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Leadership
Dispelling the myth of the irreplaceable founder
Beware biased narratives about founder CEOs’ unique abilities. They must prepare the business for life after their departure, says IMD’s Tim Quigley.
Rapid read:
- Beware the founder myth. Stories about exceptional founder CEOs often suffer from selection bias, overlooking less successful founders with similar traits.
- Make replaceability part of the legacy. Strong founder CEOs build succession into the business, so the organization can thrive after they leave.
- Lead for the long term. Even under pressure for short-term results, founders must prepare the company, its culture, and its leadership systems for sustainable success.
The founder CEO occupies a revered space in the collective business imagination. Lauded for their vision and drive, founder CEOs’ stories are celebrated in bestselling management books, media features, and autobiographies.
But research shows that much of this mythmaking is flawed, biased, and misleading. It may even have warped our idea of effective leadership. When shareholders or other stakeholders see founders as irreplaceable – or they begin to regard themselves as such – it often signals a failure to engage with the challenge of building an organization capable of thriving over the long term.
Here’s how to dispel some of the most damaging myths and prepare for life after the founder’s departure.
Selection bias and the myths of success
The primary problem with analyzing what makes successful founders great is selection bias. When observers say that successful founders share particular traits, they’re often overlooking all those who were less successful but who also possess those traits.
Such false distinctions can mislead us in developing an image of the model founder and what makes them successful. People can be swayed by myths about founders, such as the idea that college dropouts do better. Yes, Mark Zuckerberg, Steve Jobs and Bill Gates built incredible firms – but in fact, college graduates start more successful firms than dropouts.
Of course, founder CEOs often possess significant strengths in terms of their vision, execution skills, networks, or simply passion for what they do. But every individual is different.  And if we were to consider the founders whose names we don’t know – those who left before their companies became wildly successful, and those who ended up getting in the way of their firm’s continued success – we would have a more realistic view than the romanticized images so widely perpetuated today.
A stewardship mindset prioritizes the firm and its future above any one individual’s legacy.
The risks of mythologizing the founder
There are serious downsides to mythologizing a company’s founder. The first is that the business may be tied too closely to their personality, opinions, and preferences. When they leave, taking these with them, the new leaders may lack direction. Moreover, talent development and succession planning may be neglected, weakening the firm’s prospects.
Some departing founder CEOs take a more discreet ongoing role, such as chair of the board, to help steer the ship. But that creates additional risks. Research shows that when a founder CEO stays involved as board chair, their successors find their options are limited: unable to undo anything significant done by the founder, their ability to deliver growth is constrained.
Even if the founder’s ongoing association with the company is looser – if they remain as a part-owner or become a media commentator on the industry, for example – problems can arise. There are cases where founders have returned to great effect – most famously Steve Jobs at Apple – yet other examples are less straightforward. Howard Schultz returned to Starbucks twice after his original 14-year stint (while not strictly the founder, it was Schultz who built the company into a global chain). Arguably, though, he never really went away, always staying close and retaining an influential voice in the company. Might his successors have performed better if Schultz had truly left the stage?
Rather than focusing on founders’ supposedly rare gifts, we would be better served by discussing CEOs as stewards of their companies. This means hiring team players who will take the reins for a time, build the company, and hand it on in better shape. A stewardship mindset prioritizes the firm and its future above any one individual’s legacy.
An alternative approach
What can companies and boards do, then, to avoid mythologizing founder CEOs? If a leader wants to secure their legacy, it is their job to make themselves replaceable and to present themselves as such. To do otherwise is a failure of succession planning.
An inability to accept their own replaceability could point to a narcissist in the CEO’s chair. But some CEOs could simply lack the specialist skills to plan for a future under a different leader. Nevertheless, ultimately, it remains their responsibility.
The approach that Steve Jobs took at Apple is striking. In 2008, he created Apple University to perpetuate the behaviors that had made the company so successful. He gave it real heft by employing Joel Podolny, former Dean of the Yale School of Management, to run it. Jobs purposely positioned Podolny’s office between his own and Tim Cook’s, making the former academic a symbolic bridge between the founder-led past and the CEO-led future.
Different companies must, of course, find their own solutions. A leaner internal team could be set up to manage the transition. Trusted external advisers could help to cultivate the values, skills, and knowledge needed for long-term success, but it starts with recognizing that no individual is irreplaceable.
Holding the course
The reality is that not every shareholder or stakeholder will welcome a founder CEO dedicating too much time to thinking about the future. They might demand full focus on the here-and-now to maximize short-term results. Here, the founder CEO needs to make a stand.
In practice, it may require them to reject calls for a blinkered, short-term view. They need to explain that they are personally responsible for planning the business’s longer-term future. This could be framed in terms of mission. For a biopharma firm, for example, it could be a mission to help patients. For another company, it could be about serving customers. Steve Jobs rarely joined earnings calls. Instead, he focused on perfecting the product. He understood that, ultimately, this would be the key to success.
Sometimes, the task of the CEO is to tell stakeholders truths they don’t want to hear. That includes dispelling the myths about founder CEOs to better position the company for long-term success.
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