pairings have had a tendency to avoid sugarcoating the issues at hand, and a no-nonsense approach is also required. Says Cornwall, “Partners must have a similar work ethic, and they should have similar values, but not necessarily similar personalities.” Such advice, along with the examples offered below, affirms John Rockefeller’s maxim that friendship founded on business is preferable to business based on friendship. With such an appropriately sober attitude in mind—and with the implicit advice offered by history’s great duos—one should move confidently in building a capable leadership team.
Warren Buffett and Charlie Munger: Berkshire Hathaway
The partnership between Warren Buffett and Charlie Munger has been well documented throughout the pair’s 50-year professional relationship, but for traders, investors, and general profit-seekers at large, their formula for success remains elusive. In their leading roles at Berkshire Hathaway, the two have led investors (and themselves) to steady returns virtually unparalleled in the investment community. Their methods, as the two attest, are deceptively simple, yet their successes have been without peer.
Buffett and Munger are unified in their ability to generate profit for investors in their funds, and the two men share similar investing values that revolve around the simple tactic of targeting undervalued assets and obtaining them. As Chairman and CEO Buffett put it in last year’s letter to shareholders, “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.” However, the individuals behind Berkshire’s success have demonstrated their unique characters, even as they have waged a common investment crusade. Buffett, with his tireless, common-sense approach to investing, his emphasis on wise governance, and his seemingly infinite humor and wisdom, is the prototype for would-be fund kings. His annual shareholder letters offer up world-class insight into the methods by which steady returns are generated, all tinged with the folksy warmth that is no small part of the man’s appeal.
Vice Chairman Munger, long seen as a bit of a “silent partner,” originally practiced law, and has never adhered to the same degree of financial monomania as his partner, having also vested himself heavily in the newspaper business over the years. “Until recently, Munger was almost invisible,” says Bower. Likewise, Munger doesn’t emanate the same friendly glow as does his partner, known well for his bristly remarks made during shareholder meetings. Speaking on Wal-Mart, for example, Munger quipped, “Capitalism is a pretty brutal place. But I personally think that the world is better for having Wal-Mart. I mean, you can idealize small town life, but I’ve spent a fair amount of time in small towns, and let me tell you—you shouldn’t get too idealistic about all those businesses [Wal-Mart] destroyed.” He is, nonetheless, as vital to Berkshire’s success as is Buffett, and preaches much of the same principles, founded on the “basic wisdoms” of mathematics, accounting, and human psychology.
Like many other duos on our list, Buffett and Munger have succeeded perhaps because of rather than in spite of their differing personalities. The proof of this is in the pudding: Berkshire gains have beat out S&P 500 growth by 11.4 percent over the last 43 years, a tremendous investment achievement. Buffett and Munger know investing, and it isn’t a mystery why each new generation seeks to follow their lead.
Richard Warren Sears and Julius Rosenwald: Sears, Roebuck & Co.
As most of us can remember the phonebook-sized catalogs issued by Sears for most of the twentieth century, one might be taken aback to find Alvah Roebuck of the Sears, Roebuck & Co. brand conspicuously replaced here by a businessman whose name may not immediately leap to mind. Richard Warren Sears, widely considered one of the greatest marketing geniuses of American enterprise, co-founded the retailer with the watchmaker Roebuck in 1893, but Sears’ ambition quickly outstripped the modest aims of his partner, who resigned just two years later.
“Sears was a marketing genius, very energetic, almost a huckster, but he wasn’t a good businessman. What Rosenwald brought was system and order.” - Peter M. Ascoli, author
Roebuck’s replacement was financier Julius Rosenwald, who proved more up to Sears’ speed. “Roebuck didn’t have the ambition to stick with Sears,” attests Peter M. Ascoli, author of Julius Rosenwald: The Man Who Built Sears, Roebuck and Advanced the Cause of Black Education in the American South. While Roebuck was content tinkering with watches, Rosenwald shared his new partner’s dream of spreading their brand name across the United States.
The two men were as different as their goals were similar. “Sears was a marketing genius, very energetic, almost a huckster, but he wasn’t a good businessman,” says Ascoli. “What Rosenwald brought was system and order, and he built a platform on which to operate.” Sears’ aggressive marketing quickly moved the company beyond the watches and jewelry of its origins, as the Sears brand came to be identified wit consumer-friendly prices and a diverse line of products. Meanwhile, Rosenwald, with his administrative discipline, kept the operation expanding and the sometimes precarious plans of his partner in check.
