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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:
- The myth of the irreplaceable founder can distort perceptions of leadership: Founder CEOs are often celebrated for their unique vision, charisma, and drive. But selection bias means that the stories of successful founders can obscure the many entrepreneurs with similar qualities who failed.
- Founder CEOs can create challenges for their successors: Businesses built too closely around a founder’s personality risk losing talent and investor confidence when the founder departs.
- Effective succession planning starts long before a founder departs. Steve Jobs’ investment in Apple University demonstrates how founders can preserve their legacy while preparing the business for long-term success.
The founder CEO occupies a revered space in the collective business imagination. Founder CEOs are lauded for their vision and drive, and their stories are celebrated in bestselling management books, media features, and autobiographies.
But scrutiny of the evidence shows that this reverence is often flawed, biased, and misleading. It can even warp our idea of effective leadership and distort what boards look for in the next CEO. Moreover, when shareholders or other stakeholders see founders as irreplaceable – or when leaders begin to regard themselves as such – it may signal a failure to engage with the challenge of building an organization capable of thriving over the long term. In fact, research shows firms face substantial challenges and even risks of failure following the departure of founder CEOs. But this isn’t because the founder is irreplaceable; rather, it’s because they often don’t do the work needed to ensure they can be replaced.
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 some founders successful is selection bias. When observers say that successful founders share particular traits, they’re often overlooking those with the same traits who were less successful.
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 the data tell a different story – on average, college graduate entrepreneurs perform better 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. If we were to consider the founders whose names we don’t know – those who failed before the business reached critical mass, who left before their companies became wildly successful, and 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.
The two failed responses
When faced with this speed of change, organizations typically try one of two approaches, both of which predictably fail.
The first approach revolves around central planning. Firms will perhaps appoint a Chief AI Officer to design the perfect AI strategy across the company. The problem with this is that this person would need to simultaneously understand AI applications in marketing (monthly changes), legal (quarterly shifts), finance (different vendor ecosystem), IT (different risk profiles), and operations (annual updates). Given how fast things move and how different each domain is, this is at best a herculean task, and at worst an impossible one. As a result, the central planning team becomes a bottleneck rather than a value-add.
The second approach is more a case of chaotic adoption. In this scenario, every team tends to do whatever it wants, with the (again, predictable) lack of coordination that follows. An accounting team solves a problem that finance still struggles with, but they never talk. The company pays for five different AI tools that do similar things. Nothing works together. No one learns from anyone else.
There are serious downsides to mythologizing the founder of your company.
The risks of mythologizing the founder
There are serious downsides to mythologizing the founder of your company. The first is that the business may be tied too closely to their personality, opinions, and preferences. When founders leave, the attention goes with them. This can lead to broken cultures, lost relationships, and the loss of key talent who might follow the leader out the door. The successor also inherits a valuation that was partly built on perception of personality rather than results and then gets burdened for its decay as though it were an operating failure. Research shows that both CEO pay and stock price are related to charisma, but not to future operating performance. Worse, there is often a lot that needs to be fixed after a founder departs because their idiosyncrasies and shortcomings are often indulged during the celebrity years and then added to the successor’s burden as if the successor were responsible for them.
Consider Microsoft. When founder Bill Gates handed the CEO role to Steve Ballmer in 2000, the stock was trading at more than 60 times earnings and the dotcom bubble was two months from bursting. Within months, a judge also ordered the company broken up over Gates-era antitrust conduct. Even though the extreme penalty of breakup was eventually overturned on appeal, the core antitrust verdict held with the costs and distractions burdening the company for years. Though Ballmer went on to more than triple revenue and double profits, the share price barely moved; the “lost decade” became his legacy. Notably, Ballmer’s successor, Satya Nadella, is heralded for turning Microsoft around with cloud computing and other efforts, many of which began under Ballmer.
FedEx tells a similar story. Following an acquisition, founder Fred Smith ran two largely duplicate delivery networks for years with little challenge. When his successor, Raj Subramaniam, took over, he immediately faced pressure to address costs and spent four years integrating the parallel systems before the market gave him credit.
