The journey of a founder or CEO changes significantly as a company scales. Initially, the focus remains predominantly on sales and customer acquisition. This phase demands an intense dedication to understanding market demands and ensuring cash flow. Founders often thrive in environments where they can directly influence outcomes through personal relationships and individual sales efforts.
Once the company moves past early startup challenges, the founder transitions into a management role. This shift requires relinquishing some control over day-to-day operations. It necessitates a focus on broader strategic elements such as aligning team efforts with the company’s long-term vision. The founder must learn to delegate effectively, trusting a growing team to handle operational execution.
Moving from sales to governance
As companies grow, the involvement of a board of directors becomes crucial. Founders often struggle with this transition as they need to adapt to a governance model that requires reporting and strategic discussions disconnected from direct sales activities. Establishing a high-functioning board presents challenges. The CEO must cultivate relationships with board members, balancing their diverse perspectives while maintaining a clear vision for the company.
Effective governance involves setting clear expectations for board interactions. Founders must actively involve board members in strategic planning and major decisions. This means communicating company performance regularly and encouraging board engagement in meaningful ways. It’s essential for CEOs to lead these discussions, ensuring that board members feel valued and invested in the company’s success.
Governance structures in practice
Creating a governance structure can be daunting, but it is necessary. It starts with defining roles within the board and integrating well-defined processes for decision-making. This structure helps in setting guidelines for board meetings, ensuring they are productive and aligned with company objectives. It establishes a framework for accountability and responsibility among board members. By involving them in the decision-making process, you leverage their expertise while fostering a culture of shared responsibility.
A common mistake is to rely solely on board members for strategic input without establishing proper processes. This reliance typically leads to ineffective meetings and dissatisfaction among board members. Instead, define clear agendas, objectives, and outcomes for every meeting, focusing on analysis, brainstorming, and actionable decision points.
Balancing personal loyalty with business needs
As a company scales, founders often face the challenge of balancing long-standing personal relationships with new demands for business growth. This tension can surface when making decisions about team composition, especially when considering friends or early supporters for key roles. Priority must be given to what best serves the organization, even if it means making difficult personnel changes.
Letting go of friends or established team members for business needs is challenging but necessary. The decision-making process must involve evaluating skills over personal ties, focusing on the competencies required for the company’s next phase. The impact on morale and company culture should also be considered. It’s crucial to handle these transitions transparently and respectfully to maintain trust across the organization.
Ensuring long-term success
In the evolving role of a founder or CEO, establishing a functional governance structure while balancing personal commitments is essential for long-term success. Scale demands that leaders are adaptable. They need to step back from day-to-day sales and focus on strategic growth while managing board dynamics effectively. Develop processes for collaboration and enforce clear separation between being friends and being business partners. This discipline fosters a healthier company culture and greater overall effectiveness.
Bruno Monfils,
CEO Excellence Consulting
