Founder Transition

As a founder, and important shareholder, you have created your organization to where it is, and you are rightfully proud of your accomplishments. You know that your creation, your enterprise, can be much more, and yet, you have become unsure about the path forward.

Is it time to bring in an experienced leader/manager? Most of the time, asking this question is already answering it! How should you go about it? What will happen to me, you may ask? What are the pitfalls?

The key component is trust. As you recruit your replacement, you must recruit someone you will trust unconditionally – which is not in human nature. There several ways you will, or may continue your involvement with your enterprise; you may end-up wearing up to four hats: founder, major shareholder, director and employee; or you may choose to wear fewer hats.

Of course, you remain the founder, and as such, you will continue to enjoy the pride of seeing your enterprise grow. You can retreat to a shareholder position and influence the organization at shareholders’ meetings, once a year. You can retreat to the board of directors, and even assume the chair position and influence the organization’s direction a board of directors’ meetings, quarterly. You can also remain active inside the organization as staff to the new CEO – taking on the role of Chief Technology Officer, being a typical role.

It is very important that you develop a split personality in all cases, and understand that you can wear ONLY ONE HAT at a time, and wear ONLY THE PROPER HAT. As an investor, a director and an employee, you will enjoy privileges that cannot but across those boundary lines. Your thoughts an actions as an investor are only appropriate at investors’ meetings; your thoughts and actions as a director are only appropriate at directors’ meetings; and your thoughts and actions as an employee are only appropriate inside the confines of the organization walls, figuratively.

As an employee, you have to accept that your boss needs to be insensitive to your other roles as an investor and/or director, and that, if you are failing as an employee, your job can be terminated, just as for any other employee.

As an employee, you have to realize that you cannot divulge any topics discussed at the board of directors’ meetings and/or shareholders’ meetings, nor can you divulge any internal information you’re privy to as an employee, to other directors or shareholders.

This is not easy to do! And experience shows there are three level of interference a founder needs to be aware of.

The first is the cognitive level. That is the easiest of all. You have already made a conscious decision that you will bring in an “experienced” CEO to take over; you are convinced you made the right choice; you have full confidence in the new candidate, and consciously you are making all efforts to stay out of his/her way.

Then there is the emotional level. This is harder. Despite all your confidence, you have hired someone with a different style, value system, methods of working, and experiences. He/she will do a great number of things that will surprise you: terminate one of your friends, as an example. Although you know you should have done it a long time ago and although you know that the COE is acting with good judgment, you will be tempted to intervene; or have an opinion you may share with others in the staff. You may have develop friendships with others in the staff, that might see the writing on the wall and naturally come to you for the inside scoop. You may, as a director, been privy to a restructuring plan involving some or your friends. It will become emotionally very difficult to stay detached.

The there is what we call the DNA level. At this level, your reactions are really hard to control as they are triggered below the cognitive and emotional levels. As an example, you might walk down the office and notice that there is a new coffee machine, or that a secretary uses a new brand of file-folders. A normal employee could innocently say, “Wow this has to be more expensive”; but you cannot say that, because the significance of this statement by you, will not escape other employees. It will take a lot of cognitive and emotional control to resist, in all circumstances, make DNA level interventions.

Plan to Change

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Published at 20:01

11 March 2011