by Mark Goulston, Doc Barham, and Jeffrey Weiner
You’re a 60 to mid-60-something founder/CEO. You’re not only well known
to your customers, vendors and investors: you and your brand are nearly
inseparable and you are LARGER THAN LIFE.
What would happen to your company if you weren’t there (because of death or a less morbid exit strategy)?
We have asked that of a number of the companies we work with where the above description applies.
When that description holds true, we have yet to encounter a senior
management team where there hasn’t been a mixture of palpable anxiety
and nausea in the pits of people’s stomachs, admixed with eager
anticipation to finally get the chance to try their hands at running the
With a number of founder/CEOs we have met who are proud–generally
justifiably–of their company yet exhausted and battle weary, we have
begun to see a willingness to pass on the baton to the next in line. The
reasons for this willingness are many and varied. In some cases, it may
be failing health; in others it may be a desire to do something else
for their “final chapter”; in still others it may be a perception,
well-founded or not, that selling price multiples will be depressed for
years to come, or that looming competitive threats may require
additional capital or other resources not easily available to the
Whatever the reason may be for this growing willingness to pass the
baton (a subject for another day), our client experiences over many
years have led us to conclude that if the ten conditions below are
present, then the company is likely to survive and thrive even after a
“larger than life” founder/CEO departs:
1. Customers have deep brand trust and loyalty that is greater than their awe of the founder/CEO.
2. Investors, employees and others with a
direct financial stake in the company’s survival and well-being have
deep confidence in the next CEO (either the founder/CEO’s skill set and
maybe even some of their Personal Genius* is being passed on/made
scalable, or the new CEO manifests their own).
3. The next CEO has earned the trust and
confidence of people inside and outside the company by having
demonstrated a track record of successful judgment** and judgment calls
(a) Vision–able to grasp the realities of
the present, see clearly into a disruptive future and articulate a
vision so that others “buy in” instead of “buy out”
(b) People–able to get the right people in the right positions doing the right things
(c) Strategy–able to define, chart and
articulate a plan that feels right, makes sense and seems doable to the
mere mortals who will be tasked with executing it
(d) Crisis Management–able to effectively
and efficiently deal with obstacles, mistakes and conflicts head on, to
correct problems fully so they don’t reoccur and most importantly to
learn the important lessons these setbacks have to teach
4. A process for leadership and management development is in place whereby:
(a) High potential personnel and high
performers are identified, and are then nurtured and coached in ways
designed to enable them to fulfill their potential
(b) People’s judgment and judgment-call
skills are developed (this is the key to being able to delegate to
people with confidence)
(c) Skills are learned to confront and
resolve conflict early, effectively and completely (conflict avoidance
at all levels is one of the greatest obstacles to success)
5. A process for change management is in place whereby:
(a) Vision, Strategy, Execution, Metrics*** is
clear to everyone involved in the process and all are committed to it
(Vision = 5-year outcome; Strategy = 3-year outcome; Execution = 18
months to 3-year outcome; Metrics = measurable outcomes)
(b) Everyone involved knows who will do what, by when and why
(c) Specific and measurable outcome
criteria for advancement and pay are clear to everyone to prevent the
frustrating, demotivating and often demoralizing process of people
working hard only to be told they have done the wrong thing after they
have done everything they thought they were supposed to do
6. Attitude has been replaced by
gratitude: anyone who works for or with the company feels a deep sense
of appreciation and gratitude.
7. Pride and paranoia have been replaced by:
(a) Asking for help when you need it (but being specific about your request and having tried everything possible before you ask)
(b) Offering help to other people and
other parts of the company without their needing to ask for it (as in
taking people aside and saying. “I’ve noticed something that might help
you or your division get better results. Might we set a time to
(c) Instead of hoarding information, giving it to whoever it might help
8. People are committed to not letting
each other fail–people seem to have each other’s back more than they
fear turning their backs to anyone.
9. There is a “this is the place you want to work” buzz in the company, the community and the world at large.
10. Anyone who buys or uses the company’s
services or products has a nearly evangelical “you gotta try this!”
zeal that they spontaneously tell others about.****
While we would not be so presumptuous as to say that any company
missing one or even more of the above items is doomed after a LARGER
THAN LIFE founder/CEO turns over the reins, we would urge every
founder/CEO (in the next 60 seconds) to look in a mirror, and ask
himself or herself: do I have in place in my company all 10 of these
corporate “lifesavers”? If you do, congratulations–that’s great! But if
you don’t–and please do yourself a favor and recognize that you are
hurting yourself and everyone else in your company’s “ecosystem” if
you’re not brutally honest about this–then start working on a plan to
develop and implement whatever item(s) your company may be missing.
Making sure that your company is “built to last” (which is ultimately
your responsibility), will help you and your family, and your employees,
customers and vendors, all to sleep better at night, and to face each
day with confidence and enthusiasm, and, ultimately, will lead to a
higher valuation for your business.
*Personal Genius is a process developed by Xtraordinary Outcomes to
deconstruct the largely intuitive “special sauce” of the best performers
in companies so that others can get breakthrough results following the
same steps. When the best performers learn “how” they do what they do,
this process helps them do it more consistently and to achieve even
**For an excellent discussion of this subject, see: Judgment: How
Winning Leaders Make Great Calls by Noel Tichy and Warren Bennis
(Portfolio Trade, $17.00).
***Vision, Strategy, Execution, Metrics is a process developed by Cisco for identifying and implementing business initiatives.
****The Ultimate Question: Driving Good Profits and True Growth by
Fred Reichheld (Harvard Business Press, $32.95) explains in a clear and
readable book how the ultimate question is whether or not a customer
would recommend your product or service to a friend.
Jeffrey M. Weiner, Esq. is corporate partner in the Century City office of Steptoe & Johnson
LLP, and represents companies and individuals in mergers
and acquisitions, business financing and technology transactions, and
general business and securities law matters.