How to Hire a CEO
Being the boss isn't always easy, but handing the job to someone else can be even tougher. After carefully building a company from scratch, hiring someone else to be CEO can feel like giving away your child to a stranger. Yet many company founders -- especially those who are ambitious but inexperienced -- eventually decide to hire a more seasoned replacement, in the hope of turning a scrappy start-up into a household name.
Eric Ryan and Adam Lowry, co-founders of Method, a San Francisco-based maker of home cleaning supplies, have gone through the process twice. In 2001, nine months after founding the company, they hired Alastair Dorward, Method's first CEO, to focus on raising capital while Ryan and Lowry concentrated on sales and product development. Last May, the company, which has $100 million in annual revenue and some 100 employees, brought in Drew Fraser, who was previously an executive at Whirlpool, to help chart Method's next phase of growth. Ryan recently talked with Inc. reporter April Joyner about how he chose the right candidate the second time around.
Early on, Adam and I decided that we would need to bring in a CEO who had stronger management and operating experience. For a founder, giving up control is always challenging. When you start a company, you have a vision that you're trying to bring to the world. The key is to find partners who have that same vision.
When we brought in a CEO to build the next stage of the company, it was not an easy search. Adam and I worked very closely with our board. The board was sensitive to the fact that we needed to find someone who would work well with us. We needed someone who came from a consumer packaged goods background, who had really strong management and operating skills. Yet we also needed somebody who would embrace and enhance our unique culture. One of our values is to keep Method weird. At a lot of companies, you act differently when you are at work. We want people to be themselves here, so they can be creative, open-minded, and willing to take risks.
Before any candidates get hired at Method, they're asked to do a homework assignment, which always consists of three questions. For this particular assignment, the first question was, "How do we stay ahead?" The second question was, "How do we maximize profitability?" The third question, which is always the same, was, "How will you help keep Method weird?" We don't expect anybody to have a "right" answer, but we want to see how people think. It lets us see what a board meeting would be like with these people. When we push back on something they believe in, are they defensive?
Initially, back in December 2008, we had three finalists. We didn't move forward with any of them. The second time around, we had three new candidates, and Drew was one of them. Adam and I had worked with Drew when he was at Whirlpool, which is a strategic partner of Method, so there was a previous relationship in place. Ultimately, he came out best in the homework assignment. While we were interested in how Drew would fit in culturally, we were first and foremost examining how he would drive the business. So for Drew, demonstrating how he would help keep Method weird was showing how he would maintain the balance between being strategic and having discipline, and keeping our edge and endorsing creativity. He's been the perfect fit for our culture.
Every Monday, we do a company huddle, and we introduce new employees at that time. Often we'll ask them to share their answer to "How will you help keep Method weird?" When we introduced Drew, his wife helped us with a slide show of childhood photos that were on the embarrassing side. It was a great icebreaker.
We worked hard up front to make sure Drew got the information he needed so he could digest it before he got here. Then we gave him free rein. Drew has elevated the management of our company. He's built a stronger career development program to help employees get what they need, and he's holding us more accountable. But we haven't lost what makes us special: creativity, innovation, great culture.
Because the company is better run, Adam and I are freed up to contribute at the highest level. I spend a lot of time working with designers on product innovation and meeting with retailers. My goal is to be the editor in chief of our brand. We recently launched what we believe is the world's most efficient laundry detergent. For a small company, it's a huge revolution, from the chemistry to the packaging to the dispensing. As the founder, I'm freed up not only to push innovation but to hold everybody true to what our mission is, what our vision is, and how we should continue to be courageous.