The Good, the Bad and the Ugly of working with Founders
In my career, I have had the opportunity to run several businesses as the first non-founding CEO. The transition from founder to external talent is always a delicate adjustment and there have been many books and articles written on the perils of founder’s syndrome.
Based on my experiences, I wanted to highlight some of good, bad and downright ugly aspects of working with founders in a hope that it will help both founders and their CEOs to navigate these choppy waters.
Let me be clear that this article is not intended to discredit any of the amazing founders I have worked with. Their passion and courage far outweigh any flaws, but there are some habits and behaviours that can signpost how successful the CEO will be.
The GOOD
Let’s start with the actions that will set a positive tone and set an incoming CEO up for success:
Clearly define the founder’s role
This is probably the most important decision a founder will make in this transition. What role, if any, does the founder want to take moving forward. For some, it’s an active role as a chairperson or board member, while for others, it’s a functional role within the organisation. Whether you are remaining engaged as an active part of the organisation or heading off on a well deserved early retirement, make sure your CEO and team understand the role and level of involvement you will have.
Set clear expectations
This one might seem like a no-brainer, but it’s amazing how often we make assumptions about how much others understand our agenda. Founders should set clear and measurable metrics for their CEOs, but also be open and honest about any broader expectations. For example, if it’s important that to you that the founder’s story is prominent in company communications, set and discuss that expectation upfront.
Empower and endorse
While the messaging to the organisation in the first few weeks of a new CEO is important, the tone and body language of the founder has the potential to have an even greater impact. Subconsciously, the team will be influenced by the founder’s demeanour, so the best thing a founder can do for an incoming CEO is to exude confidence in the person, the decision to install and them and the opportunities the hire will bring. Subtle cues like having the incoming CEO sit behind the desk during office meetings with the founder will help fast-track this perception.
Give space
Once communications are complete and confidence has been displayed, the best thing a founder can do is get the hell out of the way for a while. Even if the founder is to maintain a role and presence within the business, a couple of well-placed leave weeks are a very effective tool. You do not want the team to have one eye on the founder while the incoming CEO is establishing their relationship and way of working.
Give and receive feedback
Feedback is one of the most important tools that we have in a business and it is especially valuable in the formative stages of the Founder / CEO relationship. Try to establish a regular rhythm of informal feedback, with an emphasis on improving domain knowledge. It’s equally important for the Founder to be open to feedback and encourage the CEO to be an active stakeholder in defining the relationship
Have a clear and regular review process
While regular feedback is critical, it is also important to establish a more formal review process. This is among the most forgotten tasks of founders, as they often wait for challenges to emerge before providing a structured review. Referencing the clear expectations that have been set during induction, this should be done at least every six months and should be followed by a detailed set of actions arising from the review.
Honour the past and focus on the future
This is one of the more delicate aspects of the transition to non-founder leadership. While it is important to capture and communicate the energy of the company’s founding story, the CEO will be most engaged if they are empowered to write the next chapter. If founders treat their incoming CEO as an administrator, they are more likely to behave like one. Give them the freedom to inspire the organisation in the same way the founder has.
The BAD
Next up are the more functional mistakes that can put unnecessary speed humps on the road to a successful transition:
Strangle with reporting
With the increased availability of data and thousands of analysis tools available at our fingertips, it’s easy to fall in love with reporting. Don’t get me wrong, as a founder removes themselves from the days to day operations, reporting is incredibly important, but every new report they task their CEO with is precious time away from running the business. Define a set of reports early and review and update the set periodically. Try to avoid adding new reporting requirements out of this rhythm unless for a discrete purpose.
Change the goalposts
Nothing is more predictable in business than change, as CEOs, we expect and respond quickly to it. However, nothing will take the wind out of a CEO quicker than dramatic changes to the strategy that do not come as a result of a collaborative process. If, for example, the founder has decided that it’s time to seek an exit, they should be honest with their CEO and make them an active stakeholder in the process. A great CEO will embrace a strategic challenge and if founders do not have the confidence to include them in strategic decisions, they simply weren’t ready to hire them.
Communicate directly with the team
One of the common mistakes that founders make as they become less involved in the day to day business is not making adjustments to the way that they communicate with the team. While it’s appropriate for the founder to continue to have a strong relationship with the team they built, it’s critical that any operational matters to communicated through the appropriate channels. Nothing will make your CEO feel less secure than finding out about operational direction coming from the founder via their team.
The UGLY
Finally, these are some of the behaviours that can really impact a CEOs ability to succeed and if left unchecked can be fatal to the relationship:
Not honest in their intentions
Let’s be clear, founders will make some mistakes in this transition, it’s the reason armchair experts like me write articles like this. It’s expected and part of the process, but the difference between inevitable learning opportunities and bad practice is intent. A founder should be radically transparent and honest in their communications with their CEO, as the outstanding ones will treat the business like their own and take it very personally. A willingness to share fears and vulnerabilities can build trust between founders and CEOs and if there’s a dramatic issue, like second-guessing the decision to make the transition, sharing this with the CEO will be uncomfortable, but the best thing the founder can do to resolve it.
Don’t live the values
Whether they remain in the business or not, the founder will remain a visible representation of the organisation and should continue to live the values that helped build it. I would contend that the actions of the founder in the period following this transition will be as important as any and that teams will often evaluate a founders commitment to the values on how they behave when they believe nobody is watching.
Surprise their CEOs
There are many times in your life when a surprise is welcome and appreciated, a birthday party, a proposal and especially that upgrade to first class, but being surprised by your founder isn’t one of them (unless they moved to an airline and are now giving out business class upgrades of course). On the odd occasion when I have been blindsided by a change of direction or strategy, it has severely eroded trust and confidence in my relationship with the founder or board. Unless the founder is responding to a severe performance issue or dereliction of duty, there is rarely a good reason not to involve your CEO early.
Success is organic, failure is attributable
Like it or not, we are all guilty of some level of confirmation bias when it comes to our influence on an outcome, but founders must be particularly careful not to fall too far into this thinking. If a business grows and flourishes after the installation of a CEO, it’s generally not inertia, but the fruits of their labour. If founders assume that at success would have happened anyway and that only failure can be attributed to changes made to the business, then you deter your CEO from taking the risks that spark genuine innovation.
The best advice I can give to both founders and CEOs in this scenario is to truly listen to each other and build a genuine relationship on a foundation of trust, respect and honesty.
