Tags: Oracle | Ellison | CEO | Blackberry

Oracle Choosing Two Co-CEOs Risks Falling Into BlackBerry Trap

Friday, 19 September 2014 09:28 AM

Oracle Corp., by naming Mark Hurd and Safra Catz as co-chief executive officers, risks following the wayward path of BlackBerry Ltd. and other companies where dual chiefs failed to mesh.

“It’s inherently unstable, you create a two-headed monster,” said Jeff Sonnenfeld, a business professor at Yale University. “There’s lack of clarity. When they’ve tried it at many places it’s been inelegant.”

Two CEOs run contrary to the traditional corporate model that the fortunes of a company ultimately rely on the decision- making acumen of one leader, not a committee.

BlackBerry’s co-CEOs, Jim Balsillie and Mike Lazaridis, stepped down in 2012 after they failed to keep its market share from evaporating and restore investor confidence in a new operating system. This year, disagreements between Publicis CEO Maurice Levy and Omnicom Group Inc.’s John Wren on how to share the top job scuttled the proposed $35 billion merger of their advertising companies.

Not all co-CEO arrangements end badly. The model can be successful when the founder is involved or the company is in crisis and needs skills divided between two executives, said David Larcker, a professor at Stanford University who studies governance issues.

“It’s a nuanced situation and fairly unusual,” he said. “If it were ideal, everybody would have two.”

Steve Ells, Chipolte Mexican Grill Inc.’s founder, for instance, shares the CEO job with Monty Moran. Other companies that split the top role include Deutsche Bank AG, with Juergen Fitschen and Anshu Jain.

Temporary Situation

In the case of Redwood City, California-based Oracle, the dual CEOs are more likely a temporary situation brought about as part of Ellison’s succession, with one executive eventually taking sole control, Larcker said.

“Safra Catz and Mark Hurd together are a powerful and world-class team,” Cisco Systems Inc. CEO John Chambers said Thursday in a blog posting.

Ellison will become executive chairman and chief technology officer to make way for Hurd, who is currently co-president, and Catz, who is chief financial officer and co-president, the company said Thursday. Hurd is the former CEO of Hewlett-Packard Co. and NCR Corp. Catz has been with Oracle since 1999. Deborah Hellinger, a spokeswoman for Oracle, declined to comment on the dual structure.

‘Sticky Transition’

“It’s going to be a sticky transition,” said Brent Thill, an analyst at UBS who recommends buying the stock. “They were on a paved highway, they went off the highway onto a gravel road, and now they’re trying to find their way to the new road.”

Citigroup Inc.’s power sharing with Sandy Weill and John Reed from 1998 to 2000 is another example of a failed attempt, said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.

“It’s a bad mistake,” he said. “If you have two people in the room, one is going to dominate. It’s best to have an organization run by one, because there’s less confusion. I don’t think it’s a good business strategy.”

The risk is that the two leaders will try to get along and focus on cooperating, rather than innovating and taking risks, such as at Waterloo, Ontario-based BlackBerry, Sonnenfeld said.

Publicis CEO Levy, talking about the failure to find common ground with his counterpart at Omnicom over how to co-lead the combined company, gave a blunt assessment of the peril.

“We were not totally in agreement, to put it mildly, on how to share the responsibility,” Levy said in May as they ended their merger plans.


© Copyright 2021 Bloomberg News. All rights reserved.


   
1Like our page
2Share
StreetTalk
Oracle, by naming Mark Hurd and Safra Catz as co-chief executive officers, risks following the wayward path of BlackBerry and other companies where dual chiefs failed to mesh.
Oracle, Ellison, CEO, Blackberry
575
2014-28-19
Friday, 19 September 2014 09:28 AM
Newsmax Media, Inc.
 
Newsmax TV Live

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved