Founder CEOs have captured the imagination of the business world and often have a somewhat idealized or even romanticized image. Most founders have dreams of becoming the next Jeff Bezos, Steve Jobs, or Bill Gates. Venture and private equity investors are all aggressively searching for the next world-changing visionaries.
But being a visionary and bold is not enough. Founder CEOs often have to build (or recruit) new muscles to help them scale the business, organization, and themselves.
So, what is so different about founder CEOs and why do some make it, and some do not? Based on our executive assessment data compiled over several years of working with hundreds of companies, compared to executive norms, founder CEOs tend to be more innovative, less structured, more focused on learning, more competitive, less sensitive and empathic, and less worried about those around them. (Note: These differences were statistically significant, ranging from 10 to 20 percentile differences!)
These attributes are critical to the early stages of launching great business concepts with passion and boundaryless courage. But as the business grows, founder CEOs can become their own worst enemy as they struggle to adapt their leadership and operating skills to scale the business to the next level. As the markets, businesses, and organizations become more complex, founders must adapt. Their need for control often inhibits capability building, consistency, and predictability throughout their company.
Noam Wasserman studied more than 6000 companies with founder CEOs and discovered that those who continued to hold onto the majority of the board had significantly lower valuations than those who no longer had board control, especially for companies older than three years.
Some of the common growth stallers we have observed with founder CEOs include:
- Struggling with letting go of control.
- Blind loyalty to employees from the early stages.
- Difficulty understanding or accepting their own strengths and deficiencies in leading a larger enterprise.
- Lacking consistent, repeatable operating cadence when running the business.
In other words, the business is too inherently about the CEO instead of being about the company’s brand, products, capabilities, and predictable outcomes. Scale requires something that most great founders do not possess or even enjoy: consistency. We like to coach founder CEOs to “turn that snowflake into a blizzard.” That paradigm shift is both skillset and more importantly in their mindset.
Founders of growing businesses need to change their leadership and operating skills and start thinking of themselves as the “chief consistency officer.” This is how founder CEOs can create a more disciplined, repeatable cadence and drive sustainable peak performance.
Founders CEOs should focus on these four areas as CCO:
Be a Broken Record About Purpose, Strategy, and Priorities
As your business scales, the CEO needs to establish a new cadence of being consistent and disciplined in setting and re-stating the company agenda around strategy and strategic messaging. It starts with how the CEO focuses their own thinking and conveys priorities to the rest of the team and to key audiences inside and outside the company. All CEOs must be able to easily state the vision of the company and the top 3-5 priorities, repeating these at every meeting, interaction, and communications.
Instill a Disciplined Operating Cadence
As the company grows, founder CEOs need to maintain better predictability and discipline in how the business is run. This includes a consistent cadence around meetings, goals, metrics, rewarding good performance, and holding people accountable. For those CEOs that abhor process and structure, do not hesitate to hire a COO who can fulfill that role. The operating cadence needs to align all the cogs in the system around the strategy, with an overall feeling of discipline and predictability that employees, customers, suppliers, and investors can expect.
Create Cohesive Culture and Values
The CEO sets the tone for the organization and company culture. What does the company stand for? Inclusion, creativity, collaboration, integrity, innovation? CEOs and their teams need to identify “how” they want people to operate after they align on “what” they want the company to become. The CEO needs to go beyond buzzwords and talk about and model the culture on a consistent basis. Try to get to the point where your company culture can be defined with a consistent list of four or five core values that can be integrated with company messaging and (more importantly) the management team’s behaviors. This will help people operate consistently and work together coherently.
Ensure High Standards for Talent
Founder CEOs sometimes are excessively loyal to employees who were there at the beginning. As businesses scale, roles will evolve, and the CEO needs to maintain consistent high expectations for performance standards.
Be thoughtful and as specific as possible about expectations for leaders, managers, and employees in terms of deliverables, behaviors, and results; and then implement standards and accountability consistently across the organization through 360s, performance feedback, and direct observations. Instilling objective and data-oriented assessment is critical for all talent decisions.
It is a paradox: Founders often resist bureaucratic thinking, but sometimes they need to adopt just enough of a process-oriented, structured mindset to help their companies grow exponentially. The same character traits that make founders so great at coming up with ideas and being visionaries can sometimes make them struggle at accelerating a company into the next stage of growth. To scale the business, founder CEOs need to strike the right balance to let go of some of that entrepreneurial control in exchange for greater operational consistency, strategic discipline, and ultimately bigger growth.