KANSAS CITY, Mo. (Nov. 11, 2015) — Startup founders often harbor dreams of leading their companies from launch to long-term success. But that ambition typically is neither realistic nor best for the company, according to a white paper released today by the Ewing Marion Kauffman Foundation.
In “CEO Evolution: Knowing When and How to Transition a Startup from Founder Leadership to Growth Leadership,” Kauffman Senior Fellow Suren Dutia calls on research and his own experiences replacing a founder-CEO and serving as an investor, advisor and board member to many startups. Dutia suggests that few founder-CEOs have the skills and experience needed to ensure company growth and shareholder value beyond a startup’s early stages. While a founder’s vision and passion are vital for getting a new venture off the ground, companies require different leadership capabilities as they grow.
“As startups mature, founder-CEOs need to ask themselves hard questions about whether someone else might be better equipped to take the company into the next stage of growth,” said Dutia. “Founder-CEOs who are able to conduct this personal skills analysis and let go of their leadership roles when needed give their companies the greatest chance at long-term success.”
After the decision has been made to put a new CEO in place, the founder-CEO and the company’s board members should jointly plan the hiring process and the change to new leadership. The white paper recommends seven steps for ensuring a successful transition:
Because founder-CEOs have been intimately and emotionally involved with their startups’ creation, letting go of the reins is not easy, Dutia recognizes. More often than not, however, as the company begins to grow, its continued success hinges on bringing on a CEO whose skills and experience give the company its best chance to be a long-term winner.