Have you ever wondered why Monster.com did not pack off all its C level leaders on the same flight ever? Have you ever given it a thought what would ensue if the founder of a company met with an accident?
These are some pertinent questions prospective investors and board members sometimes ask themselves behind closed doors. The issue of founder/owner replication often comes to the forefront while making an investment, or performing one’s unquestionable responsibilities to shareholders if serving as a founder or owner of a particularly young business. When an organization especially a start-up is over-dependent on the founder, managing partner, or any individual with a controlling interest, all could be lost if no one is capable of stepping into his or her shoes.
What happens in pre-IPO startups, small businesses and partnerships? Succession planning is generally just a second thought and, more often than not, started only after it is too late.
Founders/owners are archetypally control freaks to begin with. They just can’t entertain the thought that they can are not irreplaceable. But this trait causes many savvy investors to pass on the deal, and keeps board members on their toes even at midnight. As a founder, you need to make sure that your shareholders are protected and your legacy can be reinforced too.
What are some approaches for minimizing the problem of founder/owner replication?
Look at the bigger picture
We’re not asking you to do crystal ball gazing but you need to look far into the future. Maybe a hypothetical day when you as the founder/owner is ready to step aside and travel the world, buy a winery, or do whatever you always wanted to do. Who will be running the organization then? What kind of person would you want to replace you? How long will it take to groom him or her?
You need to formally choose a successor
A company that is doing well might not be able to raise any money without a team in place. So the founders may as well give it an earnest thought to recruit someone who could fill her/his shoes sooner rather than later. The way many startups and small businesses handle this is by hiring a President, COO or Chief-of-Staff to work alongside the founder/owner.
A succession plan should be in place
A good succession plan is a must. It takes into consideration all the skills and talents necessary for the top leadership role. It also evaluates and projects the needs of the business. The plan can ascertain specific people who could be fit for the role. They could be leaders of similar companies, or even competitors.
No founder/owner likes to believe that s/he can be replicated. But the fact remains that failing to do so means their creation dies with them, their legacy becomes totally short-lived. If you are a founder/owner, it’s time you realize that you’re not immortal and take steps to protect your stakeholders and family. And if you’re on the other side as an investor, board member or advisor, assert that the start-up have a credible plan to replicate the founder/owner.