The founder of a business is key to its launch – and sometimes, key to its downfall as well. This is how to combat founder syndrome and future-proof your business.
From day one, it’s a small-business founder’s vision, passion and focus that bring the operation to life. Over time, though, that same founder can suffocate the business.
There’s a name for it: “founder syndrome”. It describes what can happen when a founder, who may be suffering burnout, tunnel vision or is simply illsuited to managing the growth phase, refuses to let go of the reins.
By some estimates as many as 70 per cent of small and medium businesses fail to survive the transition from founder to the next generation of leader – often because they took the step too late or it was forced upon them when the business started to decline.
Jochen Schweitzer, associate professor of strategy and innovation and director of entrepreneurship at UTS Business School, says founder syndrome manifests when “the founder gets out of their depth”. Some founders may be able to educate themselves to deal with business issues that arise, learn how to manage a team that’s grown from 15 to 150 and gear up for expansion – but not all can.
“Founders need to ask, ‘Am I the right person to do this?’” says Schweitzer. “Not asking is the reason why a lot of the SMBs in Australia are not growing – because people work so much in the business and don’t have the time to step back and think strategically.”
Bootstrapped businesses in particular tend to rely on the founder having the self-awareness to create their own feedback cycles and know when it’s time to go. Aaron Smith, the founder of KX Pilates, knew he needed to shift gears after two years of “absolute grind”.
The first executive he appointed to help lead the company wasn’t a good cultural fit so Smith named Selina Bridge as chief executive in 2018.
“Selina thinks about things completely differently – there are so many times that we butt heads,” he says. “She is one side of the spectrum, I’m very much on the other and we seem to meet in the middle and get fantastic results.”
Since Bridge took over as CEO, KX Pilates has grown from 50 to 78 studios in Australia, with another one in Indonesia and a further 11 in China through a joint venture. For his part, Smith remains as a director and focuses on innovation and international expansion, as well as his young family.
Handing over the reins has proven successful – while also coming with some cost, Smith acknowledges. “As a founder you’re extremely emotionally attached to your business; someone with expertise looks at it more through the business lens. The hardest part is losing control.”
Step by step
The Chicago-based Kellogg School of Management suggests five steps to help avoid founder syndrome.
- Start with a contingency succession plan: the “hit-by-a-bus” strategy.
- Transition to “purposeful” succession planning and training for future leadership.
- Document the plans and make any legal or administrative changes that are required.
- Remember: planning for change is important to avoid stagnation.
- Trust in the process.