C-suite executives often serve on the board of multiple corporations. Even within a corporation, they may be involved in multiple companies. Under the umbrella of Virgin Group Ltd., for instance, CEO Sir Richard Branson oversees some 400 businesses, including Virgin Megastores, Virgin Mobile, Virgin Radio, and Virgin Hotels.
Branson’s experience could prove instructive to future executives. In Alice Nash’s article, “Richard Branson: How to Juggle Multiple Businesses” on Virgin.com, Branson advises entrepreneurs to follow the words of country-western legend Kenny Rogers: “Know when to hold ’em, know when to fold ’em, know when to walk away.”
He also cautions new CEOs and entrepreneurs to start small, with just 1 business; to hire the right staff to help handle the workload, especially when leading multiple companies; and to choose partnerships carefully, with an eye toward the future.
That forward-thinking approach also applies to business education. An online executive MBA program can be a gateway to a rewarding C-suite position. The experience a graduate gains from becoming a business executive may lead to offers of board seats or leadership roles at other companies.
How to Manage Multiple Businesses
Managing multiple companies effectively and efficiently can be summarized in a single word: organization. C-suite executives who lead multiple corporations need competent, reliable associates to whom they can entrust important tasks. They must divide their time between responsibilities and prioritize tasks. And they can benefit greatly from understanding how to pool resources.
These organizational efforts can benefit from technological improvements, which make it easier to multitask from a single location. EMBA graduates can expect to video conference with one company’s development team, then with the marketing director of another business, without leaving their offices.
Roy Hessel, president and CEO of Clearly and Coastal, details a few more important considerations for those who manage more than 1 company in “The Art of Simultaneously Managing Multiple Companies” on Entrepreneur.com. Hessel’s advice includes:
- Giving teams a long leash: Micromanaging multiple businesses is a recipe for disaster. With strong teams employed in every department, the executive guides the teams in the right direction and trusts them to follow their own initiatives. Richard Branson calls this strategy having “a hand to catch every ball.”
- Building an ace horizontal team: In addition to building vertical teams by department, executives need a horizontal team of peers on both boards of directors. This policy improves collaboration between the 2 companies and facilitates resource sharing.
- Cross-pollinating and pooling resources: An effective network of vertical and horizontal leadership makes cross-pollination, or sharing information and knowledge between companies, possible. Seasoned executives watch for opportunities to not only share knowledge but also create synergies between multiple companies, such as group purchasing raw materials to enable bulk discounts.
- Going the distance for face time: Absentee CEOs rarely inspire their family of businesses. Even with highly developed video conferencing technology, in-person face time has no substitute. According to Hessel, “Subtleties of office culture, the dynamics between executives, unspoken rules and latent problems–none of that can be conveyed on a conference call, no matter how good the connection or how long you talk.”
- Prioritizing downtime: Running multiple companies can be a high-stress endeavor. CEOs who don’t prioritize downtime could eventually experience burnout. Jack Dorsey, CEO of both Twitter and Square, makes sure to take every Saturday off to enjoy hiking, according to “Productivity Secrets from CEOS Who Run Multiple Companies” on Medium.com.
CEOs of multiple corporations may have completely different sets of industry knowledge, management experiences, and educational backgrounds, but most agree with Hessel’s advice.
The Dos and Don’ts of Interlocking Directorates
Another way to successfully lead multiple companies is through interlocking corporate directorates, which refers to an executive serving on the board of more than 1 company. The practice is both legal and ethical as long as the executive doesn’t sit on competing boards, for instance for both Coke and Pepsi.
“Interlocking directorates were outlawed in specific instances wherein they gave a few board members outsized control over an industry. In some cases, this opened the door for them to synchronize pricing changes, labor negotiations, and more,” Investopedia.com explains in its article, “Interlocking Directorates.”
“Interlocking directorates do not prevent a board director from serving on a client’s board,” Investopedia adds, though the situation can become complicated when an executive sits on multiple boards and the companies may be clients of one another. If the business-to-business relationship leads to unfair control of a competitive market, executives may face charges or financial penalties under Section 8 of the Clayton Antitrust Act of 1914.
While laws also prevent board service that leads to supracompetitive profits, or profits that are price-fixed at a level too high to be sustained in a free market, interlocking directorates can also provide valuable benefits, including monitoring and expertise.
“Corporations may employ an interlock as a device to monitor the behavior of other firms and reap informational advantages,” researcher Benjamin M. Gerber writes in his paper, “Enabling Interlock Benefits While Preventing Anticompetitive Harm: Toward an Optimal Definition of Competitors Under Section 8 of the Clayton Act.”
“Monitoring can act as an innocuous learning function for non-competing companies,” he continues. “Additionally, individuals with ties to other corporations may have actual expertise gained through this experience that translates to serving as an effective director of another corporation.”
Examples of Successful Multiple-Company Executives
Several chief executives are so well-known that they have become business celebrities. Ben Geier highlights several of them in his Fortune.com article, “Jack Dorsey Isn’t Alone: 8 CEOs (and Others) Who Served Double Duty”:
- Elon Musk: Perhaps the most famous executive serving on multiple boards, Musk heads up SpaceX and Tesla. The fruits of his labor can be seen driving silently and efficiently on the streets or roaring toward the heavens.
- Warren Buffett: Perhaps the most investment-savvy executive in the business, Buffett leads both Berkshire Hathaway, a multinational holding company, and Salomon Brothers, an investment bank.
- Steve Jobs: Another corporate celebrity, Jobs made history by ushering in the age of the mobile device with his company Apple’s iPhone. He also made a splash in the film animation industry through Pixar Animation Studios.
Musk, Buffett, and Jobs may be the most well-known, but executives other than CEOs often serve on the boards of different companies as well. Nothing prohibits a chief financial officer or chief technology officer from serving on other boards, as long as their positions don’t violate the Clayton Act.
Washington State University’s EMBA Degree Program
Successfully leading multiple organizations requires an educational program of the highest level. Coursework in Washington State’s online Executive MBA at the Carson College of Business focuses on strategy formulation and organizational design as well as managerial leadership. Developing skills in these intricate business operations can prepare graduates to lead companies toward profitable, efficient solutions.
Contact Washington State for more information.
Richard Branson: How to Juggle Multiple Businesses – Virgin.com
Interlocking Directorates – Investopedia
Enabling Interlock Benefits While Preventing Anticompetitive Harm – DigitalCommons.Law.Yale.edu
The Art of Simultaneously Managing Multiple Companies – Entrepreneur.com
Productivity Secretes from CEOs Who Run Multiple Companies – Medium.com
Jack Dorsey Isn’t Alone: 8 CEOs (and Others) Who Served Double Duty – Fortune.com