The CEOs Who Swapped Companies
A couple of years ago, two CEOs spent a week running one another’s companies. Their experiences make for a great yarn. I’m itching to write it--or channel it really, because this kind of story tells itself.
Both CEOs agreed to talk to me. One--I’ll call him Matthew--did. The other--I’ll call him Phillip--backed out, despite my promise to withhold the most sensitive material if he went on the record. I’m not surprised he was reluctant. Some of Matthew’s anecdotes--about frantically working the phones to scrounge sufficient funds to cover Phillip's payroll and pushing out a delayed deliverable barely in advance of a visiting customer delegation--don’t cast the most flattering light on Phillip’s organization. But I can’t tell the full story without participation from both sides. Oh well.
Company swapping is a radical idea and not for the faint of heart. But leadership development opportunities--which is what this was--are tough to come by when you’re already at the top of a business. Even executive education programs offered by elite institutions can seem dry and abstract for someone used to the high-stakes rough and tumble of running an actual company. And circulating through posts in multiple divisions and locations of a larger organization (arguably the most effective form of leadership development) is off the table.
Leading another, comparable business for a brief stint is a way to gain perspective, to change the frame, to test your beliefs in a new context. It also provides an unusually intimate view of best and worst practices. That said, I cannot imagine many CEOs following suit. As Matthew put it when I asked whether his experience was replicable: “This isn’t like I could make a home game version for other business owners.”
Still, I thought readers would find interesting some of the mechanics of the exercise. For obvious reasons I can’t go into much detail. The following is based on Matthew’s experiences only.
Matthew and Phillip are founders of fast-growth engineering firms in the same region. They met at an entrepreneurial leadership program and had been friends for a decade when Matthew proposed the experiment. (He got the idea while watching the ABC show “Wife Swap” with his spouse.) The CEOs’ goals were three-fold. Each would adopt what he admired about the other’s cultural, operational, and administrative practices. Each would report back to the other on what he deemed to be weaknesses in those practices and other problems. And each would solicit candid feedback from the other’s employees, which he would pass along without attribution.
“We agreed to prepare a pair of reports for each other,” Matthew told me. “One would be a personal review of what our people thought of us, through the screen of the other guy. The second would be one in which we evaluated each other’s management teams and businesses and made recommendations on what we thought the other guy should be working on.”
The two CEOs laid a few ground rules. We looked at each other and said, ‘How much authority is the other guy going to have?’” Matthew recalled. “Immediately, he blurted out, ‘Hire and fire. Full executive authority. ’I said, ‘That’s never going to happen.’ We both laughed.”(As it turned out, Matthew fired one of Phillip’s people within the first few days, although he checked with Phillip first.)
Before making the exchange, each CEO spent two-and-a-half days at the other’s company, meeting everyone and being briefed on current projects. Each also gave the other an assessment of his own strengths and weaknesses, to guide the observation and reporting process. Phillip, for example, is a first-class delegator. Matthew, a confessed micromanager, paid considerable attention to the operations of Phillip’s far-more-empowered executive team.
I can’t report much about the next week without revealing details about the businesses. Suffice it to say that the CEOs did not agree to put their houses in order before the swap, and that failure had repercussions, at least for Matthew. “I was very meticulous before I left that my desk was clean,” said Matthew.“My issues were closed.” Phillip’s issues were less so, which is why he’s not eager for this story to be told.
When he wasn’t fighting fires, Matthew interviewed about a quarter of Phillip’s staff about planning, communication, and leadership styles. He also visited suppliers and even customers, taking it upon himself to identify opportunities for Phillip to expand the business. “Unfortunately, they wanted to hear more about the swap rather than talk about the issues,”said Matthew. “Eventually we got down to it.”
After returning to their companies, Matthew and Phillip traded feedback. “I thought we were going to hand over a kind of formal thesis,”said Matthew. “But in the end we went out drinking and talked about most of it and just handed over our notepads.” Phillip’s recommendations, some of which Matthew adopted, included creating a strategic plan, improving product documentation, and--most important--delegating much of the day-to-day work. “The swap made me think it doesn’t add value for the business for me to be doing everything,” said Matthew. “What adds value is building a solid team and making myself replaceable.”
Matthew also learned a lot from observing Phillip’s culture. “He had created a very solid environment of people working together as teams,”said Matthew. “Morale was high and people were very friendly and comfortable with each other.” By contrast, “our financial performance was better but attitudinally people here were down. I had to look at myself for that, because I was like,‘If we don’t grow 25 percent a year we fall on our face. If we have a year where we just grow 10 percent or 15 percent I would tell everybody we stunk. After the swap I changed the way I measure success.”
Matthew concluded that from his perspective the experiment was a success, although he's not eger to try it again. For one thing, there’s no one else he could do it with. CEOs who swap companies must be good friends who trust and respect each other as businesspeople, he said. They must be in the same industry. And they must have contrasting leadership styles and skillsets, “or you won’t get as much out of it.”
For Matthew, what lingers from the swap is renewed appreciation for his own company. Phillip “did a lot of things well, but there were a lot of issues there too,” he said. “I came back to my crew here and said, ‘Look, we do a lot of things right.”