Do Founder CEOs Take Companies Farther than Board-appointed CEOs?

Do Founder CEOs Take Companies Farther than Board-appointed CEOs?

When you think about some of the biggest companies in the world… What names come to mind?

Amazon? Tesla? Apple?

When you think about these massive corporations, what one thing do they all seem to have in common? One of the main connecting threads appears to be that these companies either were – or currently are – founder-CEO run and operated.

So of course this begs the question: Does a company that is founder-run grow faster than a company with an appointed CEO?

Believe it or not, signs point to yes! Well…sort of.

The explanation for this success might seem obvious at first: Founders have a more personal connection and a deeper insight into their own business. A labor of love they won’t willfully see derailed even in the face of heavy losses. As a result, it comes as no surprise that this attitude can pave the way to radical company growth.

On the other hand an appointed CEO is more likely to think in terms of “hard numbers” and “shareholder returns”. These concerns of immediate returns can hinder growth and influence overall quality. But, to be fair, they also place the overall focus on the health of the business. So, which is better?

The answer, as it turns out, isn’t so simple… This is because — as amazing as human beings are — we cannot be amazing at everything at once. This is why we have things like teams, boards, committees, etc…

At the end of the day, this comparison is especially hard because a founder-CEO and a hired CEO are contributing two very different, but valuable, mindsets towards a common goal. So which way is the right way to run a company?

Alternating CEOs: Changing of the Guard

Much like a President serving for an appointed term— it can be beneficial to establish a “changing of the guard” system in place when it comes to CEOs.

Sounds impossible? It’s not!

Of course, this change cannot happen too quickly as the CEO needs time to work their agenda and see their goals through.

Nonetheless, having a “changing of the guard” every 10 years or so can be a great move towards the long-term health of a company.

Striking Balance Between Smart Business Practices and Innovation

Is the answer to a balanced and successful company as simple as instituting a “changing of the guard” of CEOs every decade or so?

Although not the most traditional portrait of success, consider this Steve Jobs story as a representation…

As many people might remember, early on in Steve Job’s co-founded business pursuits at Apple, there was an initial drive towards growth.

Then, realizing his limitations in business fundamentals required to maintain a company’s health—in comes ex-Pepsi CEO who, much to everyone’s surprise, fired Steve Jobs at his own company.

With Steve getting the boot, the company was left to run on sound fundamentals and smart business strategies. But, that wasn’t enough either.

When Steve came back he placed the focus on something that worked for everyone and in the process changed Apple forever— his innovation.

It’s this same innovation that gave way to one of the world’s most significant slogans of one of the worlds most successful companies: “Think different”

He wouldn’t take no for an answer, much less at the cost of a product he knew and believed in. It was at this time that Apple skyrocketed and developed into the behemoth it is today.

Bold Moves vs. Playing It Safe

To put it in a nutshell, Founder-CEOs push the gas towards big progress—they tend to take risks and spend money. But, they also tend to be more purpose-driven and in that way have the potential to grow 3x faster than other companies.

Appointed CEOs tend to pump the brakes and focus on business principles. Their priority is more on getting the company to a profitable and functioning business ecosystem rather than creativity or innovation.

At the end of the day, both of these mindsets are important for big-picture business success. However, even though there is a time for both—don’t expect a founder to think of anything less than the company becoming all it can be.

Sources for new info:

https://www.jimstengel.com/purpose/

Purpose-driven companies witness higher market share gains and grow three times faster on average than their competitors, all while achieving higher workforce and customer satisfaction.

Ceo-founders are rare and 50% surrender the position to an appointed ceo :

https://hbr.org/2008/02/the-founders-dilemma