If they are eager and able to develop their business and leadership skills, retaining a founder can be the best of both worlds.
Originally posted on Forbes online: https://www.forbes.com/sites/robertsher/2018/08/20/technical-founders-can-become-great-ceos/
Too often investors look at founders with skepticism, doubting that they can succeed as the CEO of a growing, midsized business. They can! Steve Jobs and his on-again, off-again leadership of Apple Computers is a famous example of the power of founder leadership. But we’re not just talking about tech leaders. Lawyers, accountants, engineers, architects, mechanics and entrepreneurs of all types start businesses without being groomed by corporate America. There are thousands of success stories, and we’ll share one great example with you: Phil Friedman, CEO of Computer Generated Solutions (CGS). He arrived in the U.S. in 1976 as a Soviet Union refugee with technical experience and today leads a global team of more than 7,500 professionals.
As a startup grows into midsized, the role of the CEO changes. Midsized businesses require more management, more leadership and the deployment of many best practices to help them scale. Retaining professional management can seem like a simple way to bring in that knowledge, and it is. But replacing the founding CEO with a professional doesn’t always work out so well. Many founders make a special intangible contribution to their business. If they are eager and able to develop their business and leadership skills, retaining a founder can be the best of both worlds.
We all know the story of Steve Jobs and Steve Wozniak, the founders of Apple Computer. By 1978, Apple was generating $2 million in revenues. After Apple went public in 1980, the company’s board of directors wasn’t keen about having Jobs and Wozniak at the helm. Soon, John Sculley was in as CEO and Jobs was out. But the company floundered under Sculley’s leadership and he was replaced by other professional CEOs. Finally, Jobs returned to Apple, having learned a lot about management and leadership and rebuilt the company.
Given all their passion and marketplace knowledge, wouldn’t it be better to keep the founder and build strong leadership teams as support?
But hold on. A fundamental prerequisite is that the founder must be committed to becoming a great leader. He or she must have passion, the willingness and drive for self-development, the desire to study leadership and management, and to develop high emotional intelligence. All of this will help the founder develop the behavior necessary to motivate employees through the ups and downs common to all businesses. It’ll help them lead the creation of the vision as it evolves, to align the company around that vision, and to take the lead in execution.
Founders don’t have to go it alone in their development. Coaches and mentors can accelerate learning, and at times, provide the CEO with perspectives that would otherwise be missed. They can observe the leader’s behaviors and use tools like a 360° appraisal to gain invaluable insights about how the leader is perceived.
A good CEO has the self-confidence to hire leaders who have greater expertise in every functional area. Whether the founder is a technologist, a lawyer, an engineer, or an accountant, he should retain other strong practitioners to drive much of the work, so he has time to lead the company. These leaders must be allowed to lead. They will, in conjunction with the founder and their peers, develop business plans with KPIs, prioritized projects and key strategies. It is those plans that the founder should hold them accountable for.
Companies like CGS, a global provider of business applications, enterprise learning and outsourcing services headquartered in New York City, is a good example of how to use management teams in the decision-making process. Founder and CEO Phil Friedman prioritized leading and scaling his company over his personal need to manage the firm’s technology development. He aggressively hired the best and brightest technologists. But he didn’t abdicate technical leadership. He, with support from his leaders, follows trends and competitors well enough to guide exploration and to set budgets.
The company established a technology council and engages customers in discussing and anticipating the future. It has short-term and long-term research and development plans. Friedman presides over key strategic technology decisions. For example, the firm has been following blockchain for several years. Blockchain can serve as an incorruptible digital ledger of economic transactions and other activity.
Instead of making these technologies an immediate part of its core product by executive fiat, the company monitored them to determine whether the market would accept them. It was clear that by the middle of 2017, blockchain was making an impression and that it would continue to have an impact. By November 2017, after numerous discussions between Friedman and his technology team, the company announced at its annual leadership summit that blockchain would be a top priority. Immediately following the 2017 summit, the VP of R&D took ownership of the blockchain initiative. He drove the creation of a blockchain R&D plan and separate short and long-term plans to ensure corporate focus.
Investors and boards of directors would be wise to stay open to the possibility that the founder might be their best choice to lead the company. Along with that, founders who wish to see their company thrive must take the development of their leadership and management acumen seriously. They must prioritize self-development and hire strong technical leaders to whom they can and will offload technical responsibilities.