Another issue is the departing founder who doesn’t actually leave. Some departing founder CEOs retain a formal ongoing role when they step down, such as special advisor or even chair of the board. But that creates additional risks. My own research shows that when a CEO stays as board chair, successors are constrained and less likely to deviate from the path set by their predecessor. This can limit a successor’s ability to adapt to new conditions to deliver growth.
Even if the founder’s ongoing association with the company is looser – if they remain a significant 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 as 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, allowing them to fully implement their ideas? We can’t know the answer, of course, but research suggests the stifling effects of a predecessor lingering in the background can be real.
When the myth cracks: Nvidia’s Jensen Huang and the succession question
Just as I finished this article in November 2026, Nvidia offered an uncomfortable test of my argument when CEO Jensen Huang, who co-founded the $4tn company in 1993, was forced to resign after admitting to infidelity amid reports of a relationship with a former executive at Megaspeed, an Nvidia customer that US intelligence agencies reportedly believe was used by Chinese intelligence to target him. An independent board investigation was launched into his personal relationships on 8 November. Four days later, Nvidia announced that Huang had resigned and chief financial officer Colette Kress had been appointed interim CEO.
Much of the coverage focused on the espionage question. Set that aside and take the most innocent version of what has been reported: the CEO of one of the world’s most important companies had a personal relationship with a former executive at a customer company. That alone is a serious conflict of interest at any company, the kind most codes of conduct require to be disclosed so it can be managed. And before acknowledging the affair, Huang had publicly described their interactions as related to Megaspeed and “completely normal and not unusual.” Boards can manage a disclosed conflict. What they struggle with is a CEO whose account of the facts they can no longer take at face value. The affair with a customer and possible leaks of confidential information are concerning, but the lack of candor might be even worse.
There is precedent for boards treating an undisclosed relationship as a leadership issue in itself: in 2025, Nestlé fired CEO Laurent Freixe over an undisclosed workplace relationship. Steve Easterbrook, the former CEO of McDonald’s, was fired from his position for one affair and ultimately made to repay $105m in severance pay after an investigation uncovered lies and additional improper relationships. And in 2025, Astronomer CEO Andy Byron was forced to step down after a video of him and the firm’s chief people officer embracing at a Coldplay concert went viral.
Whatever the investigation into Huang finds, it has exposed a governance gap that existed long before this week. Despite being one of the most valuable companies in the world, Nvidia does not appear to have a succession plan. According to The New York Times, the idea has been discussed internally over the years, but Huang resisted. Rene Haas, who worked at Nvidia before becoming CEO of Arm, summed up the outcome: “He didn’t like the idea.” Huang, now 63, said in 2023 that he believed he could lead the company for three or four more decades.
He has also built the company around himself, with more than 60 direct reports. This calls into question the talent development pipeline at Nvidia, something every shareholder should be concerned about. Several directors have served alongside him for decades, including two of his original 1993 investors. In January, Huang said there would never be another CEO like him. That is the irreplaceable founder myth in action.
Shareholders have a simple financial reason to care. In theory, a share price reflects the present value of the firm’s expected future cash flows, in perpetuity. If a CEO is truly irreplaceable, then the valuation should reflect what happens to those cash flows once they are gone, and they eventually will be gone. When you think of it this way, the need for succession planning becomes a lot more obvious and difficult to dismiss.
The point of governance is to do it even when you don’t think you’ll need it, because eventually you will. Unplanned CEO departures are common. In the S&P 1500 CEO turnover data my coauthors and I maintain, more than one in four departures since 2020 were forced or sudden (poor performance, disagreements with the board, scandal, illness, or death). Boards don’t control when it will happen; they can only choose if a bench of talent exists when it does.
A board that feels it cannot replace its CEO also loses leverage at exactly the time when it is needed most. When the person under investigation is the person the company cannot do without, every option looks costly, and looking the other way starts to look like the best course of action. That is the hidden cost of treating a founder, or any CEO, as irreplaceable, and it is paid by everyone except the founder.
An inability to accept their own replaceability could point to a narcissist in the CEO’s chair.
