“Phases of Leadership: Determining the Role of the Entrepreneur as the Company Grows”

For many entrepreneurs, nothing quite beats the adrenaline rush of starting a company. It’s full of risk and derring-do, and it’s a daily challenge just to keep the company upright. It takes an executive who thrives on such drama. Entrepreneurs are made that way, and that’s a good thing, until the company grows beyond the startup phase. When it’s no longer a thrill a minute to keep the company growing, some entrepreneurs lose interest, or don’t know what to do next for the company they so lovingly started. Many entrepreneurs feel trapped at this point. They don’t want to give up on their company, but they are tired of doing the same old thing. Some keep going, burning out their management team and depressing shareholder value, until the board steps in to replace them.

Others fare better by understanding their own skills and deciding how they can best support the company. Some decide to leave and go on to other startups. Others move themselves into a role that suits them better.

In this Quick-Read you will find:

• Questions to help analyze your motivation for starting and running a company.
• Methods for determining the best role for you to play in your company’s future.

SOLUTION [top]

Uncover your role in the company by answering these questions:

1. When you started your company, did you want to build something, or were you more interested in escaping something else, like a bad boss or an unhappy work place? How you answer that question says a lot about what motivates you as an entrepreneur. Entrepreneurs who want to build something will find the place in their company where they can most effectively help the building process. If you wanted to be free from constraints, you may have issues with giving up power. But remember: teams succeed, not individuals. Individuals form consultancies. Teams form product companies.
2. What motivates you? — "Do you want to be rich, or do you want to be the boss?" Venture capitalist Gerald Langeler asks entrepreneurs this important question. If you want to be rich, Langeler explains, you will give up power, or share it. You will find the right place for yourself in the company that enhances its potential for growth. If you want to be the boss more than anything, you may be the boss of a very tiny company.

   Knowing what motivates you is very important. It will help you decide what role in the company will be most satisfying to you. If you know that you find startup environments exhilarating, but what comes after feels boring, set your company up so that you can leave it in good hands during its next phase. You may want to remain on the board, simply hold stock, or sell your interest entirely.

   If you want to stay with the company, be honest about the situation and yourself. It probably isn’t a good idea to ask your subordinates what they think of you and your abilities. They are not likely to tell you anything negative about your performance.

Try these avenues to assess your value to the company:

1. Hire an executive coach. This gives you the opportunity to talk things out in a safe setting. The coach will help you see your strengths and weaknesses and will help you structure a future for yourself in the company. You can explore what made the company successful in the last year and what will make it successful in the year ahead. You will be able to see how that path to success aligns with your skills.
2. Talk to your board of directors or advisers. Ask them to evaluate you every six months in the company’s early days. They shouldn’t be shy in expressing their opinions of your performance.
3. Talk to other entrepreneurs about how their roles have evolved, especially ones who have been through a company’s growth phases before. They will help you see the signs of change that may indicate your role should change.

After the startup phase, your company will change a great deal. Instead of wearing all the hats, you’ll need to hire a management team and staff. Are you ready, as an entrepreneur, to become CEO of this company? As you reduce the span of your responsibilities, you will need to find the places where your skills shine. Perhaps it’s as chief financial officer, chief operations officer, president in charge of marketing or engineering. Perhaps, as Bill Gates has done, you will best serve the company by taking yourself out of day-to-day management and spend your time just thinking or inventing.

REAL-LIFE EXAMPLE [top]

Chris Pieper, president and CEO of ABC Technologies, started his software company about a decade ago. Unlike many entrepreneurs, he’s still at the helm of his company, but his role as CEO has changed.

"I’ve gone from being the person who did all the work, to being the person who worked through my managers," he says. But even after ten years, he is still willing to say, as the company now moves toward an Internet strategy, that his role could change. "When will my ability to change and adjust stop working? Just because I’ve been successful to this point, will I be if we become a $150 million company?"

Pieper keeps asking these questions, because it’s his way of measuring his success in his job. Because he cares more about the future of the company than his position in it on any given day, he is willing, whenever necessary, to find another job in the company.

DO IT [top]

1. Think about what motivated you to start your company. If you are a builder and a team player, remaining as CEO or in a top officer position may be just right for you. If you are more interested in the heady startup phase or are a loner, you may want to move on after startup.
2. Get an executive coach to help you evaluate your skills and act on what you learn.
3. Be certain that you are using time effectively, not wasting it on unnecessary "obligations." Get time-management ideas from the Quick-Read Solution "Manage Your Time Effectively."
4. Consider hiring a new secretary, executive assistant or manager, and delegate responsibilities you no longer want.
5. Groom an exceptional employee to replace you. Gradually transfer responsibilities to the prospective replacement.
6. Consider merging with another company, to acquire its management team.
7. Ask yourself, "If I was hiring me, where would I put me?"
8. Ask your family and friends when they’ve known you to be the happiest and most fulfilled. You may not even be able to admit to yourself that your current role in your company isn’t very satisfying to you, but those closest to you may have a strong feeling about this.

RESOURCES [top]

Books

Managing Corporate Lifecycles by Ichak Adizes (Prentice-Hall, 1999). Chapter 4: "The Wild Years: Go-Go" discusses the "founders trap," when a company is organized around its owner. Chapter 5: "The Second Birth and the Coming of Age: Adolescence" discusses the necessary "change in leadership-from entrepreneurship to professional management."

Right from the Start: Taking Charge in a New Leadership Role by Dan Ciampa and Michael Watkins (Harvard Business School Press, 1999). Consider using this book to provide a strategy for success for a new leader hired from the outside.

Internet

"The Wall" by Susan Greco. Inc. magazine (October 1998): 54-69.

"Necessary Losses" by Norm Brodsky and Bo Burlingham. Inc. magazine (December 1, 1997): 116-120.

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Article Contributors

Writer: Kathy Watson