Is Elon Musk right to say CEO is a made-up title?

Speak­ing at a Wall Street Jour­nal sum­mit for busi­ness lead­ers in Decem­ber, Elon Musk claimed that, as a job title, CEO was mean­ing­less. The boss of Tes­la and SpaceX added that he’d just legal­ly changed his role at the for­mer com­pa­ny to “tech­no-king, as a sort of joke” to under­line his point. 

Unsur­pris­ing­ly, giv­en that his audi­ence most­ly com­prised CEOs, Musk’s com­ments elicit­ed a mix of laugh­ter and groans. But he explained: “There are only three titles that actu­al­ly mean any­thing for a cor­po­ra­tion: pres­i­dent, sec­re­tary and trea­sur­er. All these oth­ers are basi­cal­ly made up. So CEO is a made-up title, CFO is a made-up title, gen­er­al coun­sel is a made-up title. They don’t mean any­thing… They’re obvi­ous­ly just someone’s mar­ket­ing exper­i­ment.”

For many busi­ness lead­ers, such opin­ions are easy to dis­miss (espe­cial­ly giv­en that Musk’s self-coro­na­tion could be viewed as a flip­pant ges­ture of defi­ance towards the US Secu­ri­ties and Exchange Com­mis­sion, which had oblig­ed him to stop serv­ing as Tesla’s chair­man for three years in 2018 to set­tle a fraud suit). As a job title, CEO still holds a lot of mean­ing and is almost uni­ver­sal­ly recog­nised, they argue. 

Among them is Eliane Lugassy, co-founder and CEO of Wit­co, the Paris-based provider of a smart build­ing app. “Elon Musk is the only per­son who could get away with call­ing them­selves tech­no-king,” she says. “The rest of us must rely on lan­guage that every­one under­stands.”

In Lugassy’s view, the CEO des­ig­na­tion clear­ly iden­ti­fies the per­son who is ulti­mate­ly account­able for the per­for­mance of their busi­ness. In fact, the title, “with the struc­ture and for­mal­i­ty this term implies, has more rel­e­vance today than ever”, she argues.

Ran­dall Peter­son, pro­fes­sor of organ­i­sa­tion­al behav­iour and aca­d­e­m­ic direc­tor of Lon­don Busi­ness School’s Lead­er­ship Insti­tute, believes that it’s easy for Musk to say that the role of the CEO is mean­ing­less, giv­en that his com­pa­nies have gone from strength to strength. It’s when things aren’t going so well for a busi­ness that good lead­ers real­ly show their worth.

“When the tide is com­ing in and every­thing is aligned in your favour, being CEO is actu­al­ly not much of a job,” Peter­son con­tends. “It can be pret­ty straight­for­ward and it doesn’t real­ly jus­ti­fy the glo­ry and mon­ey it brings. What he hasn’t done is stick around when the tide goes out. Try­ing to save a busi­ness, for instance, is hard work – and I don’t think he’s seen that side of being a CEO yet. If you’re pro­duc­ing elec­tric cars at the point where many gov­ern­ments are mak­ing them manda­to­ry, the pieces will come togeth­er for you. That’s when, by def­i­n­i­tion, the CEO role is at its min­i­mum.”

For David Sole, for­mer cap­tain of Scotland’s rug­by union team and now man­ag­ing part­ner of the School for CEOs, this point cuts to the core of how an effec­tive CEO should oper­ate. He says: “In some respects, the per­son in that job shouldn’t real­ly be doing any­thing while the busi­ness is run­ning well. They should sim­ply be enabling every­one else to flour­ish.”

To achieve this, CEOs must take on a mul­ti­fac­eted role, he argues. It requires them to man­age up to the board and ensure good gov­er­nance while also man­ag­ing down to moti­vate the whole work­force and inspire every­one to pull in the direc­tion they have set for the organ­i­sa­tion. 

“The most impres­sive CEOs we have come across are those who are col­lab­o­ra­tive but at the same time recog­nise that they have ulti­mate account­abil­i­ty,” says Sole, whose com­pa­ny offers a range of lead­er­ship devel­op­ment pro­grammes. “The age of the dic­ta­tor is well and tru­ly fin­ished.”

So, as mod­ern organ­i­sa­tion­al struc­tures in busi­ness place less empha­sis on hier­ar­chy and the tra­di­tion­al hall­marks of a good leader con­tin­ue to change, is it time to reassess what CEO real­ly stands for?

Ludo Van der Hey­den, chaired pro­fes­sor of cor­po­rate gov­er­nance at Insead, believes that the nomen­cla­ture would ben­e­fit from an update. 

“The title is wrong,” he argues. “The chief exec­u­tive is not typ­i­cal­ly the one exe­cut­ing the work. They are the ones who are man­ag­ing.”

Although this may seem pedan­tic, Van der Hey­den argues that it’s impor­tant to have clear job descrip­tions. He sug­gests that “chief deci­sion offi­cer” may bet­ter reflect a busi­ness leader’s key respon­si­bil­i­ties, adding: “Peo­ple do use the title CEO too much with­out know­ing what it means. That can cre­ate con­fu­sion – and con­fu­sion is the ene­my of good man­age­ment.”

Despite his asser­tion that the CEO title should be changed, Van der Hey­den dis­agrees with the sug­ges­tion that the role could be wan­ing in sig­nif­i­cance. 

“I would be com­plete­ly opposed to the idea that the CEO is becom­ing irrel­e­vant,” he says. “What is true is that we are com­ing to the end of the era of the hero­ic, all-pow­er­ful leader… Man­age­ment, by essence, is a col­lab­o­ra­tive act, but it doesn’t mean that you don’t still need a cap­tain.”

This could be the rea­son why Musk was able to so casu­al­ly say that the CEO title is mean­ing­less. While his tenure in charge of Tes­la has seen the elec­tric vehi­cle man­u­fac­tur­er go from strength to strength, his style of lead­er­ship – where a sin­gle charis­mat­ic boss dic­tates their vision for the com­pa­ny – is becom­ing less com­mon at the top of mod­ern enter­pris­es. 

Peter­son posits a dif­fer­ent sug­ges­tion for a more appro­pri­ate job title for the times. “Chief cul­ture offi­cer pro­vides a more pos­i­tive descrip­tion of what they do,” he says. “The two ele­ments that are cru­cial in busi­ness are cul­ture and strat­e­gy. An effec­tive leader needs to pro­vide align­ment between the two.”

Rather than being incon­se­quen­tial, the des­ig­na­tion appears to have dif­fer­ent con­no­ta­tions depend­ing on the individual’s inter­pre­ta­tion of what a good leader should offer, from strate­gic deci­sion-mak­ing to set­ting the appro­pri­ate cul­ture. Although it’s far from mean­ing­less, giv­en that the term has so many pos­si­ble def­i­n­i­tions, per­haps Musk was right to say that CEO is a made-up title after all.