This perfect balance of personalities between the co-founder and his vice presidentnaturally-widespread success of the Sears Roebuck & Co. brand during the early 20th century. Sales stacked up, the catalogs thickened, and, in 1906, Sears and Rosenwald took their company public, setting the stage for over a hundred years’ worth of retail prominence. The remarkable success engendered by Sears and Rosenwald demonstrates a single-minded partnership between two very different men, and affirms to leaders the net value generated through complementary leadership skills. This combination of the brilliant, at times chaotic, visionary teaming up with the organized and steady manager has been copied many times to varying degrees of success. One of the best-known examples is the pairing of Bill Gates, the software genius, and Steve Ballmer, his first business manager. Another similar pairing is that of William Durant and Alfred Sloan during GM’s early years in pushing the first wave of automobiles. Durant, the company’s founding visionary, and Sloan, its meticulous organizer, played off each other’s complementary talents in much the same way as did Sears and Rosenwald.
Steve Jobs and Steve Wozniak: Apple Inc.
These days, Steve Jobs is known as one of the most domineering presences in the executive suite and in the boardroom, health problems not withstanding. But the recent dust-up over the Apple board’s failure to disclose the details of Jobs’ illness highlights his individual importance to the company and its potential weakness should he ever falter. It wasn’t always that way. In the beginning, Jobs leaned heavily on partner Steve Wozniak to make Apple one of the first technology darlings.
The pairing of Jobs and Wozniak—two Silicon Valley computer nerds before either term had the significance it has today—demonstrates the success that results when dedication and creative talent are applied in liberal doses. From their beginnings assembling machines in Jobs’ garage, these two entrepreneurs brought personal computers to the American home and workplace. Wozniak was the “engineering genius with a hacker’s ethic,” says Leander Kahney, author of The Cult of Mac. “Jobs brought the vision. He took Wozniak’s ideas and turned them into a business.”
Though Wozniak’s and Jobs’ first “business”—selling illegal telephone hijacking devices to Wozniak’s peers at UC Berkeley—was a bust, when the two set out to build personal computers, they revolutionized the fledgling industry. “Their relationship was harmonious,” says Kahney. “They were a great combination of talents, and they quickly attracted investors.” Apple conducted a highly successful initial public offering in 1980, but profit seemed secondary to the Apple cofounders. “Wozniak was always interested in electronics, and in teaching,” says Kahney. “He’s always been about pursuing personal interests. For Jobs, money is only a means of keeping score; he’s interested in continuing to create new things.”
Though differing personalities have been shown time and again to combine successfully, one thing Jobs and Wozniak have going against them is longevity. Both men departed Apple in the mid-1980s, but it was Jobs alone who returned in 1997, establishing a cult of personality that today defines the company (witness investor panic at his announced leave of absence in January). As Wozniak was never interested in the kind of technological domination that so motivates his fellow co-founder, he has long stepped aside to allow Jobs the reins, showing that even the best partnerships can be fleeting.
Of course, Jobs and Wozniak weren’t the original garage-to-corporate-penthouse success story in the Valley, nor would they be the last. In many ways, their rise mirrored that of Bill Hewlett and Dave Packard 40 years earlier. Like Jobs and Wozniak, Hewlett and Packard fed off each other’s passion for electronic gadgetry. Later, Stanford students Larry Page and Sergey Brin would found Google with a similar partnership based on the mutual embrace of their inner geek.
Sidney Weinberg and Gus Levy: Goldman Sachs
Odds are, former Goldman Sachs head honcho Sidney Weinberg would not approve of being considered anyone’s “partner,” even to a figure so influential on the firm as Gus Levy. Indeed, following his successor’s flattering speech at a company dinner in 1969, the same year his own death forced him out of the firm’s management, Weinberg had this to say: “Those are very nice thoughts, Gus, and I’m glad you feel as you say you do. But don’t you ever forget this, Gus. No matter where I am, I am the senior partner of Goldman Sachs and I run this firm!”
If Weinberg’s rise to power was the classic Carnegie-esque bootstraps-and-janitor’s-pail story, Levy’s rise within Goldman was based on the innovation and creativity that would later lead to the radical revolutionizing of the firm’s operations. Weinberg had an investment banker’s mentality and valued work ethic, stability, and professional respect above all other qualities. Gus Levy was a trader, a workaholic, and dedicated to making as much money for his firm, and for himself, as possible. Said a peer of Levy’s, “He had only one central idea: More!” Together, the two men established Goldman Sachs as a twin-headed Wall Street powerhouse that came to embrace its banking-trading duality, even as the two factions themselves vied for power.
