Newport Board Group, Susan Kearney and Lynn Lednicky, presented to an audience of business founders and CEOs. The topic for that portion of the webinar was the event or other catalyst that leads an entrepreneur to take action, as their business grows and becomes more complex, to build or augment their management team.
The partners also discussed several other topics that are central to the question of when and how an entrepreneur builds a management team.
Finding the right role for the entrepreneur who steps aside from running the business day to day
Per the panelists, in many instances the right thing for an entrepreneur to do as his or her business grows toward scale is to step back from day to day involvement with the company, turning over those responsibilities to a professional CEO and management team. This enables the entrepreneur to delegate management duties, freeing him or her up to concentrate on what they love to do (which is often the reason they got into business in the first place) and do best. These transitions are typically not an immediate break. They may be gradual, over a period of years. The founder may be hesitant to let go of the reins or may prefer to build the management team incrementally and slowly. A gradual process indeed may be less risky—and yet the ultimate direction of the transition should be clear to employees and customers.
Susan Kearney noted that the emotional issues involved in the founder’s transition shouldn’t be discounted. Nonetheless she has seen cases where an entrepreneur welcomed the opportunity to bring in a CEO so they could take on a new role. In one instance this meant spending more time understanding technology trends and designing new products as the company’s “product visionary.” The entrepreneur was clear on the kind of person who as the company’s new CEO would complement his strengths. He found the right person and committed to a transition plan over six months.
Should you bring in a fractional CMO?
It might be the way to fire up your marketing and start to build your management team.
What kind of person should the founder/entrepreneur bring in to be the CEO?
An entrepreneur who aims to bring in a new CEO faces some difficult choices. Should it be someone whose expertise is in the same industry—or someone whose career has been in a contiguous or entirely different industry and will bring fresh perspective? Should it be someone who will make the employees feel comfortable—or a person who will shake things up? Should it be someone whose skills are ideal for the company now- or a person best suited to run the business in 3-4 years, when it will hopefully be larger and more complex?
Lynn Lednicky noted that one way for the founder to think about this question is to ask themselves what kind of skills and personality will best complement the company’s current capabilities and get the company to the next level. Does the current team have a greater need for technical expertise or general business and leadership skills? Think about style and personality. It might be best to promote from within to fill the gap versus bringing in someone from outside.
As you get closer to onboarding the new CEO, consider creating a grid that identifies the areas that he or she will most need help getting up to speed with. And consider what support existing employees will need during the transition.
Susan warned against the risk that that the owner will hire someone they know and feel comfortable with—even if the person doesn’t have the skills and experience the company needs. Even a highly experienced person will need guidance to get up to speed and have a positive impact on the company.
Lynn mentioned another concern. He has seen owners elevate to CEO an employee who has been with the firm for a long time and has strong loyalty to it and its owner. Loyalty is an important quality but its value shouldn’t be over-weighted. There is a risk that the person who has been with the company a long time will be put in a position they don’t have the technical or management skills to handle.
Before the webinar ended, the panelists expressed the hope that business owners among the participants are successful in their efforts to build a management team that will drive the future success of their companies.
