Post #46 - When Founders Exit

​There is much written about the founder’s role after an external CEO is hired to lead the organization. As with everything I write, my perspective is from hands-on experience working with founders and the leaders to whom they will transition accountability for running their organization.
 
Here are the two things I know for sure:
 

1. When a founder remains in the business without a clearly defined new role, her or his impact will impede the effectiveness of the new leader.

 

1. Any new CEO coming in worth their salt will want to do their own assessment of their team and the business. At the interviewing stage, there should be conversations with the board and the founder to make sure that there is alignment on expectations and fit between what they envision for the business and the experience of the candidate. But once the board chooses, they need to let the new CEO do her or his job.

 
When founders stay more involved than they should, their team and others will have a hard time not deferring to them. This creates a lot of inefficiency. The team knows they have a new CEO, but with the founder still involved, they may not know who is in charge. They often feel like they have two bosses and don’t want to be disrespectful to either. Most founders don’t completely understand their impact. They are often so revered for what they have accomplished that it can be very hard for their employees to let them go, especially if they see them in the business.  Even when the executive team knows that the founder is no longer effective, if they are beloved, and they often are, the transition can be even more difficult.
 
The new CEO comes in ready to hit the ground running. They know they have 6-12 months to really set the course for the business. The first 100 days are particularly important. Unfortunately, this is usually the time that the founder is having trouble transitioning out of their role, even if they want to hand over the business.
 
Nobody, especially the founder, is trying to sabotage the business. But that is exactly what happens when the founder stays in the business trying to co-lead with the new CEO. It is a very emotional process to hand over an amazing business you created, nurtured and loved…willed into its very existence. It can be even more difficult to let go of some of the relationships with people who have been in the trenches with you from the start.
 
So, what to do?
 
I recommend that before the new CEO starts, the founder gets help in defining his or her new role.  Reflecting with them on how they can be of best and highest service and how they will be involved are important to explore before they have to hand over the business. Founders can introduce the new CEO to their most important clients and relationships. They can have great insights into the business development opportunities. If they are experts in their fields and they usually are, they can serve as influential advisors on proposals or design and approach. It will also be important for the new CEO and founder to communicate their new roles, the boundaries for each and cascade this to the whole organization (founders have connections at every level).
 
Sometimes founders should exit. The way most are wired, they love to create and start and that is where they will be most happy and effective. This decision should be based on what will be best for the business.
 
The founders I have worked with are passionate about the business they created, want it to succeed and care about the people. Giving up things we love is a courageous act. Knowing that it is the right thing to do doesn’t always make it easier. Underestimating the emotional aspects of this type of transfer of leadership will cause unnecessary confusion and angst. This process requires preparation, respect and care. Founders can often contribute. Defining how is extremely important.