The founder - filled with passion and creativity - is all about getting the concept up and going. The founder "owns" the idea - they see in their mind how the solution they have created solves a real problem. They see how their solution is relevant to their customer audience - and they work hard to communicate that message of relevance to prospective customers. This often means small adjustments to the concept so that the solution really becomes a good strategic fit for the customer. Once one customer becomes three, then becomes ten, a business forms - and the job of delivering on the promises made begins to consume the founder's time and energy.
In short - early stage founders are entrepreneurs who have the insight to create a product or service to solve a problem in a meaningful way.
Contrast this core trait to the job of the CEO. As an idea becomes a business, the CEO's job is to run the company: overseeing financial decisions, streamlining operations, hiring the right functional leaders, setting strategic direction, resolving imbalances, and keeping things on track for more profitability year after year.
This means a great CEO is a combination of an "idea person" (like the founder entrepreneur), willing to take risks and think big; and a "hands-on person," eagle-eyed in matters of money and human resources, always willing to dig into the details until everything is perfect.
The transition from Founder to CEO involves 7 key changes you must make in your leadership style and in your organization:
1. Developing People
Loose organizational boundaries must be replaced with real functional clarity of roles and responsibilities without duplication. This requires you to have the leadership competency of organizational development - hiring the right people, developing your team so they work well together, ensuring each team member fully understands the company strategy, and leading the team to execute your plan.
2. Leading Innovation
As the founder you are (and have been) the sole product visionary. You saw the opportunity before others. Now you must learn to let your team innovate on the product or service. The input of others - especially as your team interacts with your customers is essential for growth. This requires you to have the leadership competency of design thinking - gathering input from the team, seeking facts and truth, listening carefully to the input of the team and your customers, and building a cycle of innovation so that your products and services are always improving.
3. Designing Process
The business must make the leap from simply following your lead and thought of the day to having well defined and managed processes. This requires you to have the leadership competency of process optimization. Without well-defined processes, the business will not be able to scale, you'll never leverage your time, and profit margins will be destroyed by inefficiency.
4. Understanding Finance
Growth by need and available cash must be replaced with a solid plan and a financial model for growth. Scaling a business means all parts - including infrastructure - must grow together. This requires you to have the leadership competency of financial modeling - understanding the impact of a dollar invested in terms of revenue growth, margin development, customer acquisition and the ultimate return on investment.
5. Enabling Technology
Most founders begin their business with "laptop technology" - a combination of simple and free software. These are great tools for beginners, but are not designed to scale a business. This requires you to have the leadership competency of growth planning. Simply stated, understanding how technologies can be used to manage workforce costs, optimize inventory, support customers, and create learning loops from the company's processes and data.
6. Scaling the Enterprise
As founders, we obsess over our product or service. Until the product is right, there is no business. But the product or service is not the business either. Your product or service becomes a business only through customer growth and profitability. This requires you to have the leadership competency of a strategic mindset. Over time, your job becomes managing the people - the people are ultimately the product. You will set and reinforce the vision and strategy, ensure the team is well connected and informed, listen to the voice of the customer, and set the direction for the enterprise. You will mentally live 6-9 months ahead of where the business actually is - planning for upcoming quarters, predicting resource needs, and looking for opportunity. The day-to-day will be managed by the team.
7. Managing Stakeholders
Many of you will, at some point, require outside capital to grow. Whether that is through a loan or an equity investment, this means there are additional stakeholders whose input must be considered. They require information. They look to you to oversee their investment and share both good and bad news. This requires you to have the leadership competency of stakeholder management. There are many stakeholders as the business grows - and they're your responsibility - clients, staff, investors, vendors and the community to name just a few.
Michael is an executive coach, entrepreneur, investor, and strategist with 30 years of experience leading investor-backed, high-growth organizations.
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