Fri, 07/16/2010 – 00:28 | by Jim Vollett
In order to be successful, most early-stage tech companies need two very different types of innovation, and therefore, two very different types of CEO’s – technical/product innovation, supplied by the founder CEO, and managerial/sales innovation, supplied by the builder CEO.
In addition, the transition from founder to builder is critical to the success of a company. Done well, it will lead on to powerful growth; done poorly it can severely set back the company.
Over the past year, I have written a series of articles that examine this critical transition:
Let me now summarize the main points of the series so far:
1. Helping Founder CEO’s Hand Over the Reins
From nothing to “something stable”
- The founder’s job is to believe in something valuable that no one else sees and convince a critical mass of other people – investors, customers, employees, and vendors – to share that belief.
- The founder takes a company through the levels of: research; development; and barebones stability
From “something stable” to “something great”
- The builder’s job is to nurture the valuable “something” the founder identified and help it realize its full potential.
- Builders lead a company through the levels of: stability and preparation for growth; growth; and wealth.
What’s next for the founder – a matter of identity
Transitions can be painful for the founder because it feels as if they are losing a part of themselves. Therefore, a long-term solution must include a shift in identity for the founder.
2. Helping Builder CEO’s Pick up the Reins
Potential pitfalls of shift from founder to builder
- Lack of buy-in from the founder, often because the transition is initiated by the board/investors.
- Founder must undergo major shift in identity.
- Risk hiring the wrong builder and having the whole exercise be a worse experience for the company than sticking with the original founder CEO.
Guidelines for hiring
First, do all the things that you usually do when hiring. There is a list of these in the original article. But then, take your due diligence further:
- Dynamically steer as much as you can—in other words, break this down into small steps.
- Uncover the builder’s compelling personal reasons to innovate. Builder CEO’s will go through their own identity shift, be blindsided, look bad at times, be emotionally triggered and feel like they were lied to. What inner drive will keep them going? Will it be a drive for success in the eyes of others, freedom to prove something to themselves, or a desire to give something back to society?
- Finally, trust your founder’s intuition i.e. trust your gut.
Hiring right is only the start. There is still a lot of work to ensure the relationship between the founder and the builder turns into empowerment rather than a power struggle.
There are six steps to accomplishing this:
1. Confront the challenge
2. Build the trust to reveal the conflict
3. Create the conflict-free possibility
4. Feasibility: drive it through the teams
4. Boards Helping Founder and Builders
A way in – the annual governance review
- The Board can use the annual governance review to conduct a 360-degree review of the Board and the directors with an independent coach.
- Having had the privilege of conducting 360 processes, I usually discover there is conflict under the surface. Often, people do not know a way to resolve it positively, so it seems like a better idea to keep it hidden.
- This conflict quickly comes to the surface when we introduce an individual confidential process. And once we introduce a powerful group process to solve it, people quickly engage and find a true alignment.
By Jim Vollett, Vollett Executive Coaching. Jim can be contacted here.