Are Two CEOs Better Than One?

The case of WIPRO

Take an organization with business divisions that overlap, add rapid growth, and flavour
with problems arising from an uncertain environment. What you have, potentially, is a
recipe for confusion. At Wipro, India's largest software services firm, however, little
evidence of confusion has appeared despite the turbulent winds that have buffeted the
company for the past few years. When former CEO Vivek Paul left to join Texas Pacific
Group, a private equity firm, Wipro has had no CEO since Paul's departure, with
Chairman Azim Premji -- who owns more than 80% of this Mumbai- and New York-listed
company -- combining the roles of both chairman and CEO.
Wipro was established in 1947. It was a vegetable oil company to start with and was
created from an oil mill established by father of Azim Premji, present Chairman and
CEO of Wipro. It later ventured into consumer goods in 1966 under Azim Premji's
leadership as Wipro Ltd. In 1975 Wipro Fluid Power was set up to make pneumatic
cylinders and hydraulic cylinders.
Wipro demerged its non-IT businesses such as in consumer care, lighting, hydraulics
and medical diagnostics into a new company to provide more focus for its IT business.
Infosys and TCS are pure-play IT services companies. The demerger will help improve
profit margins. But analysts think that moving out the small non-IT businesses from the
company will alone not help. The company needs to focus on using technology to solve
business problems, rather than just emphasize on technology, cost-cutting, and
increased productivity. IT services accounted for 79 percent of Wipro's total revenue in
the quarter. The company in year 2011-12 earned business revenue of US $ 1929
million.
That situation changed when Wipro announced in mid-April that it had appointed not
just one CEO but two: Girish Paranjpe and Suresh Vaswani. Paranjpe has been with
Wipro since 1990 and most recently was president of the BFSI (banking, financial
services and insurance) vertical of Wipro's global IT business. Vaswani is a 23-year
veteran at the company and was, before his promotion, the president of Wipro Infotech.
In addition, he oversaw some areas of the global practices of Wipro Technologies.
Wipro's organizational structure is complex and sometimes baffles outsiders. The IT
business has two organizations -- Wipro Infotech and Wipro Technologies. The latter
handles the global business while Wipro Infotech serves India, West Asia and Asia
Pacific. In functional terms, the company has a matrix structure with three verticals and
two horizontals. The verticals are the $1.06 billion technology business (which is in the
product engineering and the telecom service provider space); the $1.4 billion enterprise
business (targeted at manufacturing, healthcare, retail, etc.); and the $799 million
financial services business. The two horizontals are the $1.1 billion global practices
business (testing, package implementation and technology infrastructure services) and
the $290 million BPO (business process outsourcing) operation.

These verticals and horizontals are headed by executives who were expected, after
Paul's departure, to function as CEOs. But, Premji got roped into the day-to-day
functioning, and inevitably he was overburdened. "It pushed too much of the operating
load on me and was getting counter-productive," says Premji.
Premji is confident that the new arrangement will work. In an interview he said, "We
believe that two people who have worked together for more than 10 years and been in
the company for more than 15 years would be able to work very well as a team. The
fact that 75% of our revenues come from global markets, the fact that we are growing at
30% a year in a service, highly people-intensive industry, we figured that a two-man
team at the top would be stronger than one man at the top. I continue to be executive
chairman, but they are the joint CEOs of our IT business." The two men occupying the
hot seat -- or, in this case, seats -- are equally spirited. Says Vaswani: "Given the size of
our business and the ambitions that we have for our business, two is certainly better
than one. We do believe that the power of two will help us so far as we are concerned,
given our environment." Adds Paranjpe: "Given the enormity of the opportunity and the
task at hand, we felt it was worthwhile to have two of us trying to drive this rather than
leave it to one individual to try and do [everything]. And from a personal perspective, it
can get very lonely at the top. So, having two people helps."
"The business environment in India gives an impetus to this model of collegial and
collective leadership." The "premium" aspect for companies doing business in India is
the combination of access to a highly skilled labour pool and attractive wage levels. The
"penalties" are the uncertainties in the business environment with respect to
infrastructure, power availability, urban transportation and stability in policy regimes.
Companies like Wipro need two CEOs because of the complexity of doing business in
India. "On the one hand, you have to manage offshore client relationships and business
development by staying really closely tuned to what is happening in international
markets. On the other, you have to be embedded in India to manage the countryspecific challenges." Sometimes these two faces of complexity are quite divorced from
each other; they are different sets of challenges. It may be difficult for the same CEO to
handle both ends.
Another reason such a "collegial leadership model" works in some Indian companies is
because of "founder effect." The founders of companies such as Wipro, Infosys
Technologies and HCL Technologies "are entrepreneurs in some senses, and are more
principals than employees," he says. "They have very strong shared values and they
have seen their companies grow over the years. Conflicts between CEOs often occur
because of vastly divergent visions and different skills; that's not the problem with these
people."

