Updated: Dec 31, 2020
The journey toward building a brand is an exhaustive and mentally draining one, and no one knows this journey better than founder CEOs. When creating a brand from scratch, how do founders stop themselves from become emotionally attached to it? The brand becomes an extension of yourself, many founders see their creation as their “baby”. It is this ideology and attachment that leads founder CEOs to believe they are the only key decision makers who can lead the company. Though, do you ever think to yourself about whether or not your entrepreneur skills can last forever? Humans are flawed, people make mistakes, and this is why CEOs surround themselves with an executive team of leaders who assist the company and CEO in making best practice decisions.
However, even with a team of leader’s, CEOs tend to march to the beat of their own drum, and tend to ignore their team and make decisions that rely on their own understanding. For example, the founder and CEO of Amazon, Jeff Bezos, hired Larry Tesler, an expert in the field of human-computer interaction. Tesler had many notable accomplishments with Xerox Parc and Apple. Yet during his three years with Amazon, all of Tesler’s ideas and intended changes to the Amazon interface were ignored by Bezos. Similar to Bezos, Steve Jobs was another famous founder and CEO who was also known for ignoring his team and relying solely on intuition when making decisions for Apple Inc. It is the founder CEOs fear of letting go that pushes them to tune out their executive team when making decisions. This behavior is not specific to only founder CEOs, as it is also hired CEOs who have been shown to ignore their executive team. But is this rejection of outside ideas due to fear of ceding control? Or is it because of the makeup of the team?
In terms of non-founder CEOs, the composition of their advising team does play a critical role in the long term success of a company, but only when the CEO loosens their grip on control over some decisions. When a CEO refuses to cede control, they leave their company and their team in the same predicament as those with a founder CEO. It is this need to control that costs the company in the long term, this is why 67% of all startups fail, because of problems between the founder and the rest of the team.
Founder CEOs can build a company, they create on-boarding processes, coordinate the allocation of resources, and many other duties, but in the long run they need professional help as the company expands. Mark Zuckerberg for example became the founder and CEO of Facebook and as the company expanded he released control and followed the advice of his team. Zuckerberg hired Sheryl Sandberg as Facebooks COO, Zuckerberg’s ability to leverage and utilize the experience of his leaders allowed him to remain CEO while allowing Facebook to continue expanding. However, does Zuckerberg’s age play a role in his ability to cede control and make decisions?
Facebook was started in a Harvard dorm, and like many other young CEOs they may lack the years of experience and education that distinguishes hired CEOs from Founder CEOs. Many times young founder CEOs surround themselves with personal friends of the same age and hire them into their executive advising team. It is these behaviors that create a sense of founder CEOs needing to be supervised. Another instance would be when WeWork went public in 2019, their young founder/CEO, Adam Neumann, was surrounded by executives older than him which made the release of control even harder. Later Neumann’s extravagant lifestyle and substance abuse forced the Neumann to step down. Similarly, when Groupon went public in 2011 their young founder CEO, Andrew Mason, had an executive team that was much older than him. Like WeWorks, Adam Neumann, the irresponsible actions of Andrew Mason led to his firing from the company.
However, not all young CEOs struggle with letting go of control and listening to their team. The best example is the founder CEO of Dell Technologies, Michael Dell. After starting Dell Technologies, Michael Dell hired Mort Topfer as a vice chairman, which led to Dell being the youngest CEO of a fortune 500 company because he loosened his grip on control over every decision and listened to his team. Holding on to power as a CEO hinders a company’s path towards success, it is imperative that CEOs listen to their team and share collective for the organizations success.
Information provided by:
Christopher Bingham - Professor of strategy and entrepreneurship at the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill.
Bradley Hendricks - Assistant professor of accounting at the Kenan-Flagler Business School at the University of NorthCarolina at Chapel Hill.
Travis Howell - Assistant professor of strategy at the Paul Merage School of Business at the University of California, Irvine.