“These were two extraordinary individuals,” says Charles D. Ellis, author of The Partnership: The Making of Goldman Sachs. “Weinberg was smart and tough, no-nonsense. Levy was always looking for the next deal, he was a tremendous worker.” Through his successes as a trader, particularly in the development of “block trading” among investors, Levy eventually managed to make senior partner—but only after a departing Weinberg instituted a managing committee to have one last layer of supervision over the impetuous manager. Summing up their attitudes, Ellis says, “Levy had people call him ‘Gus,’ but to everyone in the company, Weinberg was ‘Mr. Weinberg’ and nothing else.”
The Weinberg-Levy story illustrates that great duos are sometimes forged out of reluctant inevitability. And to be successful, the two don’t even necessarily have to like each other.
Stephen Schwarzman and Peter Peterson: Blackstone
The Blackstone Group has made billions of dollars for its investors, to say nothing of the financial successes of its two co-founders, Stephen A. Schwarzman and Peter G. Peterson. The two former Lehman Brothers cohorts joined forces in 1985 to create what would come to be one of the most successful private equity firms to ever leverage a buyout.
When Schwarzman and Peterson made the revolutionary decision to take their firm public in 2007—one of the first-ever IPOs for a private equity company of Blackstone’s size—they brought the private workings of their buyout empire under a public lens, and in doing so made investors—and the company’s cofounders—rich. Now, as the private equity market sits silent while the world works its way through the recession, the two have been temporarily sidelined. Peterson recently set aside $1 billion of his lifetime earnings to start a charity group, the Peter G. Peterson foundation, which will likely take up much of his attention in the years to come. But Schwarzman, no philanthropic slouch himself—his $100 million donation to the New York City Public Library was among the largest in the city’s history—isn’t likely to recluse himself from the private equity game anytime soon, not while there are still deals to be made.
Despite their gap in age and experience, the relatively younger Schwarzman and the elder Peterson have worked in synchronicity to make Blackstone the powerhouse it is today. “Part of the reason their partnership works so well is that Peterson is very wise,” says Bower. “So he understands what he wants out of the company and it works out well.” While Schwarzman is considered the more influential of the two, with his hearty appetites and active drive for new deals, it was Peterson, with his business connections and rock-solid work ethic, who provided the foundation for Blackstone’s takeoff. Any business leaders that understand each other so well will be primed for similar successes.
Sandy Weill and Jamie Dimon: Citigroup
While many initially characterized the professional relationship between Sandy Weill and Jamie Dimon as the archetypal father-son business ascension plan, most were shocked when the young upstart “ran away from home” at the youthful age of 42. Before Weill’s and Dimon’s tumultuous breakup following the epic formation of the Citigroup banking conglomerate, the two had blazed through the financial industry, orchestrating a slew of mergers and buyouts that brought together investment, trading, insurance, asset management, and real estate under the two leaders’ broad umbrella. The scope of the men’s operation was vast, and, as a tandem, Weill and Dimon seemed poised to conquer the world together.
Individually, Dimon and the elder Weill were cut of the same cloth, both demonstrating throughout impressive careers their drive, dedication, and hunger for expansion. Weill, bootstraps in hand, was something of an introvert, preferring financial statements and charts to the pressing of flesh. However, such insularity didn’t beget any degree of humility, according to some. “He’s a narcissist,” says Stanford University Professor of Management Charles O’Reilly. “He’s grandiose, often manipulative, and he believes that he alone represents the company. That can be dangerous.” The protégé Dimon, though no such self-proclaimed icon, is well known for his bold and often disarming managerial style. These two distinct personalities melded amiably until increased tensions and in-house squabbling led to Dimon’s resignation in 1998—just months after Citigroup’s debut. Following his departure, Dimon ultimately moved along to become CEO and Chairman of JPMorgan Chase—one of the few Wall Street institutions to hold its position during the recession, largely due to hiss shyingaway from mortgage-backed securities—while Weill stepped down from his empire in 2006. Though all good things of course must end, the 16-year partnership between Weill and Dimon stands as one of the most successful business relationships in history, and should serve as a model for anyone looking to change the world.
