Innovation and Founder CEO’s

There is a great piece on Forbes that attempts to explain some of Apple’s current run of success. The main thrust: it comes down to the founder CEO, and what makes them different from a non-founder CEO. But there is one element to the thread I would like to add, and there are some other areas worth exploring.

Founder CEO’s Write The Story

I agree 100% that a founder CEO is motived by more than just the bottom line (although the smart ones pay attention to that, too). There is something more, though, than just a willingness to take risks and ignore analysts. A founder CEO also gets the story. They have a vision for what the company and it’s products “stand for”, and what place they want to be in the world. A founder CEO, because they are the storyteller, knows the plot, they know where they want to take the story, and execute on that.

Nonfounder CEOs often miss the point. Because they aren’t the original author, they are uncertain on the story, or the underestimate its importance to the company’s success. The focus shifts from the story to the bottom line. It’s like movie sequels: nonfounder CEO’s are like the directory making the Nth instalment of a movie franchise that was once great, but at best all they have achieved is a pale copy. They concentrate on the form, but never really get the substance. It’s imitation, and not invention.

But Founders Can Lose The Thread Too

Not all founder CEOs who guide their company to success can maintain that success. Consider Sun Microsystems as a cautionary tale. Had this been 15-20 years ago, Scott McNealy and Sun would have potentially been an example of success, in part, because of the presence of a founder CEO. Sun was at the top of its game. It was neck-and-neck with HP in terms of server market share. It was an innovative and imaginative company, and others sought to imitate them. McNealy was hailed as a visionary, and his willingness to stick to certain principles and a particular direction was seen as bold, but it was successful.

But somewhere along the way, McNealy lost the thread. He didn’t see that the world around him was changing, or he did but refused to believe it could happen. Much like the “old” companies like Microsoft or IBM that he like to deride when he was at the top of the heap, he, too, railed against change that was going to happen whether he liked it or not. He became the crusty veteran accusing others of selling snake oil. In the mean time, the Sun board of directors was unwilling to toss him aside, despite it being clear his vision and his direction was on a downward trajectory. He was one of the founders. He was part of the reason Sun succeeded when it did.

So McNealy was kept on too long, and by the time the board tried to right the ship, it was too late. Between the rise of small Windows and Linux servers, and the move to commodity hardware, Sun was displaced. IBM, HP and Dell saw it. Sun didn’t. The result was a board that had to scramble to salvage what value they could, eventually selling the company to Oracle.

Sun isn’t the only example. RIM is on the same trajectory. Yahoo! is suffering a similar fate. A founder CEO that acts as if the whole world is the one that is wrong can be dangerous too. The focused vision that ignored the trends and ultimate set new ones (like Apple) can also lead to giant, company-killing blindspots and an inability to see that the world has moved past you.

Employee CEO’s Adopted As Founders

Sometimes, a CEO comes along who is essentially “adopted” as a founder. They may not be a founder, but they end up acting and working as if they are one. It seems to occur around the time when a company is in trouble, and is looking for leadership, vision and direction. Examples here include Jack Welch at GE, Lou Gerstner at IBM, Alan Mulally at Ford and Michael Eisner at Disney.

Many took over when a company was in trouble. Often, it was a case of a company following a path that had clearly diverged from what their customers wanted and expected. All managed to lead their companies with a passion and vision that was very similar to what a founder would do. They all had a vision, and all of them started to write a new story for their respective companies. The changed the direction of the thread, and gave their companies a purpose beyond satisfying the bottom line. They figured out what their companies were about (or what they should be about) and took steps to remake them in those new images.

The ideal is that a company can be run indefinitely by either the founder, or successors who continue to act as if they are founders. The reality, though, is that is a hard thing to accomplish. It means finding someone who wasn’t there at the start, but is willing to adopt the company as if it were their own (and be adopted as a “founder” in turn). Certainly not an easy thing to accomplish.