How to Handle A Founder CEO That is Struggling to Let Go

Guest post by Dr. Ajit Menon and Trevor Hough, in this article, they talk us through how to deal with a CEO who can’t move on.

To begin, the article details the experience of growing up in Durban, South Africa which holds one of the largest populations of people of Indian descent outside of India. Due to the apartheid, which was the institutional racial segregation in place since 1948, many Indian families were unable to find employment in the formal sector.

As a result, many of them set up their own businesses, and very many of them became very successful multi-generational retail businesses. When the author was young, they would visit the stores in Grey Street on Saturdays to get the deals on clothes and shoes, he also remembered often seeing an old man sitting on a chair outside store entrances drinking tea.

This was the “Uncle”, everyone greeted him as they entered or left the store, and he would often be engaged in a deep debate with his sons, grandsons or even customers. Due to the apartheid, the author was not able to engage with the man to understand the significance of the “Uncle”.

How the “Uncle”, is today’s CEO

Years later when at university and studying organisational culture, a classmate of the author spoke about the phenomenon of transitioning family-owned businesses to the next generation. The classmate spoke of how while passing the torch to the next generation was necessary, there was also immense cultural knowledge within the shops in the form of the founding elders.

There was an understanding of the importance of showing respect to the ones who had worked so hard to build these successful businesses. Having an “Uncle” sit outside on the chair with his tea had a number of uses.

He was available to call on when his knowledge and expertise were needed, he ensured the old customers would keep coming back to see their old friend, and most of all the “Uncle” felt respected and valued for what he had built. The last point was particularly important, this allowed for the reins of the business to be passed from the “Uncle” on without much resistance, it allowed for both the best and most successful aspect of the culture to remain in the business, and allow for the evolution necessary for external adaption to happen.

While this story is rather idyllic, it does not account for the next generation of the business’ struggles with having “Uncle” around all the time, it can cause issues that startups have in attempting to evolve in terms of succession and leadership.  Edgar Schein, who coined the term organisational culture, reminds us that all groups have to do two things to survive. They must adapt to their external environment and they need to integrate internally.

Should they do so successfully over time, how they have done this will be embedded in the group’s culture. This is how successful founders build a strong culture that then informs on how things get done in that organisation.

Their early success is closely linked to the founder’s personal value systems as CEO, their wider assumptions of business, and how they get the most out of people. The risk that founders have is unfortunately based on these very personal attributes, now also organisational attributes. The author’s experience with many founders is that because of their personal influence on the organisation’s success, it’s difficult for them to believe anyone else can understand the business when they are running it as the CEO, so they find it hard to hand over control.

These successful personal attributes sometimes cause them to resist adapting to changes in the external environment. Similar to professional sportspeople who do not know when to leave the professional arena until it’s too late. Their identity and legacy are attached to what they do, so leaving the profession can feel like giving up yourself.

In the author’s consultancy, they are often asked to assist with helping a founder to step aside, to allow it to move forward. They have found it is extremely useful to try to help both the founder and the next generation that stepping aside is not a binary thing.

It is not that one day they are in charge the next they are not, instead they ask what problem the business is trying to solve by putting in place new leaders and CEOs and what parts of the new leadership need to be taken up by whom. Finding ways to have the founders add value and pay homage to their contributions is essential, it reduces the defense of the founder against relinquishing responsibility of control of the business.

The step is, therefore, not “out of” but rather “sideways”, it helps to find a space for their knowledge to keep residence whilst, at the same time, creating the space for new leadership and ideas to thrive.

Trevor Hough is a clinical psychologist, executive coach, and Principal Organisation Development Consultant at Blacklight Advisory. To learn more about the author, check out the link here.