Crowded in the Corner Office
While many companies have experimented with the co-CEO leadership structure, there has been no more prominent example than the 64,000 employee-staffed Motorola, which last August brought in former Qualcomm Chief Operating Officer Sanjay Jha to join President Greg Brown in helming the telecom. The two co-CEOs are veterans of the burgeoning telecom and mobile phone markets, with about fifty years’ technology experience between them. Brown, who serves as the operational leader of the pair, has served with Motorola since 2003. Jha, the newcomer, is just a year into his new job, and is widely regarded as the cunning engineering mind of the two, intelligence he’s going to need if he wants to justify to shareholders the $104 million in total compensation he received for his five months of service in 2008.
The tasks facing Motorola in the coming years are challenging; the telecom has seen its market share dwindle in the face of Apple’s domination of the mobile devices field—Motorola suffered net income losses of $4.2 billion in 2008. Motorola and Jha had intended to spin off the mobile devices arm into its own business this year, but the plans have been delayed, according to Jha, “due to the macroeconomic environment, stresses in the financial markets, and the changes under way in mobile devices.” With the company in a precarious position, it will be up to Brown and Jha to prove to doubters that two heads are in fact better than one.
Though Brown and Jha are probably the most well-known co-chief executives of the moment, their shared leadership is by no means the only example of this uncommon executive structuring. Many companies have experimented with the co-CEO arrangement, with varying degrees of success. Start-up technology companies, which generally aren’t managed by leaders with extensive corporate experience, very often split the top role, with Blackberry developer Research In Motion and co-heads Jim Balsillie and Mike Lazaridis being a prominent example. The move is also often very appropriate for smaller businesses that require healthy interaction with clients from the top level. Says Barry Sloane, co-CEO of New England regional savings & loan, Century Bank, “It assures that there is always CEO representation on-site, and we are client-driven, so there are twice as many of us to handle the client obligations that come up every day. It comes down to having more resources and time to give to the cause.”
Others are more critical of the arrangement, and question whether such a structure is truly beneficial to the company. “The co-CEO set-up strikes me as unstable,” says Stanford University’s Charles O’Reilly. “The notion of allocating roles and responsibilities between two senior managers is quite reasonable, but if you try to say they’re both equal, it raises a lot of questions, especially when ego gets into play.” Harvard’s Joseph Bower agrees that such a top-tier structure can be uncomfortable: “It strikes me as an awkward relationship; it can be confusing, and, to me, it represents ambivalence.”
Sloane points out that many larger organizations, particularly investment banks, split other high-level management positions—having dual fund managers, for example. “It can be complicated when you divide the business units and their reporting structure,” he concedes, “but I think it’s an optimal configuration.” Many successful companies have experimented with the co-CEO structure in the past, including Charles Schwab, SAP, Martha Stewart Living Omnimedia, and Imax. These four, however, have since backtracked to a standard CEO-and-chairman leadership structure. For Motorola, it will be up to the management to determine which set-up is right for the company’s needs.
Birds of a Feather
Though a winning business duo can be symbiotic, with two partners feeding off of each other’s motivation and wisdom to take a company to success, there is also a danger of two corrupt partners allowing each other leeway to breach the boundaries of ethical conduct. Such a relationship was clearly at play between Kenneth Lay and Jeffrey Skilling, whose combined leadership at Enron resulted in the greatest accounting scandal in modern times. “Corporate corruption doesn’t happen overnight,” says Professor Jeff Cornwall of Belmont University. “It builds from the values partners share, and the common behaviors they model from each other.”
Much in the same way successful business pairs utilize distinct characteristics of each partner, Lay and Skilling had very different personalities, but, unfortunately, it was the perfect mix to nurture a corporate culture that favored cutting corners to get ahead and winning at all costs. CEO Lay, gregarious and generous at heart, was overly susceptible to peer influence, despite his intelligence and knowledge of the energy industry, says Sherron Watkins, whistleblower née Vice President of Corporate Development at Enron. ”He wasn’t very hands-on,” says Watkins, “and this allowed Skilling free rein.” Skilling, whose arrogance and recklessness grew along with Enron’s inflated stock price, came to institute a company culture that ultimately led to ruin. “He ended up with yes-people around him, and didn’t want to hear that something should not be done,” says Watkins. “He wanted things accomplished at whatever cost.”
“The danger is that a bad partnership tends to bring in similar people, and it has a profound effect on company culture,” says Cornwall. “These common behaviors tend to shape the values of everyone around them.” Just as a virtuous partnership at the top of the ladder can inspire those beneath them, a vicious pairing can drag the entire company down. As the billions of investor dollars lost and the more than 100,000 jobs eliminated (including those within dissolved accounting firm Arthur Andersen) attest, a marriage based on dysfunction can have dire consequences.
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