The Founder’s Trap; not necessarily a trap at all

The term ‘founder’s trap’ is meant to describe the moment when the founder is beginning to inhibit growth and success, despite best intentions. According to the logic they can either choose to keep control or hand the business over to someone better equipped to take the business to the next level.

Dr. Ichak Adizes first coined the expression in his 1990 book Corporate Lifecycles where he described the nine stages that every organisation goes through, from ‘birth’ to ‘death’. We recently created our own 6-stage version – ‘the Value Partnership Business Journey’ in which we map and explore the challenges faced by organisations from the growth and scaling stages through to reinventing.

So what causes the ‘trap’, when does it typically happen – and can we avoid falling into it? Is it possible for a founder to break out of this trap and continue to lead their business successfully? We believe it is.

Once over the hurdles of the initial start-up period of a new business, founders find themselves in the growth phase. This requires a shift from the founders and core team doing everything – to bringing in some hired professional help. Funding shifts from early stage to growth capital. Leadership needs to come to the fore, as, whilst the business model may well be proven, the ability to scale is now the challenge. Maybe the founder is struggling to delegate effectively or hire the right talent required to take the business to the next level. Or finding the new level of strategic management required hard to master. At worst, the pace of growth and progress – and results that they had dreamed of, begin to evaporate.

But, is this actually a trap – or an opportunity for learning and growth?

Andrew Hill’s article in the Financial Times (‘The torment of founders who cannot let go of their babies’, April 1, 2019) described the entrepreneurial founders’ desire to succeed as an ‘elemental force’. Without this mind-set, where’s the drive, passion and energy required to take the organisation to the next level? However, it’s precisely these emotions that can create problems. And during this period more reflective founders start to realise their own limitations. Once the founder no longer feels in control of the business, investors may start to push for the appointment of a new CEO.

We’ve worked with the founders of fast-growth, agile organisations at this stage in the development of the business, and in our experience the choice is not as binary as the ‘founder’s trap’ suggests. The founder may indeed wish to step aside or to retain the leadership role. What is the right option? Every circumstance has its own characteristics. Our experience shows that leadership coaching can unlock problems and expose opportunities for the founder, in some cases transitioning them successfully into the CEO role. The business is in safe hands and retains the founder’s passion and vision – a potentially win-win situation. In one case we worked with the CEO to strengthen his leadership team in key positions and developed the tools to forge a common purpose, goals and roadmap. The business grew rapidly under his continuing stewardship and was ultimately acquired, realising his aspirations for the business. He has grown enormously as a person and become an excellent CEO.

Less ‘trap’ more ‘opportunity’.

Our coaching focus is on the performance of the business, giving leaders the tools needed to be able to lead with conviction. The founder’s trap is a risk, but it is not inevitable, not by any means.

Simon Court & Sophie Astin, Value Partnership