The twin-CEO model should work well at Wipro as they are having very compatible
personalities. Both are hands-on, have a great deal of discipline, never miss the details,
and have a strong sense of not going after expensive, blue-sky ideas until they can be
validated by research. Premji, too, will be comfortable with the new order because of
what he describes as "an extraordinarily numbers-driven environment" at Wipro where
"a direction will emerge" after individual executives make their business cases.
"Generally, a strategic direction emerges whether you have two CEOs or one. There
could be tactical differences, but those can be resolved." In addition, Premji will be
involved in all key management decisions, and has "always been part of the analytic
filter that all decisions must pass through."
Wharton management professor Peter Cappelli sounds a cautionary note; he points out
that he hasn't seen the twin-CEO model work effectively in Western corporations.
"Generally, in the world of governance, this is a situation to avoid," he says. "My guess
is that what ultimately happens is the co-CEOs confront the possibility of a stalemate,
but there is also the possibility of them continuing to disagree, and so they may end up
negotiating settlements all the time. In principle, that is not bad if they actually have the
interpersonal skills to negotiate conflicts as opposed to just stalemates."
Cappelli points out that in companies that have twin CEOs, the board of directors could
help resolve disputes. The real problem, though, comes up while trying to make
decisions that reinforce the company's culture or which make for a consistent strategy.
Cappelli warns that if the two individuals differ about business direction, "you could end
up with practices that don't represent either vision because the parties are negotiating
compromises along the way." That, he says, "is arguably the worst of all possible
worlds."
Cappelli also doesn't recommend shared power at the CEO level by carving out two
autonomous business units as a way to retain top management talent. "You are
basically structuring a whole corporation around these two individuals with the goal of
trying to keep two people," he says, adding that he doesn't approve of "turning the
organization on its head just to make that happen."
Like Cappelli, some observers in India are a shade circumspect. "I believe that, in the
long term, it is critical for any business to have a single CEO," says Sudhir Sethi,
chairman and managing director of IDG Ventures India, part of a global network of local
venture funds. "Wipro may adopt this approach for two to three years." Sethi, however,
sees several positives. "Wipro's adoption of a joint-CEO structure is a step indicating to
internal senior management the potential of rising to the top," he says. "To the other
stakeholders, this move signifies depth of its management cadre in the IT business. The
IT business is large enough to need two CEOs."

The other side of the coin, of course, is the notion that this is the easy way out. Wipro
has lost some senior people recently. Appointing an outsider as CEO -- or promoting
just one person -- could have led to further departures. "A decision to opt for a joint-CEO
structure sometimes also implies that the two may have co-skills and that there is no
frontrunner," says Nandita Gurjar, group head of human resources at Infosys
Technologies. She makes it clear, however, that she is not talking about the Wipro duo,
but in general terms.
Track Record of Co-CEOs
In 1999, Chief Executive Magazine examined a number of joint-CEO instances that had
been created because of mergers. Joint CEOs are regarded as one of the vehicles that
can help in the integration of the merged entity. Still, the article raised questions about
the viability of such arrangements. "Historically, the co-CEO structure has a dubious
track record. Yet companies continue to tinker with the concept," said the article. "With
prospects of success so grim, why (are there) so many attempts to breed a healthy twoheaded behemoth? For one thing, the concept looks good on paper. In theory, sharing
the CEO chair should leave both leaders sitting pretty, blending complementary skill
sets and experience and easing the strain of overwhelming responsibility. In practice, it's
not that simple. As critics of the dual CEO structure are quick to point out, failures
outnumber success stories by far."
Consider Unilever, the Anglo-Dutch conglomerate. For 75 years it functioned with one
chairman in London and another in Rotterdam. (The chairman of Unilever plc was
deputy chairman of Unilever N.V. and vice versa.) In 2005, the company reported a
fourth quarter loss, shareholders were up in arms, and the joint leadership structure was
abandoned. Patrick Cescau was named sole chief executive. "We hope the new
structure will help us win in the next couple of years," Cescau said at that time. "In 2005,
we won't change the world, but we will make good progress." In the past three years,
Unilever has performed much better. Now the CEO is Paul Polman.
"In earlier times, there was a hierarchy based on age and tenure but that has now
changed," says Gurjar of Infosys. "Now the capabilities of individuals matter the most.
An organization can have only one king or queen. Otherwise, each will create their own
kingdom which could cause conflict and pull the organization in different directions."
India's IT firms seem to be exceptions to this overall pattern -- many of them have
collective leadership structures, which is why the Wipro arrangement is in good
company. For example, at Mastek, founder Ashank Desai is still actively involved with
the company, though the chairman and managing director is Sudhakar Ram. Premji
cites the example of Infosys. "For all practical purposes, it has a very active team of
three at the helm," he says. Infosys chief mentor N.R. Narayana Murthy, Premji says,

