Much like living organisms, organizations follow a natural life-cycle – complete with predictable stages, or patterns of growth and behaviour.

As organizations progress and develop, they face a unique set of challenges at every stage. These stages, identified by Dr. Ichak Adizes are defined as infancy, adolescence, stability, bureaucracy and death.

After infancy, companies go through what Dr. Adizes calls the “Go-Go” stage. In this stage, the company has a number of successful products or services, and is growing by leaps and bounds. Just like human infants taking their first steps, everything looks interesting. Encouraged by initial success, companies in the Go-Go stage feel they can succeed at almost anything they put their mind to.

Go-Gos and their Founders

The founders of a company at the Go-Go stage have grown it to the point where it becomes too big for them to handle; they’re still involved in everything. A sense of excitement still propels the company, everything is a priority and opportunity is everywhere.

But companies at this stage begin to pay a steep price. Strategically important but not urgent matters and decisions get deferred to pursue the latest trend or cool new project.

The irony is that, for founders, success at the Go-Go stage is the realization of their dreams. They have little time to lead or manage — to work “on the business” rather than “in the business.” Their work, the business itself, is their sandbox, a place to keep building their dream.

This is, at the same time, both invigorating for management and staff but ultimately limiting for the organization. People begin to feel frustrated by the overwhelming and never-ending workload, unclear responsibilities, fuzzy goals and a leader who has his hands on everyone else’s sandcastle. New hires are thrown into their jobs woefully unprepared and unaware.

The Trap

The trap occurs when the Go-Go company is:

– unable to release itself from the dependency of the founder;
– incapable of developing the needed abilities to replace the founder’s unique skills and vision; and,
– when the founder is unable or unwilling to decentralize control of the business and delegate effectively.

Most mid-market companies face the founder’s trap to some extent. Up to the Go-Go stage, companies need strong and opinionated leadership. But after a few years in the Go-Go stage, the founder may realize he can’t run the business as a one-man show anymore. The Founder’s Trap keeps the organization stuck in a perpetual vortex of frustration and unrealized value.

The Great Escaping

To escape the Founder’s Trap, an organization needs clear responsibilities, authorities and a reward system that is aligned with its core strategic initiatives. This also means the organization needs a culture of responsibility and accountability, placing people with the right skills in the right jobs (and the desire to fulfill the organization’s goals). In short, it needs to distribute the founder’s responsibility and decision-making than is likely taking place.

One idea worth considering is delegating to a management team, rather than a single individual. This approach avoids employees and managers ganging up on the new leader. New leaders can do this in stages, negotiating the transfer of responsibility and decision-making with the founder. Allies from within the business who the founder respects can also help.

In addition to building a more valuable company, the leaders job is also building a management team that can work together to decide important issues and develop a sense of shared accountability. And if they work together to make a decision, they’ll likely make a better one than the founder could have made alone. The old saying, “two heads are better than one” is the operating principle. If they can’t agree on an important issue, the founder can always step in and make the call.

A skilled and effective management team is critical to continued success for companies at any stage, but particularly so at the Go-Go stage. Mutual trust and respect between the team and the founder doesn’t happen overnight. The founder must make sure the right people are in place, those with the professional and leadership skills to take the company to the next level of growth.

Maturity, Inter-dependence & Growth

As the management team matures, they sort out the differences between what is a decentralizing decision and what is a strategic decision. These changes are so fundamental, it’s not unusual for the founder to struggle with how to make a meaningful contribution when they’re not responsible for making the decision.

Creating a way for the founder to still make a contribution while at the same time delegating significant strategic and operational planning is a pivot point. For example, the management team and the founder might decide the founder will no longer have to attend all management team meetings. But they will have a say in developing the agenda for the meetings as well having the right to veto any decisions made. Putting together this type of arrangement with a founder provides the “rules of the road” on which everyone has agreed greatly lessens the temptation for the founder to step in.

Regardless of whether a company is new or established, the Founder’s trap comes up when the organization is trying to find its feet—like a teenager trying to find their independence.

Taking action to create the structure — a culture of accountability and responsibility — one that builds shared decision-making and supports delegation is easier said than done.

Posted by Greg Kelemen, Range Advisors

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