What is founders curse syndrome in management?

The curse arises because the funder, in order to maximize the organization's efficiency in the first period, tends to select and reward conformist members and, consequently, discourages non-conformist and creative ones.

Founder’s syndrome also known as the founder curse is the difficulty faced by organizations, and in particular young companies such as start-ups, where one or more founders maintain disproportionate power and influence following the effective initial establishment of the organization, leading to a wide range of problems. The syndrome occurs in both non-profit and for-profit organizations and companies.

The enthusiasm and charisma of the founder, often sources of the initial creativity and productivity of the organization, can become limiting or a destructive factor. It may simply limit further growth and success, or it may lead to bitter factionalism and divisions as the scale of demands made on the organization increases, or it may result in outright failure.

There’s a point at which Founders become more hurtful than helpful. So how do you know when is the right time to start succession planning? After all, certainly not all founders have founder’s syndrome. And everyone is entitled to an off day now and then.

Founders are likely to have strong egos, a strong sense of self-worth and agency. There is nothing innately wrong with this. It gives them a sense of control when all the odds are stacked against them. It helps them to strive against adversity. It helps them to establish and build organizations. Many good leaders have this. However, founder’s syndrome emerges when founders stop listening to wise counsel and start believing in their own truths to the detriment of their organizations’ well-being. This might be intentional or unintentional.

To have founder’s syndrome, a founder must also be incapable or unwilling to see how they have begun to restrain their organization or impact their well wishers. This requires a lack of self-awareness or a degree of double-think where they acknowledge that things must change but hold fast to the old way of doing things. They are inclined to blame problems on other people or external factors. They struggle to reflect on their own role in the equation.

Founder’s syndrome is insidious as the personal characteristics that enabled their organization to grow and succeed in the first place now turn against the founder and start to undermine their organization. For example, establishing startups requires a different approach to leading mature organizations, and many leaders will struggle to change their leadership style.

Eventually, stakeholders confront the founder about the organization’s recurring problems .Often; the founder becomes increasingly nervous and defensive, and soon resorts to blaming Board members and staff. Without ongoing coaching and support, it’s likely that the founder will be replaced, or even worse, the organization will collapse.

Signs of Founder’s Syndrome

I. No succession plan in place

II. Failure is preferable to replacement

III. Board and staff members are full with ‘friends and family’

IV. Obsessive leadership style compared to a more standard behavior

V. The founder becomes increasingly paranoid as delegation is required

VI. Higher levels of micromanagement by checking on employees or colleagues

VII. The founder has difficulty with adapting to changes as the organization matures

VIII. The culture of the leadership team and company plays an important role for success or failure

There may be a tendency for a founder to see their organization as a personal fiefdom where they have absolute power much like a feudal lord. There may also be a slowdown in decision-making throughout the organization as the founder wants to have control over every decision. Predictably, all important decisions will be escalated for his or her approval. This problem will increase as the organization gets larger and as more decisions are required.

It is common for factions to emerge that are either for or against the founder. The founder may become obsessed with the loyalty of directors and staff. Consequently, they will try to retain strict control over appointments in the organization. Emerging leaders end up in conflict with the founder as they want more responsibility and decision-making power, which may be promised but never established. These upcoming leaders will predictably start to become detached. They may lead new factions or leave the organization to join or start competitors.

Outdated thinking will tend to permeate the organization. This might manifest as a failure to modernize or innovate. The founder might have difficulty in seeing how the strategic context surrounding their organization has changed. The founder might struggle to see how the strategy or business model should shift. Doctrine that helped to build the organization might become dogma that keeps it stuck in old patterns.

Eventually, stakeholders will confront the founder about the organization’s recurring problems. Often, the founder becomes more and more anxious and defensive, and soon resorts to blaming Board members and staff. Without ongoing coaching and support, it’s likely that the founder will be replaced, or even worse, the organization will collapse.

How to deal with Founder’s Syndrome

The correct treatment depends on the type of organization and the context. For example, it is almost impossible to dislodge the majority owner/founder of a privately-owned business who does not want to change their actions. On the other hand, there are more options when dealing with non-profit organizations, public companies, and government organizations.

The hostile actions may lead to downgrade the founder or shift them to another division of organization or fire them. Dilute the founder’s influence — appointing strong unaffiliated people to staff and board. Improve organizational systems so that the desired processes and associated decisions are clearly prescribed and less vulnerable to the founder’s interference.

The more constructive actions would be to help the founder to see the next stage in their career, develop an exit plan and then make a graceful exit — one where they leave a capable organization behind them. An exit means also leaving any position that the founder occupies on the board of directors.

As with all diseases, it is better to prevent founder’s syndrome from arising in the first place rather than waiting until it must be cured. It is like choosing to eat healthy foods and get exercise so that you don’t get diabetes or heart disease. Founders should adopt the mindset of ‘working on’ their organizations as opposed to ‘working in’ them. They should aim for their organizations to be self-sufficient systems that can survive and grow without needing their constant participation.

They should strive to delegate power wherever possible, it will also free up some of the founder’s time to focus on more long-term and strategic issues that are confronting the organization.

Finally, the founders, members and shareholders should ensure that the organization practices high-quality governance. This will involve getting a diverse, competent and largely independent team of directors to help oversee the organization and look after its interests. This team should ensure that the organization can continue to grow should the founder unexpectedly leave or be unavailable.