Founder-CEO succession: “Cracking the code”

10 September 2021

Every Founder of an organisation reaches a point sooner or later where they think about succession and every case is unique. A Founder might wish to work ‘on’ the company from a non-executive position, instead of as CEO ‘in’ the company and might thus be looking for a successor. Or a Founder might – if not with the arrival of private equity – be facing the next phase of their company’s growth and not consider themself to be the right person to take the company to the next phase. Or a Founder might have founded a successful SAAS company but gets more energy out of developing partnerships than leading a company. Or a family-owned company might be looking for its successor outside of the family because there is a need for a CEO with an entrepreneurial profile as a chaser of innovation and growth, and said person can’t be found within the family.

All the situations outlined above are unique and all are about realising what is needed to make the next phase of an organisation successful.

Success factors for a successful succession

A complex question and little data exists to answer it. How many successions succeed and how many do not? What is the reason for success? Can any factors leading to success be identified?

Experience and our own research has taught us the following:

1 – Sometimes a Founder’s deep desire to let go because he or she wants more time, their annoyance at people whining when an operation costs too much money, is different from actually being able to let go. More importantly, what does letting go entail? The first 6 months after the succession, the Founder might have enjoyed experiencing relative peace and quiet, but after that restlessness and a sense of loss can start to creep in. The Founder wants to get involved in the company again, with all good intentions of course, but this can interfere with the role of the new CEO. It’s important to spend time on the new role of the Founder after the succession and what this will involve.

2 – Is it clear for the Founder what exactly is needed in the company? Which challenges is the organisation facing and what type of leader fits with them? A Founder can have the feeling that he/she is the only one that really knows the company, knows where it should go and how to get there. Looking for a copy of oneself seems like a logical choice, but it skips the question of which type of leadership suits the next phase of the company. Should someone make scalability a reality across several different axes, keep going with digitalisation and start on improvements at the same time? Or is someone needed that will allow the company to transition into a unicorn and that ensures that growth does not tail off? It’s important that that is clear and only then will it become clear what kind of profile is needed.

3 – Do Founder and CEO match when it comes to norms and values? If anything goes wrong in the succession it tends to be something pertaining to this point. It’s important that enough time is taken in those first conversations to really get to know each other. In this way you realise if personal norms and values are shared. This is the foundation for working together and continuing to be in dialogue with each other.

4 – When the new CEO is on board, that’s when the journey really starts. How does the Founder make sure the new CEO is successful and what does success mean to him or her? Defining success, making a clear plan of how and across which timespan the Founder will phase out and the new CEO will phase in is crucially important. It’s important to take MT with you in this process so it’s clear which space is being given and how the successor is being positioned.

A conclusion can also be that the time is not yet ripe. Letting go without external succession but by strengthening the current MT for example and placing a bigger number of tasks and decisions with them could also be a next step

In the next blog we’ll delve deeper into the perspective of the (new) CEO.

By Hanneke Rinkes-Meijer (Managing Director at Newpeople). 

Would you like to talk about this topic? Feel free to call or e-mail Hanneke to make an appointment at hanneke.rinkes@newpeople.nl or at +31 (0)6 46 07 41 03.

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