Tale of a title: the rise of the CEO; The title of chief executive officer is of relatively recent vintage in the annals of corporate history. A timeline of the transition from founders to presidents to CEOs.

• Author: Cappelli, Peter
• Position: GOVERNANCE HISTORY

THE TITLE OF chief executive officer, or CEO, is now so prominent that it has been adopted across organizations of all kinds, surpassing the more straightforward and imperial-sounding "president," which had been used to identify the head of governments, businesses, and organizations of all kinds. Where did the CEO title come from, and what did it represent? To answer that question requires a brief step back in time to the early days of business.

Before the rise of the great corporations, there essentially were no executive or even managerial jobs apart from the role of the business owner, who typically held the title of president. They were the venture capitalists of their day who were compensated, in some cases enormously so, based on the value of their ownership. Aside from the founder, there was little management structure to these early corporations. The founder typically held the title of company president and managed everything himself (and it was always a "he"), including the day-to-day decisions of the company.

J. Ogden Armour, the head and founder of the Armour meatpacking company, was fairly typical. Not only did he carry out all the executive functions of the company himself, but also all the departments in the company reported directly to him. Henry Ford was perhaps the archetype of the owner-manager who ran everything personally, even resisting management systems like accounting. As late as 1910, he said he saw no reason even for keeping accounting books. "Put all the money we take in a big barrel, and when a shipment of material comes in, reach into the barrel and take out enough money to pay for it" was his view of the audit and accounting function.

The reason it was possible to run these large companies without professional executives or even managers was because many of the tasks that we think of as being central to a company's operations were outsourced to the market. A good many of their functions were pushed off onto outside suppliers and contractors. Few, if any, large companies sold their products directly to individual consumers. They supplied independent merchants who sold the products for them. Even production tasks were pushed off to independent contractors.

Started with the railroads

Management as a function began to develop first in the railroads because their far-flung operations required the need for coordination across units and functions--jobs performed by middle management. If middle management involved administering and executing existing procedures to help coordinate the major functions of the business, then creating those procedures was the task of executives. Their jobs required discretion and autonomy that went beyond what middle managers had. The geographic breadth of...