Why founder readiness is key for a successful company handover

The most important factor in founder succession is founder willingness and readiness to let go and hand over their initiative. Often referred to as ‘your baby’ – a project, a role, or a company you created from scratch makes you a founder. If you’re not willing and/or not ready to let it go, it will not happen. Through coaching, we can help founders become willing and ready over time.

First, I want to highlight that willingness and readiness is inevitably linked to my definition of successful handovers:

“When the transfer of both ownership and leadership of an initiative or organisation has already happened, including the transfer of power and the source role.”

In other words, the handover is a success only when you, the founder, have emotionally let go of your power, your role as source, and have moved away from managing your original project, so your energy is available to focus elsewhere. Let me share a couple of stories that illustrate the founder’s unwillingness to let go of their project.

Founder unwillingness to pass on the business

Ervin, a CEO of a 3rd generation Belgian insurance company, shared several stories of unsuccessful transitions from his family business. His company was founded by his war veteran grandfather in 1922 at the age of 22, after serving for 5 years in the military and WWI. He didn’t want to study further, but wanted to start making a living. Setting up an art insurance company was a great opportunity as they were close to an art community and people wanted to protect their assets after the war. The business grew from a 1-man-band to a profitable business during his time.

When it came to choosing a successor, he told both of his children to carry on with the company behind their backs, inevitably setting them up against each other. He was unwilling to pass his business on and wanted the business to die with him. He was unwilling to choose between his 2 children because neither of them was the right choice according to him. The son was not entrepreneurial enough, and the daughter, although capable, was a woman. At that time, he would lose credibility among his peers if he chose his daughter, so setting them up to fail was his choice instead.

After his death and many painful episodes of family disagreements, unhappiness, hardship, betrayal, and litigation, eventually the company ended up being led by his daughter. She had 2 sons, Ervin, and his brother, and here I heard another unsuccessful family transition story. In her case, as a mother, she was unwilling to choose between her 2 sons. She couldn’t, so she didn’t. She decided to sell the company instead. Eventually the company was bought back by her sons changing the flow of energy in the company, which I will talk about more in my next post.

A successful handover is so much more than just the transfer of knowledge

Another example of not being ready to let go is exemplified by Giles, who established an intrapreneurial organisation within one of the top five consulting firms. He created this organisation with a lot of passion and his purpose was to change the way large businesses work with charities and humanitarian organisations. It has been an incredible success since, and people have absolutely loved working with and for the causes they supported.

He ran this organisation for 15 years before an episode of mental breakdown / breakthrough as he called it in his book. He ended up in a mental health care facility in Scotland, after which he could not go back to continue for several reasons. A temporary successor was appointed first, and then taken over by Lisa, who was his right-hand operations lead at the time and has been leading the organisation ever since.

Giles did not actually have a chance to perform a handover as he was not able to go back to his original role after taking a 7-month long break, so I considered their succession unsuccessful. More importantly, when I asked him if he had let it go since (as it has happened 7 years before the interview), both him and Lisa said no: “The short answer is no, I don’t believe I have …” and “So, yes, he has let it go in a formal sense but like I said, you know, for years still, he talks about it all the time. So emotionally, I don’t think he’s let it go.”

This is a great example of how he wasn’t ready to let go of his project at the time and I felt that he was yanked out of his leadership role. He certainly has not let go of the emotional side and spent several years working on being able to move on.

The effects of founder unwillingness

This happens quite often in organisations, when the founder and their project are still tethered to each other energetically, but internal structures or decisions are not allowing them to continue or letting them move on. The impact of this is that organisations or projects will start to lose their focus, energy and direction leading to infighting, competitiveness and over time they wither and disappear.

Looking through this lens helps to make sense of many of my past experiences in various organisations and teams. Just think about teams you hired or projects you initiated from scratch: once you turned your energy and focus away without proper handover to someone you trust, your project lost its energy or died, and your team members left.

It is, of course, slower to notice in large organisations because there is strong financial and structural support, but as you have seen in my previous article, it costs a huge amount for large organisations. Small and medium size organisations often don’t survive the departure of their founder, or the founder stays on and meddles, making the transition and any growth plans increasingly difficult to carry out.

Coaching is a vital component of succession planning

As we see so strongly in these examples, a successful handover is so much more than just the transfer of knowledge. This can go unnoticed for a long time in larger organisations, but through one-to-one support companies can avoid failed handovers. If you’d like to find out more about founder succession coaching, please see here.

Note: I must also underline that in the above examples, both organisations mentioned have been successful in terms of tenure and performance, but were unsuccessful when it comes to founder succession, which was my research focus.

This article is part of a series where I will delve deeper into each factor, exploring how coaching can support the succession planning process and where HR can ensure a seamless transfer of leadership. See below a list of articles in this series for more insights on navigating successful founder transitions in organisations.

If you would like to explore how I can support you and your organisation in leadership transitions, please get in touch.

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