A business’s founder is in a unique position. However, companies may outlive people, and when the founder decides it’s time to move on, they need to consider succession. It’s not something as simple as saying that founders need wills. Succession is typically done internally within the company. Even if that person they choose is someone they’re related to, they at least know how the business operates. A legacy only exists if the company manages to succeed. If it doesn’t, then the business will be seen as the child of one person. Historians will also note that the founder was not adept at choosing successors, hence the business’s collapse.
A business founder’s real legacy is their company’s ongoing success, but how does a CEO secure this?
Succession Planning Isn’t the Board’s Responsibility.
One of the pitfalls that many CEOs fall into is thinking everything will somehow magically work out. In fact, MIT notes that, with surprising regularity, boards tend to ruin the job of CEO succession. Founders should be taking the lead in both selecting and preparing a successor to carry out their responsibilities after they vacate the position. Timing is everything, and the sooner you start doing this, the more time you allow for training. It’s the only way a founder can guarantee the long-term health of their brainchild when they leave the CEO position.
Ego is the Founder’s Stumbling Block.
If it were this simple to choose a founder, then many businesses wouldn’t have failed the way they did. More often than not, CEOs find themselves the largest barrier to their own businesses’ succession and long-term survival. However, if we examine how most CEOs get to their position, we can appreciate why. In most large companies, we can trace the initial growth and establishment to a founder who learned everything they knew and used their own resources to get them to where they are. As the business scaled, their feeling of being an overprotective parent meant that the company was safe, so long as they remained at the helm.
Even when training a successor, this overbearing nature can be the undoing of the entire enterprise. Smart Company highlights a condition known as Founder’s Syndrome, where the founder has a hard time separating themselves from the company as it grows. This problem can make passing the baton to a new generation of CEOs difficult, if not impossible.
Separating the founder from their position can be dangerous, but it may be necessary. Establishing term limits on the CEO is one way of doing so. The founder may remain as a shareholder but would only control the company’s daily activities within short, defined regions. When it’s time for them to stop managing altogether, it becomes much easier to hand over the reins to a successor. Additionally, this can also work by building in succession planning. When the Founder gives up their CEO title at the end of their term, the board can support their chosen successor, establishing a line of succession and guidance over the long term.
Meeting Challenges May Mean Giving Up the Position.
When choosing a successor, a CEO must note that their own skills as the head of a company can’t cater to every eventuality. Businesses evolve, and those that fight to stay stagnant eventually lose their edge and go into decline. A CEO is only useful if he can keep the company pushing forward. A successor should be someone who understands the founder’s vision but has a unique set of skills that defines them differently. In this way, the business will have someone that approaches problems differently from the founder. In this case, the guidance shouldn’t be about HOW to solve a problem but instead maintaining the vision for the company. The problem-solving falls to whoever is the sitting CEO at the time. When the founder vacates it, his or her successor would likely solve problems differently.
Look At Evolution, Not Survival.
Another pitfall that founders have when it comes to their legacy is focusing on the wrong ideals. Again, since most founders had to suffer through survival as the company grew, they may find it hard to let go of that feeling of uncertainty that being a small, growing company has. The successor they choose shouldn’t be focused on survival but the evolution of the business idea. The founder’s legacy relies on the success of the business over the long term. This success depends on the ability of the successor to see new opportunities and seize them. Whether this is entering new fields of research and development or pivoting the company altogether, evolution, not survival, is how a CEO guarantees their legacy.
Make The Board Accept Your Choice.
While boards might be more than happy with CEOs serving out their terms as heads of companies, they may not be so pleased with the choice of succession. The issue is a thorny one since the board still retains the power to suspend or remove the CEO as they fit. If they find that the successor is underperforming or not meeting their expectations, they can take the requisite measures to depose them. Founders never have to deal with this since they are typically very close to the board members. However, the successors come from a new generation, and both parties view the other with distrust. A CEO that wants to ensure his legacy survives needs to make the board know, in no uncertain terms, that their successor is their choice.
Adopting Your Successors Success as Your Own.
Founders will always have a hard time giving up the reins of power. Getting there was a struggle, and handing it up almost feels like giving away part of their lives. Yet for succession to work and the legacy to continue, the founder has no choice. Giving up the position of CEO is weaning oneself off the power. Retiring completely still keeps the founder part of the company but no longer the central focal point. For some, this can be a step too far. Founders syndrome kicks in, and they feel like sabotaging their successor. The only way forward is to see their successor’s wins (and the company’s successes) as things they helped to create. For a founder to ensure that the legacy comes to fruition, they must always consider the big picture.