An alternative approach
What can companies and boards do, then, to avoid the problems associated with mythologizing founder CEOs? Stop acting as if one person is truly irreplaceable. To do otherwise is a failure of succession planning – a key part of the CEO’s role. Moreover, if a leader wants to secure their legacy, they need to make themselves replaceable by developing the talent behind them.
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, it ultimately remains their responsibility. Further, even if a founder truly is one of a kind, they can be replaced with more than one person, the same way the Oakland A’s in Moneyball replaced a star player they could no longer afford with several cheaper players who together matched his output. The difference is that, unlike sports, there’s no limit to the number of players you can field in business.
Rather than focusing on founders’ supposedly rare and irreplicable talents, boards and shareholders would be better served by holding founders to account for recognizing their own limitations and finding future leaders who have skills the founder is missing. Relieved of the belief that the current leader can’t be replaced, one can then naturally get on with the business of talent development and succession planning that seems pointless if you believe a leader is really irreplaceable.
The approach that Steve Jobs took at Apple is striking. Was Jobs a unique, once-in-a-generation talent that was directly irreplaceable? Undeniably yes. But that didn’t mean Jobs neglected his responsibility to ensure the firm’s long-term success. He just went about replacing himself with a great leader possessing complementary skills while developing a company full of design talent reflective of his own unique skills.
How? He built an internal training program, formalized as Apple University in 2008, to perpetuate the behaviors that had made the company so successful. In his biography of Jobs, Walter Isaacson says he did so to ensure “the Apple style of decision-making would be embedded in the culture.” Isaacson credits Jobs with infusing Apple’s DNA with “the design sensibilities, perfectionism, and imagination” it would need long after he was gone, and Apple University taught that discipline of simplicity explicitly.
As reported by The New York Times, one course contrasted the 78-button Google TV remote, where every engineer and designer got what they wanted, with Apple TV’s three-button remote, where designers debated until only the essentials remained. Other courses taught case studies of pivotal decisions, including making the iPod and iTunes compatible with Windows – an idea Jobs hated, but eventually accepted at the urging of his lieutenants. Opening the iPod to Windows users fueled explosive growth of the iPod and the iTunes Store, an ecosystem that later helped the iPhone succeed. Most important, it also demonstrated that even Jobs could get it wrong once in a while, not something an irreplaceable leader would tend to admit.
Notably, when it came time to hand over the reins, Jobs told Isaacson, “One of the things I wanted to do for Apple was to set an example of how you do a transfer of power right.” Tim Cook clearly had a different skillset – one that augmented Jobs’ skills – with a focus on supply chains and logistics rather than design. The results are compelling, with Cook arguably delivering even more impressive performance than Jobs. Under Cook, Apple’s revenue increased more than fourfold while the market cap went from $347bn to $4.7tn, which Bank of America worked out to roughly $32m of value added per hour across Cook’s tenure. It’s also worth noting how the pattern continued – when it came time for Cook to step down, he also didn’t try to replace himself. Instead, Apple went with an engineering and product design-oriented leader in John Ternus. I’d also bet Apple University now has courses intended to capture Cook’s operational philosophies so the DNA of his legendary performance lasts long into the future as well.
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.
Building a successor is expensive, slow, and produces nothing visible in the current quarter.
Holding the course
Of course, not every shareholder or stakeholder will welcome a founder CEO spending time on this. Building a successor is expensive, slow, and produces nothing visible in the current quarter. Worse, it invites the question of when the founder plans to go, which is exactly the question most boards want to avoid asking. So, the founder has to make the case themselves: that the institution outlasting them is the point, and that a company that cannot survive its own founder’s departure was never worth what the market said it was.
Bluntly, 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 and famously released conservative earnings estimates Apple routinely bested with room to spare. Instead, he focused on the mission of perfecting the product and delighting customers. He understood that, ultimately, this would be the key to success. His future orientation extended to the development of the talent needed to replace him. But it’s important to recognize this isn’t just an investment that pays off far into the future. Rather, as a founder develops these complementary talents throughout the organization, it creates both a bench of possible future CEOs and the depth of talent and resilience needed to propel the company’s success long before the succession occurs.
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