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In this debate, business leaders discuss the age-old question of how a Founder can find the perfect CEO to act as the next steward for their business, and the pitfalls to avoid.

“Founder vs CEO: How can a Founder find the perfect CEO to take over from them and what qualities should they seek?”

In the latest Business Leaders Meetup by HotTopics.ht, members were asked t0 consider the infamous Founder vs CEO question, one that has long pricked at the consciousness of Boards, investors and teams alike.

Margaret Rice-Jones, NED of Holiday Extras and De La Rue, and former Chair of Skyscanner, kicked off the debate with her allowance of several different interpretations of the question: are we considering hostile, conciliatory or other handovers? The question is certainly complex, but with her thoughts, and subsequent debates, the following was concluded:

As the Founder within a Founder vs CEO context, it’s important that you:

  • Respect the CEO’s experience and direction they will take the company.

  • Be open to differences to time management; Founders and CEOs are famous for having different interpretations of when a decision should be made, one more impulsive than the other. There are strengths to initiative and consideration.

  • Do not undermine a new CEO, whether in private or public.

  • Train staff to use the new CEO as their point of reference and pointedly step back.

As a new CEO within a Founder vs CEO context, it’s also important that you:

  • Remember your experience as a test of what’s to come, as well as your strengths and weaknesses so you can start your leadership openly.

  • Research the culture of the company carefully so you can lead with insight and empathy.

  • Do not undermine the Founder, whether in private or public, unless of course if your position is directly in response to the actions of the Founder.

  • Find complementary skills to the Founder if they are remaining in the business.

In further detail, the Meetup debated certain key action points that may be useful to understand when the inevitable Founder vs CEO time rears its head, for the Board in particular.

 

1. What is the company’s culture and core values?

You must clearly define core values of a business’ culture and highlight those that may change in the future and those that should remain sacrosanct. This should be visible to the whole team and communicable to CEO candidates, to make it easier to find the right fit, and the company as a whole to feel that they are a part of the hiring process too.

 

2. Select the CEO for the future you need

Outline your business needs and aspirations, around the most critical areas of growth for your company. The Meetup discussed the various experiences needed: growth experience? Larger company experience? Public or private equity experience? Strategy or leadership? Functional expertise? Channel or sector knowledge? They are all valuable, and most CEOs have a more generalist skill-set, but some may have a particular head for a specific paradigm. Of course, no hire will be tailor-made for the role, but you should look for sharp business acumen and a capability to execute the business model. In this way the Founder vs CEO question feels more like a seamless transition and a smart, strategic move for the business as a whole.

 

3. Founder vs CEO: ignore the versus

A new CEO will need a strong executive team and relationship with the Board. Typically, teams are close-knit units where it can be difficult to tell where one role starts and another ends. Enterprise-level teams have sometimes even stronger bonded teams, connected with various degrees of closeness to others across the business. They all work in informal groups but the structure of the former is more of an ‘all hands on deck, we’ve got a problem’ style of work than compartmentalised separation of roles and responsibilities of the latter. The transition of a Founder’s relationships to the new CEOs is one of the most important, yet fraught, points in this journey.

 

4. Avoid the knowledge vacuum

Want to avoid a chaotic transition? Make the entire knowledge of the business available in simple, easily accessible terms and files. From customers, largest contracts, investors, product technologies, sales, and marketing activities, the new CEO will need everything to hand, and this can be actioned via specific managers across the business to ensure accurate transition of knowledge and trust between those and the new CEO.

 

5. Make it an efficient handover

One month is roughly the acceptable period to transfer the knowledge of a business to the new CEO, the Meetup decided. It is highly dependent on the complexity of the transition, but should first start with the incorporation of a new CEO into the culture of the company, what are the easy wins, what are some of the obvious hurdles and what could be some of the unforeseen challenges? Targets should be the next point of reference, how to make them measurable over time and visible for the rest of the company. Getting Board influence here can be helpful in certain cases, but what is most important in a Founder vs CEO debate is that there is no versus.

Enjoy debate with your fellow marketing leaders in our monthly virtual debates and join the LinkedIn community today.

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