SMITH BRAIN TRUST -- Twitter's new CEO, Jack Dorsey, is wasting no time in making changes: This week the social networking company laid off 336 people, or 8 percent of its workforce. He also recently introduced "Moments," curated edited collections of tweets intended to attract new users; and made new overtures to advertisers.
Dorsey, a Twitter founder who also serves as CEO of Square, which offers software and credit-card readers to retailers, had returned to the company last summer to serve as interim CEO. The board was insistent that it wanted a full-time CEO, but on October 5 it hired Dorsey, although he will remain CEO of Square, too.
How can one person serve as CEO to two companies? There are some precedents: Carlos Ghosn is CEO and chairman of both Nissan and Renault, although those companies are more closely entwined than Square and Twitter (through a cross-shareholding agreement). Elon Musk runs both SpaceX and Tesla, while Steve Jobs famously overlapped at Pixar and Apple.
Setting aside clearly problematic cases — one CEO couldn't run competitors like Coke and Pepsi — Paulo Prochno, clinical professor of management at the Smith School and faculty director for the DC evening MBA program, says the feasibility of overseeing two companies depends on several factors: the leadership style of the CEO, how one conceives the CEO job and the level of change needed at each company.
A CEO who gets heavily involved in product decisions, like Jobs, is unlikely to be able to play that role at two companies, simply given how much time it takes to be a micro-manager. (Jobs was more hands-off at Pixar, though he described the dual-CEO period of his career as a difficult one.) But one role of many CEOs is to serve as a broad strategic planners, as suppliers of vision. "That's not something that is necessarily time intensive," Prochno says. "It's based more on your experience in the industry, and your insights. You don't have to work 50 hours a week to have a good insight into where your industry is headed."
Just as important is that CEO's be organization builders: that they establish mechanisms through which other leaders at a company can work through difficult issues and arrive at conclusions. Building such structures can be time intensive. But if such a structure exists at Square, Dorsey could cut back on attention spent there without harm, Prochno says. (He acknowledges he doesn't have enough knowledge to know whether that's the case.)
Also consider, Prochno adds, that if Twitter had brought in a leader from a company whose focus wasn't social networking, he or she would have required months to get up to speed. "It seems to be that Twitter recognized that it had to change,and to make a quicker adjustment they decided they needed someone who really knows the company," Prochno says. Who better than a founder?
But how do you tell a senior manager at Twitter or Square that he or she should be putting in long, long hours while making a fraction of what the part-time CEO makes? If a CEO can do a great job without putting in 60 hours a week, can't other employees? "Those are questions that don't have definite answers," Prochno says — though they suggest to him that the cult of long hours is one that ought to be questioned more broadly. "How the two companies deliver the message in order to get buy-in from employees is a crucial element of making this work." If employees think that they are being treated fairly and rewarded properly, it is less likely to be an issue. "The ideal situation is an organization where people don't even think about asking those questions," Prochno says.