The co-CEO model might be dead and gone at fellow cloud powerhouses Oracle, Salesforce and SAP, but Workday last week revived the unconventional management structure to allow co-founder and now-co-CEO Aneel Bhusri more time to focus on products and strategy.
Bhusri’s new partner in leading Workday into the challenging future is Chano Fernandez, who prior to the promotion was co-president. Fernandez joined the company in 2014 as a sales leader and his ascent to the top of the organization was underscored several quarters ago when he began to appear with Bhusri on earnings calls.
For Workday, this is a return to a model that served it well in its early days when Bhusri joined co-founder Dave Duffield as co-CEO after Duffield held that role from the company’s founding. Duffield later relinquished his co-CEO role, and remains as chairman of the company he founded with Bhusri in 2005.
For Bhusri, this change provides an opportunity to not only recognize the ongoing achievements of Fernandez via the promotion, but also to allow Bhusri to devote more/most of his time and attention to what he loves best: product strategy and product development.
I recall that in the last face-to-face meeting I had with Bhusri, about a year ago at the Workday Rising event, he said at one point, “Oh, you know me—I’ve always been a product guy.”
So the co-CEO model has worked for Bhusri in the past—which is good—and gives him a chance to really devote himself to helping conceive and build the next generation of products that will take Workday from its current $4 billion run rate to $10 billion. And that’s also good.
What’s not so good is the dismal record that the co-CEO model has outside of Workday:
- Oracle: For almost a decade, Larry Ellison managed Safra Catz and the late Mark Hurd first as dual presidents and then as dual CEOs (the company assiduously avoided the “co-” thingy). But when Hurd died about a year ago, Ellison stated that Hurd would not be replaced and that Catz would be the sole CEO.
- SAP: Over a few decades, SAP had various combinations of co-CEOs, a structure that founder Hasso Plattner was fairly mainstream in Germany and across Europe. But SAP experienced enormous growth for 9 years under former CEO Bill McDermott after his one-time co-CEO resigned. Then, after McDermott’s unexpected resignation a year ago to become CEO of ServiceNow, Plattner revived the co-CEO model with Christian Klein and Jennifer Morgan. A few months later, however, in a move that SAP said was based on the need for streamlined decision-making during the pandemic, Morgan resigned and Klein took over as sole CEO.
- Salesforce: A couple of years ago, founder Marc Benioff elevated longtime sales leader Keith Block to the co-CEO role. That lasted about 18 months, and while Block and Benioff exchanged friendly words on the earnings call during which the move was announced, no reason was ever given for Block’s departure and he has not resurfaced in an executive role in the tech industry.
Now, besides the fact that Oracle, SAP and Salesforce are all world-class tech innovators, those three companies and their founder/leaders are about as different as any three companies you could find in any industry. I mention that only to say that in spite of those massive differences in culture, personalities and backgrounds, all three have determined that the co-CEO setup might work in theory but is not the optimal route to take in the real world.
At the same time, the fact that those three companies have scrapped—at least for now!—the co-CEO model certainly doesn’t mean it can’t work brilliantly for Workday. And in his announcement of Fernandez’s promotion on the August 27 earnings call, Bhusri struck the perfect tone for how and why it will indeed be successful at Workday:
Lastly, I want to end on the exciting news that my great friend and colleague, Chano Fernandez, has been promoted to co-CEO of Workday. In his expanded role, Chano will now oversee all of our customer-facing activities, including sales, customer services and support and many aspects of marketing. Chano joined Workday back in 2014 as our president of EMEA and has taken on more and more responsibilities over time, most recently as co-president of the company. He is an amazing values-based leader and has driven his team to great success over the years. So the move to co-CEO is a natural progression for him, for Workday and for me. I’m personally thrilled to be his partner for this next chapter of Workday. And for those of you who have followed Workday for a while, you will hopefully remember that my cofounder, Dave, and I operated as co-CEOs for almost five years and it all worked great for us and for the company. I wholeheartedly expect the co-CEO structure will also work great for Chano and me.
Congratulations Chano, and a big thanks to you and your team for a great Q2. I’m looking forward to being your partner for many years to come.
Those personal touches are, I think, essential if this split-responsibility leadership structure is to work:
- “my great friend and colleague”;
- “an amazing values-based leader”;
- “I’m personally thrilled”; and
- “I’m looking forward to being your partner for many years to come.”
And since Bhusri’s involved, I’m betting this is one case where co-CEOs is the right way to go.
Disclosure: at the time of this writing, Workday and SAP were among the many clients of Cloud Wars Media LLC and/or Evans Strategic Communications LLC.
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