CEO’s have a shelf life, but should they move over, rather than move out?

Jack Dorsey, the recently resigned co-founder and CEO of Twitter said:

“There’s a lot of talk about the importance of a company being ‘founder-led.’ Ultimately I believe that’s severely limiting and a single point of failure…I believe it’s critical a company can stand on its own, free of its founder’s influence or direction.”

The adage has always been that if you truly want to build a successful business, then you should be working towards making yourself entirely redundant. There are certainly the stats to back up the idea that founders have a shelf life, with recent research (aimed to better understand and quantify the impact of founder-CEOs on their firms in the long term) finding that whilst founder-CEO leadership is associated with an almost 10% higher company valuation at IPO, the value of having a founder in the top seat rapidly deteriorates after that. The research, cited in Harvard Business Review, also found that the value added by a founder-CEO essentially dwindles to zero approximately three years after firms go public, and they then start detracting from the value of the company in the longer term.

But should you move over, or should you move out?

I work with a lot of founders, and it’s true that in all organisation except those in the start-up phase, I would be suggesting that these leaders should be concerned with where they see themselves in the long term. But it’s my feeling that ‘making yourself redundant’ doesn’t necessarily mean exiting the business completely (although that is one option). Instead it’s about repositioning yourself to where you might be better placed to help the business thrive as it grows without you at the helm. 

It’s this premise that made this Harvard Business Review article particularly interesting – a suggestion of strategies that can be effective in ensuring a smooth transition from CEO to, well, something else. 

1.) Funnelling founders towards non-CEO positions.

This approach works best with founders who are able to acknowledge that they are no longer the best fit for the CEO role, but who are still committed enough to their companies that they are willing to stick around and help. I’ve seen this strategy first-hand with one of my own clients who started as a specialist, then became a generalist as they headed up and grew their own business. Recently, this very individual has brought in a leadership team and re energised themselves in their own specialism. The challenge was moving from ‘doing everything’ by bringing in people who could do things better and focussing on the core part of the business they had a real passion for. It has (and continues to be) an amazing journey. 

2.) Involving founders in succession planning

Especially in organisations where the founder still holds significant power and influence, board members and executives may be reluctant to even think about succession planning, let alone open up a candid conversation on the topic. But one way or another, succession will have to happen eventually, and it’s likely to go a lot better if the CEO is involved from the outset in crafting and implementing the plan. One of my clients – who has a finance background – has done exactly this. Noticing their own growing skills gap as their business accelerated, the founder has deliberately focused on the financials and moved into what is technically the FD role, all whilst coaching a now new MD of the business. This self-awareness and acceptance to sidestep rather than exit is already proving extremely beneficial. 

3.) Moving on with a passion project

This one is somewhat different, but equally worthy. One of my clients is beginning the process of going to market with their business; a move driven by the desire to pursue a new passion for technology. After leading and growing a successful business, they are now keen to develop a new idea without compromising the health of their existing business. Slowly, and with very deliberate planning, everything is being put in place to allow their very successful business to go on without them. 

So yes, your time as a CEO might be shorter than you first believed, but with self-awareness of your own strengths, and the ability to recruit talented people who will fill your boots and then some, you might find the transition leads you to something equally rewarding. 



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