On Founder’s Syndrome and governance

Founder’s syndrome (also founderitis) is a popular term for a difficulty faced by organisations where one or more founders maintain disproportionate power and influence following the effective initial establishment of the project, leading to a wide range of problems for the organisation.” (Source: Wikipedia)

In recent weeks and months I’ve heard a lot about this phenomenon, with many of my friends, clients and other business associates discussing the topic with me and sharing their personal experiences.

The Wikipedia article describes the issues very well: “The passion and charisma of the founder(s), sources of the initial creativity and productivity of the organisation, become limiting or destructive factors. The syndrome occurs in both non-profit and for-profit organisations. It may simply limit further growth and success of the project, or it may lead to bitter factionalism and divisions as the scale of demands made on the organisation increases, or it may result in outright failure. There are ways in which a founder or organisation can respond and grow beyond this situation.”

BoardSource also makes this observation: “When founderitis surfaces, the source of the dilemma often is a founder’s misunderstanding of his or her role in an evolving organisation. […] It is important to note, however, […] the board – not the founder – is responsible for setting the guidelines and direction of the organisation. Rubber-stamping a founder’s wishes is rarely best for an organisation over time. If a founder is no longer able to abide by the organisation’s guidelines and direction, to support the board’s decisions, it may be difficult for a founder and board to continue a mutually acceptable working relationship. It then may be time for a founder to step aside, as hard as it may be.”

So while personalities are inevitable a feature that need to be acknowledged, the solutions are really all about governance. An engaged board appears to be the key, as it takes the organisation beyond the founding individuals towards a long-term sustainable model.

Note that the issues appear in companies and non-profits alike, there’s fundamentally no difference in that respect. With the special role of the board in either organisational model, it is very important to establish and maintain a clear and fairly strict separation between it (the board) and the executives of the organisation, otherwise the governance becomes inevitably messy. As we know, quite a few companies have a “Chairman [of the board] and CEO” and this seems like a hideously bad idea. The CEO reports to the board, but in those organisations they are at the same time the chairman of that board. In most cases, it is probably most appropriate for a top-level executive (CEO, CTO, CIO, etc) to not be a board member at all. This way the separation of roles is non-ambiguous, and that will likely prevent many problems. Governance is important.

If any of this sounds familiar, and you’re interested in reviewing and addressing the issues in your own organisation, we’re here to help!

Click on a tab to select how you'd like to leave your comment

Leave a Reply

Your email address will not be published. Required fields are marked *