Formula for a failed leadership transition

WHAT HAPPENS AFTER THE FOUNDER

Storytellers have been spilling ink for over a decade about what Baby Boomer founders need to do to pass on their businesses to the next generation of leaders. As a result, the meme-worthy cautionary tale of "archaic founder won't let go of the reigns" has become the narrative of the Zeitgeist from Yellowstone to Succession to The Righteous Gemstones. 

You know the tale:

A wealthy, influential leader and creator of enterprise. He's a mild Luddite, knows the internet exists, but would rather live without it. A titan of industry, a study in folklore, he is almost as much a caricature as a character. He wears a slim-fit TravisMathew zip-up fleece to the office. He dabbles in Pilates. 

Shortly before the pandemic, he was confident that retirement was near. But then, with offices shutting down and revenues swinging wildly, he simply couldn't walk away at such a sensitive time. 

Succession plans were stunted. Logical heirs were undermined, exposed for imperfections, or sent to Siberia to manage "special projects."

Despite what it may seem, the world doesn't need one more article on what he must do to finally step back. He's read them all and finds them unconvincing. Crisis (like a good auditor) or creature comforts (like his house in Tampa) may eventually push him out, but he is generally unconvinced that those 40-year-old upstarts are ready for the reigns. They're still Millennials, after all (you read that derogatory tone correctly).

THE TWO TRUTHS OF THE LEGENDARY FOUNDER

Truth Number 1:

A clear and committed founder is essential to a venture's success. That cartoon outline I've sculpted above? It's filled in by grit, sleepless nights, countless compromises, and more hard lessons than anyone in the cheap seats would dare imagine. Founders—entrepreneurs—are the essential lifeblood of a healthy economy. For all the sometimes-earned criticisms that the founder mentality invites, it is also a catalytic engine to drive through any venture's chaotic startup years.

Truth Number 2:

Founders’ strength is their weakness. That same unencumbered drive is often why founders outstay their effectiveness in their organizations. The skillset needed to get a business to terminal velocity is rarely the same skillset needed to grow an organization into its next-gen era. Depending on the venture and the leader, that fading effectiveness can show up in year 5 or year 25, but regardless, the switch is coming: that day when the Founder's brightest days shift from windshield to rearview.

Founders must become obsessive about watching for that shift and leading its implementation when possible. The fire of the Founder can heat the homes of millions, but that same fire can burn them down. But this article—formula for a failed succession—isn't primarily about Founders and their frailties. Instead, it's about Successors and how they set themselves up to fail.

THE THREE MISTAKES SUCCESSORS MAKE

Successor leaders nearly always come into an organization in need of change. Depending on the Founder's awareness of their weaknesses, the change may be large or small, a revolution or evolution. Regardless, successors seldom are there to stay the course. Leadership transitions are one of the most dramatic that any organization undertakes, and they fail more often than not (up to 70% of the time, according to the Corporate Executive Board). 

Successors make one of three critical entry errors. A cultural crisis is on the horizon if these three are in play. 

1. Accommodation - Successors with pliable personalities or strong personal ties to the founders often make the mistake of trying to continue the Founder's legacy too closely. Strong founders leave strong cultures for good or for ill. Many G2 (second-generation) leaders, particularly those mentored by the Founder, feel the pressure to stay the course. They focus on "not making waves" and "minimizing disruption." This mild-mannered approach may seem to lower risks, but it exacerbates them. No matter how good the Founder was, what they've left behind needs to be disrupted.
   
   After years in the driver's seat, the Founder’s blind spots are ingrained in the organizational culture. Without the magnetic power of a Founder to smooth over them, those cultural grains will become crevices, and those crevices will become canyons. By trying to ignore these issues, the Successor only ensures their longterm survival. I gently remind these Successors: "You're the leader now, not the follower. So lead."
2. Fad Chase - Successors eager to make their mark, particularly those growing up within an organization, are over-responsive to hype and trends. They want the financial advisory firm to "get into crypto." They want to pivot the homelessness org into taking a stand on student loan debt. It matters lit how valid or needed these current affairs may be. Invariably that tyranny of the now becomes an oily slick in the smooth water the Founder left behind. Successors need to manage change with a long-term view, subsuming the drive to "make a big impact" out of the gate. To these masters of the zeitgeist, I remind them, "Your first job is to define reality, not make a splash. So listen before you leap."
3. Rebel - Successors have often watched from the sidelines, racking up a master list of all the Founder's flaws that desperately need to get fixed. In others, a desperate board has brought in a successor to "clean up the mess." In these situations, it's easy for successors to get wrapped in putting all their energy into zigging where the Founder zagged. The Founder loved corporate retreats? They're a waste of resources. The Founder was committed to brick-and-mortar stores? The future is purely digital. U-turns result in innocent bystanders falling off the side of the boat. One last gentle reminder: "Leaders primarily make cultures, not decisions. So don't start with your plan, start with your people."

THE ONE THING SUCCESSORS MUST DO

Taking over leadership of a proven venture is a delicate game. I liken it to learning how to bake the perfect loaf of bread at sea level and then moving to the mountains. It would be easy if you remake the bread recipe every 500 ft of elevation change or so. Then, you'd have it mastered by the time you get to high altitude (a challenge for even the most skilled bakers).

But Successors are taking a proven recipe and making it work in a new context. Founders built their businesses for a world that is no longer here. They made the rules of that past world last as long as possible. They made as many changes as they could to their cultural framework. And then their need for change outstripped their ability to pivot. 

Successors have to recontextualize everything. If there is a generational gap between leaders (as there often is), you, as the Successor may be very familiar with life at elevation. You know the new world better than your predecessor. But you still have to update the recipe for baking at 10,000 ft. 

In business, context is everything. You must master the integration of listening, crisis management, and long-term cultural evolution. You are surrounded by pitfalls and recipes for failure. Your best "in theory" ideas suck in actuality. 

This is the life of the Successor. And you only know it once you're in it. But successors who KNOW this is what they've signed up for have the upper hand. 

Dear Successor, you'll notice the three admonitions above are the "recipe" for contextualizing your venture for its next significant era:

1. ASSUME THE ROLE: You're here to lead.
2. KNOW WHERE YOU ARE AND WHERE YOU'RE GOING: Listen before you leap.
3. CULTURE IS A LEADER'S MOST IMPORTANT JOB: Don't start with your plan; start with your people.

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