The co-CEO model has many detractors.
Several companies, including Salesforce, Oracle, and Chipotle, have abandoned it. And while others, like Netflix and KKR, employ dual CEOs, they’re in the minority and do so despite the warnings of corporate governance experts.
But cloud software company Workday is adding a twist to that template, intentionally using a co-CEO model to transition to a new chief. Carl Eschenbach, previously a partner at Sequoia Capital for six years, took the reins earlier this month as sole CEO after jointly serving more than a year with Workday founder Aneel Bhusri, who is now executive chair.
“A lot of times these co-CEO things, you know, don’t always go well. Or in some cases, they actually fail,” Eschenbach tells Fortune. “In our case, I think it’s worked out quite well.”
A co-CEO framework certainly isn’t for everyone, and the pitfalls are obvious: power struggles, mixed messages from the top, and unclear spheres of influence. But Eschenbach says it was beneficial during the transitory period, helping him work hand-in-hand with Bhusri, absorb his wealth of knowledge, and more deeply understand the intricacies of the company.
“If [people] want a blueprint on how to make co-CEOs work well, I think we just delivered on it,” says Eschenbach, adding that the company was deliberate about creating a multi-step plan for the transition and transparent about its intentions and end result.
A 2022 press release spelled out that Eschenbach would take over in early 2024 and Bhusri would move into his new board role. “We did that because we wanted to be clear, both internally and externally,” says Eschenbach.
To be sure, CEOs who move into executive chair roles can create a tense relationship with the current CEO. Look no further than Bob Iger and Bob Chapek at Disney, or John Foley and Barry McCarthy at Peloton. But Eschenbach says he felt secure about taking on the co-CEO transition because he had already served on Workday’s board for five years.
Over the past year, Eschenbach has been on a listening tour of sorts, hearing from the company’s nearly 18,000 employees globally. Workday points to the company’s growth as evidence the co-CEO mentorship works, noting that over the past 14 months the company surpassed 65 million users under contract and hired a new CFO, CMO and CIO.
Eschenbach’s advice for companies considering a similar co-CEO transition is to establish rapport between both leaders, keep egos low, align on core values and the company’s mission, and have mutual respect.
A complimentary skillset between CEOs doesn’t hurt either. Eschenbach comes with a sales, marketing, and operations background, while Bhusri has deep tech knowledge.
“We knew each other’s skill sets and capabilities, and we had to feel each other out to make sure we were definitely leveraging each of the best of what we had to offer,” says Eschenbach.
