There have been a lot of prescriptive articles about the critical--and often ignored or overlooked--need for succession planning in large companies, particularly at the highest management level. And I've seen the massive notebooks at some big businesses that detail the candidates and the replacement process for practically every member of the senior team. On the other hand, apart from the occasional VC who insists on key man insurance as an investment condition, there's been very little discussion or literature about this issue in the startup world. Given how single-threaded so many startups are, you'd think this topic would be much more top of mind than it is.
There's never a perfect moment to talk to the founding CEO of a startup about replacement, succession or making a prompt and graceful exit (even when everyone basically agrees that it's essential to moving the business to the next plateau) or about him or her being "kicked upstairs" to a board position or an advisory role. But treating the entire issue like it's a taboo subject doesn't make any sense at all. And yet, it's pretty much the ways things are and have always been. As many businesses as I have been a part of and as many times as I've addressed these issues as a board member, it never seems to be a clear or easy process.
This is mainly for three reasons: (1) the incumbent CEO never wants to discuss stuff like this-;it's just like talking about your will or your funeral plans with your wife or kids; (2) most VCs would tell you (if they are being remotely honest) that, in 75% or more of the cases where the company is wildly successful, they totally believe that they're going to have to fire/replace the CEO anyway, so they'll worry about it down the road; and (3) it's too early in the company's brief lifetime to be discussing these kinds of "negative" ideas and concerns. We don't want to scare the troops or the investors. I call this last consideration the "let's rob the train first before we worry about splitting up the loot" mindset.
No matter how unpleasant the topic feels, it's a really good idea for the CEO to get ahead of the pack and actually try to initiate and direct some of these discussions before they take on a life of their own, and he or she becomes--- at best-- an interested bystander to the process. Boards rarely directly broach subjects like this without a precipitating event or a firm push or incentive from someone and it's almost always better to be the one making things happen than the one watching things happen-; especially when they're happening to you.
The hardest question in this process really isn't "who's next?" The critical question is "when is the time right?" to start thinking about making at least a plan and maybe even a change. How will you know when the time is right to at least start talking about the subject? Even if you think it's early, or never gonna happen to you, it's a good idea to know some of the internal signs and some of the emotional signals that will help you decide whether and when it's appropriate and smart to think about succession issues and your eventual (and hopefully consensual) decision to move on.
I've talked to maybe a dozen serial entrepreneurs over the last couple of months specifically on this subject and, of course, I've been through the process many times myself. And it's pretty clear that the inventory of emotions and concerns is fairly common. Here are the ones that I've seen and heard repeatedly:
(1) When it feels more like an exhausting job than an exciting journey.
I've always thought it was stupid to ask an entrepreneur whether he or she is having "fun." Building a new business is a whole lot of things, but anyone who's lived through it will tell you that it was not a lot of fun. It's challenging, stimulating, overwhelming at times, and certainly satisfying when you succeed, but it's not a lark. When you're actively unhappy at the end of a long day instead of just being beat, it's time to think about beating it.
(2) When it feels more like pulling the wagon than leading the charge.
Leading people is always a challenge and it helps a bunch to have the right people on your team. But after you've shown them the vision and the path, in the best businesses, the burden's on them to move the ball forward. Trying to drag a disinterested division down the road or carry a "care less" crew on your back is just too much work for anyone to try to do alone. Begging your people to believe is a waste of breath. Find new people or a better place to be. You can't push a rope.
(3) When no one, but you is interested in what's new or what's next.
Businesses that don't keep raising the bar and getting better every day start dying. It's that simple, but not necessarily easy to encourage everyone to keep one eye on the future. People inside your business are always reluctant to change or to part with what they see as working "just fine" for them. Meanwhile, the rest of the world is trying to eat your lunch. This isn't about some fixation on always seeking the newest shiny object or buying the best new whatever, whether you need it or not. It's about living in a world where change is the only constant.
(4) When the process becomes more important than the business's progress.
Nothing is more heartbreaking for a true entrepreneur than watching bullshit bureaucracy slither its way into the business. Punctuality comes to trump productivity. Rules and regulations get in the way of real results. People prefer peace and quiet over progress. Hurt feelings are more important than hard facts. And too many crave consensus and the lowest common denominator over the chaos of creativity and new challenges.
(5) When the conversations are about imitation rather than innovation.
If the best your business can do is just a little bit better or cheaper or faster, you won't be in business much longer. Thinking small and aiming low are self-fulfilling prophecies. And if I can write down a simple set of rules and instructions to do the lion's share of your business, a machine or a robot will be taking your place a couple of weeks from tomorrow. The future isn't going to be incremental, it's going to be radical. The businesses that want to grow and survive will need to make a demonstrable difference in, and add real value to, people's lives. Design will be important, but not protectable or proprietary, because the web lets the whole world know what you're thinking and doing in an instant. Speed, impact and exemplary execution will be everything.
(6) When everyone's talking about better safe than sorry.
If all the talk is about saving the business's bacon and securing the status quo instead of the setting the curve and shooting for the stars, you're on the wrong escalator and headed in the wrong direction. You can't save your way to success; and, if we knew in advance how all these things were gonna work out, they probably wouldn't be worth doing in the first place. The caterpillar is safe in the cocoon, but it's the butterfly that's beautiful. The best businesses are richly rewarded for taking the greatest risks-;not gambles, but calculated risks. Playing it safe is the riskiest thing you can do.
(7) When you spend more time looking over your shoulder than over the next hill.
It's important to cherish and celebrate the past as long as you don't live in it. You can't change it; you won't forget it or get over it; and the very best that you can hope for is to avoid making the same old mistakes again. But the worst mistake of all is to use the past as an excuse for not moving forward or as a place to hide from an uncertain future. The best entrepreneurs run toward their fears, not away from them.
And, just to be clear, since the most critical choices are the ones we make with our hearts rather than our heads, you'll know it's time to go when your fears are greater than your dreams.