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Should a Founder Become the CEO, or Should They Step Aside?

There’s a moment when a start-up becomes a “real” business…a founder must not miss it There are people who are uniquely capable of creating a successful start-up. And there are people who can lead and manage a large company. But clearly, finding people who can do both is challenging. Whether or not a founder can […]

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There’s a moment when a start-up becomes a “real” business…a founder must not miss it

There are people who are uniquely capable of creating a successful start-up. And there are people who can lead and manage a large company.

But clearly, finding people who can do both is challenging.

Whether or not a founder can be a great CEO is based on a few key assessments and decisions. But before making these assessments and decisions, founders must have a few a-ha moments and be willing to learn and let go.

Successful startups are powered by the vision, passion and hard work of the founder. Founders tend to be creative, driven, bold thinking individuals who are highly effective in creating excitement, ideas, and culture.

Combining those attributes with limited bureaucracy and process gives the team an opportunity to spitball, dream big, think big and if successful, develop disruptive products and services.

Then, at some point, the organization reaches an inflection point. The moment when the company should transition from being a startup, an idea, to being a “real” business and company…the moment when growth at all costs leads to scarcity of resources and competing objectives in the organization. Policies, processes, decision making, prioritization and hierarchy; the enemies of the startup culture are required.

Most founders expect this moment to arrive. Otherwise, why build a business around your idea?

If you believe in it, you anticipate moving from a startup to a sustainable business.

And yet this point in time is often difficult to identify…even if it’s inevitable. And it’s the first “test”; does the founder recognize the a-ha moment?

Many founders don’t see the moment and growth begins to slow…people begin to question the direction. Chaos may follow.

If the founder does recognize the inflection point, it leads to the next a-ha moment; to look in the mirror and perform an honest assessment of their capabilities, and the team as well.

Are there gaps in the founder’s ability to operate the business as CEO? If so, can the business support bringing in new execs? Will the founder support the transition from startup to a professionally managed organization?

The foresight to know there’s a need for change and the accurate answer to the questions above will determine the fate of the organization…and whether the founder can be successful as CEO.

Why?

Because EVERY organization, at some point, needs process to ensure transparency, timely execution and alignment of resources. Add in some financial rigor and discipline; and a healthy dose of brutally honest, marketplace-driven assessments of your competitive positioning and you’re ready for battle.

So to answer the question of whether founders can make great CEOs, it depends…but there are three potential outcomes:

  1. The founder does a self assessment and says “I have some meaningful gaps in my experience and skill set, I am going to surround myself with people to fill those gaps.” These founders can become successful CEOs, because they addressed their shortcomings.
  2. The founder does a self assessment and says “I have so many gaps and so many weaknesses with respect to operating a business and implementing a more professional management structure that I need to hire a CEO.”
  3. Or the founder doesn’t do a self assessment, or doesn’t do an honest self assessment, and they miss the opportunity to take their company to the next level.

An advisor or mentor can be very helpful during these transitional moments because when you are immersed in the details of running a business day to day, it is very difficult to also identify the inflection points and strategy adjustments. Advisors are helpful in facilitating the transition from a vision to an actionable, strategic plan by:

  • Sharing experience and insights from an objective third party
  • Providing tools and processes
  • Doing a tough minded assessment of the marketplace and competition
  • Acting as a sounding board and mentor in the assessment of strategies and the team

To repeat… there are many people out there who are uniquely capable of creating a successful start-up. And there are many people who can lead and manage a large company. You don’t need to be an expert at both. If you want to be successful as a founder, find a great mentor/advisor and build a leadership team equipped to implement the strategic transition plan and ensure the appropriate processes and policies are intact.

And if you know you’re not the best person for the job, find a different role when that inflection point comes… just don’t miss it all together.

This article was originally published on medium.com on 1/31/2020.

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