Feature: Out of the founder’s shadow

What happens when a visionary leader moves on?

EDITOR’S NOTE: In July, Halogen Software CEO Paul Loucks took many by surprise when he announced his resignation. “After meaningful reflection, I made the decision that I wanted to spend more time with my family and consider other interests over time,” the longtime chief executive said in a statement. Loucks became president and CEO of the software-as-a-service company 15 years ago and orchestrated a major company pivot to HR software. He led the company to a $55-million IPO in 2013 and, later that year, was named CEO of the Year by Ottawa Business Journal and the Ottawa Chamber of Commerce.

TECHOPIA asked local executive search expert E. A. Clarke, managing partner of the StoneWood Group, to comment on what it means when a founder leaves a company. Here is his edited response.

The departure of a company’s founder/chief executive can cast a shadow from its shop floor all the way to the stock exchange trading floor.

That’s often because the departing founder has a larger-than-life personality with the reputation of a guru and visionary. Invariably he or she knows the company, employees and managers better than anyone else. So amplified are their profiles, they have become the very embodiment of the firm.

In the early days, many founders earn their management stripes the hard way, by trial and error and by leading “war rooms” with sheer determination during times of trouble. The loss of this, even later on, can cast a pall on a company that might not have remained in existence without such leadership.

But there can be a touch of silver in the corporate lining as they depart. Once board members believe no one is irreplaceable, they’ll place the emphasis on “manager” as much as “visionary” in their search for a new senior executive.

Recent history has shown the way.

When Apple, the world’s largest company, needed a new chief executive, it looked no further than Tim Cook, its most competent senior manager. Steve Jobs, his predecessor, had become a symbolic figure whose enlarged personality and public performances were a reflection of the company he built. He touched every functional area and left no doubt who was in charge.

In contrast, Cook chose to remain privately personable yet publicly professional while deftly managing and changing the leadership of key functional areas. Sometimes he broadened roles and responsibilities, as he did with Jonathan Ive, now the company’s chief design officer. For Cook, Ive was simply the best leader for Apple’s hallmark functional area. Cook was no Jobs, nor did he want to be. He simply wanted to be the best at management.

The lesson is equally apt for smaller, less iconic companies where it can be an open secret that sometimes (although not always) visionary founders aren’t necessarily the best managers. With the departure of a founder, the opportunity for change usually emerges for the better. And that change can lead to more proficient management structures.

An enlightened board will ask its executive recruiting firm not to find another guru or imitation founder, but someone who can manage the talent already in place. Replace the founder, if you will, with the next strong building block in the management foundation. The old adage “everyone is replaceable” is true not because people like Steve Jobs aren’t one in a million – they are. Founders are replaceable because the void they leave is often one of personality.

Functional leaders are there for a reason: they possess the skills necessary to step up to increased management responsibility. Just as the founder needed to be hands-on in the early days, a sound management team needs to take the reins of functional responsibility in the days ahead. It’s not unusual for such a team to flourish once out of the founder’s shadow.

Not to be forgotten was Apple’s first attempt at a replacement CEO. More than 30 years ago, John Sculley, the chief executive and marketing guru from Pepsi, was recruited as obs’s replacement. An “imitation founder,” Sculley tried to mimic his predecessor’s mastery of innovation. Yet he floundered and flopped with his pet product, the ‘Newton’ personal digital assistant.

As a faux founder trying to brighten Apple’s future, Sculley cast one of the notable shadows on the company’s otherwise storied history.