spends 80% of his time on Infosys; Co-chairman Nandan Nilekani is "completely

active"; and then there is Kris Gopalakrishnan, the CEO and managing director.
Some family-run businesses also have joint CEOs. Brothers Shashi and Ravi Ruia, who
are now seventh on the Forbes richest Indians list with a net worth of $12 billion, even
share the same office room. (Given its size, however, it doesn't really matter.)
Neeraj Aggarwal, director and partner at the Boston Consulting Group, is of the view
that leadership structure needs to be viewed in the context of the organization, and it's
hard to pass judgment from outside. "Any structure can be made to work, and any
structure can fail," he says. "In the case of a joint-CEO structure, a lot depends on the
chemistry between the two individuals."
"A joint-CEO structure can work if both of them have worked together long enough to
understand each others' strengths, and if they have healthy respect for each others'
judgment and expertise," says Gurjar of Infosys. "While organizational decisions are
relatively easier to make because of the rules of the game, it is the trust between the
two that impacts interactions and can make or break the structure." But, she adds, "you
can't go with two CEOs beyond a certain period of time, say around 18 months. Beyond
this, the joint CEOs would need to divide responsibilities very clearly."
At Wipro, it is the practice to revamp the organizational structure every two or three
years, primarily because of the company's rapid growth. The company goes through a
process of introspection to find out if it can have something tighter and more effective.
Should this happen, the joint-CEO system could potentially make place for a new
arrangement in the future. But for today, Premji insists that he wants to make the coCEO structure work. "We will look at all structures after three years, but that is not to
say that we will collapse the two CEOs into one CEO."
Meanwhile, Paranjpe and Vaswani have their work cut out for them. Premji points out to
run an organization of such business volume and complexity, two heads are better than
one.
This is a new organizational model without too many explicit examples from the past.
Every attempt at organizational design seeks to resolve the most pressing immediate
problems while ostensibly trying to address growth and sustenance of the entity. For
any structuring attempt to work, role clarity, processes, boundaries, and incentives must
be defined. This is usually done at levels below that of the CEO.
In this and similar cases of trying to structure a co-CEO role, the challenge is to define
boundaries because, in effect, a CEO is responsible for the overall vision, culture,
strategy and functioning of the organization. For this co-CEO approach to work, the
prerequisite has been simplified to "chemistry" between the two incumbents. What this
means is that they should have a shared value system, be completely aligned in

philosophy, and trust each other explicitly to take and execute any decision within the
organization. In short, they have to be an alter ego to each other while complementing
strengths. It takes an extraordinary human to accept power sharing. Loneliness at the
top is usually a self-inflicted syndrome caused by a desire for power. This is an
experiment worth observing.
Today both the Jt. CEO Girish Paranjape and Suresh Vaswani left the organization
citing personal reasons. However, in the corporate circle the question remains whether
Wipro Jt. CEO resigned voluntarily or were asked to leave and why. There could be
umpteen factors behind it; both professional and personal. A look at the performance of
the company and the chairman's comments hint that a few sectors, which turned out to
be money spinner for rival, was their weak zones. Verticals like healthcare, financial
services, insurance etc. And looking at the responsibilities, while financial services,
communication, media, telecom and technology, were the Girish's domain, Vaswani was
responsible for manufacturing, retail and consumer products, government and
transportation, healthcare and energy and utilities sectors and BPO, technology
infrastructure, enterprise applications, business technology services (enterprises) and
testing service lines. The Wipro management would have pointed finger to the duo for
that.
Personally, though Premji clarified that this is a professional organization and not a
private garden which is cultivated the way owner (Azim holds more than 75 per cent
stake in the company) wants it to, it is still visible that he is building the highway for his
son, Rishad Premji (currently chief startegy officer for Wipro Technologies). But this
could have been little later, when Rishad was ready for the CEO role, why now?
According to a Wipro watchdog, who has been indirectly connected with a lot of
executives in the company, T K Kurien has been a close affiliate of Azim(closer than
the two CEOs) and taking him above the corporate hierarchy as the CEO was expected
to come some day. He went climbing the position in just 10 years. Data proves that in
less than year, he moved the shoulder level of the chairman and was constantly
changing his positions, from BPO to consulting, then EcoEnergy and now IT business.
Wipro's announcement for the appointment of T K Kurien clearly says about under
performance and that it was the management's decision to let them go. The Joint CEO
structure was one of the key factors that successfully helped us navigate the worst
economic crisis of our times. With the change in environment, there is a need for a
simpler organization structure.

Question: Study the story of WIPRO and comment critically what went wrong in
WIPROs co-CEO model from organization structure and design point of view?