Many successful business builders are better suited to incubating companies, then passing the reins to a growth-oriented partner.
Conventional wisdom says the best way to build a successful company is to find an entrepreneurial CEO and management team to launch, build, and grow a business. But the skills required for those three phases often don't lie within the same person. The entrepreneur who likes to build is not necessarily the CEO who has the capability to grow.
We recently spoke with a serial entrepreneur within a billion-dollar company. Every year or two, this corporate business builder incubates a business, starting with a strategic partnership. Once the business is off the ground, he hires his own boss to grow the business. Then, as the he transitions the business to the CEO, he steps away and focuses on the next business opportunity. To us, that's a great model.
One of our partners at Avondale, Dione Spiteri, has built a number of companies over the past 20 years, including a three-time Inc. 500/5000 recipient, US Appraisal Group. As Dione took the business from concept to funding to growth, she always strived to create a replicable growing machine that she could pass onto someone else. Once this foundation was in place, she would search for the perfect CEO to step into her role and grow the business. Now Dione helps our clients build and transition their businesses to growth oriented leadership.
We once met a CEO of a meat processing company who referred to himself as a "Meat Scientist." We met a CEO of a manufacturing company who was an engineer at heart. We met a CEO of a financial services start-up who longed to be a "sales guy," and became just that after selling his company to a larger entity. In each of these cases, the person who built the company was a subject expert rather than a growth-company CEO. Their core strength was developing a concept that worked for a specific customer. Once they achieved that goal, they longed to go back to the concept phase and found someone else to grow the company.
Many large, established companies are poor at entrepreneurship. They are filled with talented people who can manage and grow, but they typically lack the talent for creation and building. Should they bring in more creative incubators to build businesses?
Companies that grow by leveraging the collective strengths of a business builder (entrepreneur) and the business grower (CEO) are often better built to survive through multiple stages of growth. Is that the best route for your company?
KARL STARK AND BILL STEWART are managing directors and co-founders of Avondale, a strategic advisory firm focused on growing companies. Avondale, based in Chicago, is a high-growth company itself and is a two-time Inc. 500 honoree. @karlstark