How many CEO’s to screw in a lightbulb

closeThis article could be out of date, as it was published 11 months 20 days ago.

Is it just me or has the CEO title recently fallen pray to title inflation?

More and more companies seem to find economies of scale in appointing CEO’s by the dozen, one per division, one per continent or even one per country.

It used to be pretty clear that if you had a meeting with the CEO, you spoke to the guy in charge (back then in most cases it actually was a guy, although recently – especially in tech – we saw more and more gals in the top CEO position).

The CEO was the one person where all the different reporting lines of modern matrix management came together and who could actually make decisions on their own (not saying the good ones did, but they could).

Famous it the card saying “Ï’m CEO, B….” featured in the movie The Network.

Also meetings with “the CEO” were different.

First of all they generally tend to happen on the top floor (of the office, the hotel or whatever the location of the meeting was), and the road to the meeting room was full of rather nervous staff (nowadays we would call it an entourage) huddling people in and out of the inner sanctum and giving pointers like “Best not to run over as we have to get him/her to his (typically private) plane right after”.

The CEO title also – at least in Europe – was deemed only appropriate if you were at the head of a fairly large and preferably multi-national organiwation.

Sure, startups of just two people sometimes had democratically divided all available CxO titles among themselves (Hi, I am the CT/F/MO and this is Bart who is the COO and CISO). But since founder sounds so much cooler, we nowadays see less and less of that.

Also founder has the distinct advantage that you get to keep that title if you grow (Have a look at the movie ”Jobs” to get an idea of the process I mean).

Soon the CEO title may go the way of the VP title, which was rapidly enhanced by adding terms like Senior, Corporate, Executive and of course Senior-Corporate-Executive VP. Let me know if you get the first card that says Sr. or Corporate CEO.

Now I am not implying or even assuming that adding multiple CEO’s is just about cosmetics and ego’s.

In many cases there is a need to have units that are more agile, more aggressive and more focussed than the typical large corporate multinational.

And if you as headquarter actually manage the unit as if you are merely a shareholder – meaning you sit on the non-executive board of this CEO and decide on firing/hiring/paying him but do not get involved in running the unit yourself in any way shape or form – than fine.

We used to have the term “general manager” to describe that role, but within the aforementioned modern matrix organisation general managers often cannot even decide when to change the aforementioned lightbulb (as facility management does so on a global basis), or on how to organise sales (as corporate product units and lines of business leaders appoint product and sales leads into his unit).

Personally I am a big believer in organising using cell structures. The late Eckard Wintzen – founder of Origin, later part of Atos Origin – wrote a great little book about this called “Eckarts Notes” (in Dutch and strangely enough never translated, but for a summary in English see http://reinout.vanrees.org/weblog/2011/01/23/eckarts-notes.html).

The cell approach – where you split cells if they get tpo big to be managed by one person – was pioneered earlier and is still in use today by other IT service companies.

The general idea was that within a unit of between 50-100 people you don’t need a HR department (as the general manager knows each of his people – and their strengths and weaknesses), you don’t need facility management (as you can tell people to clean up their own mess behind them) and you on’t need a purchasing department (as the GM does large purchases himself and leaves individual purchases to the (empowered) individuals.

It’s a very entrepreneurial approach, some practitioners even incorporate each cell as a separate company, meaning that cells can go out of business if not managed well.

The draw back is you miss out on synergies of being big – on artificial, paper synergies like having the same type of coffee machine in all your 2000 offices worldwide (sure global facility management shows a saving of 12.5 million over 5 years, but it is 1 cent per cup or 0.0021% of overal your staff cost, so who cares!) but also on some real synergies like shared systems, a shared accounting function or shared computer capacity.

But wait a minute! With cloud computing I can have those synergies (and more), without having to be organised like a 19th century industrial estate.

Tell you what. Why don’t you have as many CEO’s as you like (but do give them full P&L responsibility and operational/tactical and strategic authority for their cell, unit or division), but stick to one CCO (Yes, one Chief Cloud Officer) who coordinates the internal cloud services (that your employees consume) and the external cloud services (that you provide to your customers).

Something to ponder on in 2014? Is cloud really more about enabling cells to thrive and prosper, than about centralizing everything into a large grey monotony?

By Gregor Petri – Research Director, Gartner

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