Thinking Differently About Founder Transitions
Maybe Founders Should Never Leave?
Conventional wisdoms says that when it comes time for a founder to retire or otherwise step aside, he or she should leave the company or organization entirely.
Ride off into the sunset
Give the new leader space
Don’t cast a shadow
Stay off the board
Make a clean break
Step out of the way
All potentially good advice for certain leadership transitions.
But should this model always apply, especially when it comes to mission-driven founders and leaders?
My experience would argue “No”
Organizations should consider several creative options when facing a founder transition.
Balancing Risk with Opportunity
Every leadership transition represents an opportunity for fresh ideas, new energy, refined strategy, and growth.
Founders (and even long-serving CEOs) often become an embodiment of the organization’s essence, its DNA, its mission and purpose. Clients, investors, and employees often engage with the organization because of the founder.
So separating a successful founder entirely from the organization, whether on short notice or following a longer transition period, can create significant risk for an organization.
Revenue loss risk
Employee departure risk
Loss of organizational identity risk
And even risk of organizational failure
Some Creative Approaches
I’ve had the privilege of helping guide dozens of businesses and nonprofits through healthy leadership transitions, and I’ve seen nontraditional founder transitions actually work well, especially when that founder, and ideally the new incoming CEO, both model the form of mission-driven leadership we espouse here at Good Works.
Because mission-driven leaders tend to place the needs of the organizations, its customers, its employees, and even the broader community above their own personal needs, such leaders are often more likely to be able to navigate and thrive in a nontraditional founder transition.
Below are a few creative approaches we’ve seen lead to successful, out-of-the-box founder transitions:
Change the Job Description, Not the Founder. Often when founders express a desire to step away from the CEO role, it’s not because they want to leave the organization entirely, but because they no longer enjoy serving in the CEO role as it has been designed, and they just haven’t considered that a change in CEO duties might be a better answer, for them and for the organization. In many cases, removing some of the CEO's daily operational duties, making the role more externally-facing or strategic, and/or hiring or elevating other leaders to take on some of the traditional CEO duties can elongate the CEO’s tenure.
Consider Creative New Roles for the Founder. If a founder truly needs to be out of the CEO chair, that does not mean he or she must leave the organization entirely. I have seen founders transition to a board role, a paid consulting role, and even a role lower on the org chart reporting to a new CEO. Sometimes these ongoing roles last a long time. Sometimes they are just for a shower period. Either way, these kinds of creative transitions do require significant care and planning, including:
Clear documentation of the new role
Clear lines of authority among all leaders
A built-in re-evaluation schedule where the new role is re-evaluated and can be changed or ended without consequence or hurt feelings
An outside third party to help structure such an arrangement
Giving the new CEO full authority to end a creative ongoing role for the founder without repercussion
Recruit for Chemistry with the Founder. If the founder has served the organization well, organizations should consider recruiting a new CEO who (among other important qualifications) demonstrates good chemistry with, and an openness to, some form of continued founder role. This often requires a more involved recruitment process, one that might require more meetings and interviews, and even some role for the founder to play in the process, than typical recruitment processes often afford.
Let Me Be Clear
I’m not arguing that every situation is ripe for perpetual founder engagement, just that organizations should at least not take the standard management advice as gospel truth in every situation.
But what do you think? Have you had experiences with successful, or unsuccessful, creative founder transitions that you can share?