 "The founder's dilemma")
In recent weeks, Housing.com co-founder and CEO Rahul Yadav has made news headlines for his public outbursts on his differences with the venture's investors. While it is not unusual for entrepreneurs to clash with their venture capital backers, such instances raise an important question: do founders always make the best leaders?
History is replete with examples that show that the founders' ability to inspire people and passion may not be enough to enable their ventures to capitalise fully on the opportunities ahead of them. Many founders believe that if they have successfully launched an enterprise, that is ample proof of their management prowess, but that is clearly not how it works. So what are the qualities founders need to transition into great leaders as their enterprises grow? What other qualities and skills - apart from passion and the ability to inspire people - do they need to deal with challenges that accompany scale?
Right-brain thinking
"I never took a day off in my twenties. Not one." This famous declaration by Microsoft co-founder Bill Gates probably rings a bell with every entrepreneur/founder, echoing the sheer effort, ideation and sacrifice that go into a new venture. But it takes more than just hard work to get the show on the road.
Many entrepreneurs come to believe that their enterprise is their "baby". "A founder doesn't work for wages," says TV Mohandas Pai, Infosys veteran and Aarin Capital co-founder. Emotion and self-belief also carry founders through bleak moments in business. "Only a certain cussedness can keep an entrepreneur going when all evidence points to a depressing future," says afaqs.com co-founder and director Sreekant Khandekar.
Clearly, a lot of emotion is involved, which enables the founder to work much harder than professional managers, sometimes compromising on health, private life etc. In many cases, founders are known to initially work without high compensation, often less than some of their professional managers. Such emotional attachment begets its own set of problems, the presence of ego being one of them. "The quality of your 'ego' matters," adds Alok Kejriwal, founder, games2win, and creator of entrepreneurial social network, TheRodinhoods. "Take a Steve Jobs, who was egoistic about himself leading to a dislike for him in the organisation, versus a Tim Cook who is the picture of humility personally, but is egoistic about Apple."
It is like this: one needs different mindsets while designing a car and while driving it. What sets a successful founder apart is realising which part of the journey he is at and whether he wishes to transcend from there. This leads to the next point: when does a founder realise he cannot run a one-man show? How best should he handle the transition?
Delegate, delegate, delegate
"While entrepreneur-founders are very decisive and hands-on, corporate leaders are generally better people managers," admits Rajesh Magow, co-founder and CEO, MakeMyTrip India. In cases where founders don't scale quickly or if their vision is limiting the company's potential, the professional manager can step in to improve execution. "At Housing, initially I manned the sales team, and all department heads reported in to me. Now I have made clusters of departments and layered the reporting structure," says Housing.com's Yadav. "If you are slow at delegation, you will hit your limit as workload increases."
A founder needs to create a team with exclusive skills, allowing room for a leader to emerge to whom the founder can eventually hand over the reins of the organisation. People skills are, therefore, key. A founder too needs to play different roles at different points of the organisation's life cycle. "One of the challenges that a founder faces includes knowing when to let go," muses Anil Sachdev, founder and CEO, School of Inspired Leadership.
Escalations to the founder are very common initially, which means he also needs to possess negotiation and conflict resolution skills. "Take Uber as an example," says Vijay Shekhar Sharma, founder, Paytm. "The company shoulders legal blame in virtually every market, but the founders have been successful in training management teams or else it would not have expanded so much so soon."
Furthermore, being too experimental later on may backfire. The startup style, useful when a company was small, flexible and agile cannot be applied later as it takes a long time to implement decisions. "If I have a 10-member team, I can change my mind every two days, but if I am running a 30,000-strong organisation, I cannot do that. Founders must accept this reality," says Praveen Sinha, co-founder, Jabong.
Connecting the dots
Because an entrepreneur has been working at the company from day one, he knows every nuance of his business rather well. Take media mogul and News Corporation founder Rupert Murdoch. On acquiring The Sun (London) in 1969, his proposal to convert the newspaper from a broadsheet to a tabloid, faced opposition from printers who said the printing machine couldn't be accordingly adjusted. In one meeting, Murdoch reportedly climbed atop one of the machines, opened a cabinet, and pulled out a bar that, when placed in a certain way, converted the machine to a printer of tabloids. An important lesson: being in control of the finer aspects of a business ensures you are never out of the game.
One great advantage founders have is that they move keeping in mind the big picture. "Infosys' NR Narayana Murthy was very clear about what he wanted to do with the company - to build it into a global business," says Pai.
One could argue that some of these qualities of a founder can also be found in a professional manager, but one must understand that leadership is the superset here. A few elements of leadership can make a founder, but all founders may not be great organisational leaders.
The question, really, should be about when should an organisation move from the energy of the founder-creator to that of a leader-manager.
Expert take
A good founder spots an untapped opportunity, passionately pursues it, show willingness to bear hardship and work hard while plunging into the unknown. He has to be persistent in raising complementary resources, often financial, and pursue the goal vigorously. It is a lonely journey. The key qualities required to build a venture are not all the same. One has to be a visionary with strategic thinking and capabilities to scale up through successful execution. This will demand building a team with excellent communication and influential skills.
In such a transition, a founder will have to realise that not everyone would agree with the approaches and solutions identified by him/her. One should be able to listen to others and work with 'detached passion'. Flexibility has to be a fundamental value as assumptions and realities could be quite different in a turbulent environment. This is particularly so when entrepreneurs have to work with outside investors who may have different views of the situation.
In essence, founders have to hit the ground running. Boys will have to grow up to become men. They can no longer be driven by impulses, but will have to show wisdom. Only then will they leave the founder's phase and become entrepreneurial leaders.
History is replete with examples that show that the founders' ability to inspire people and passion may not be enough to enable their ventures to capitalise fully on the opportunities ahead of them. Many founders believe that if they have successfully launched an enterprise, that is ample proof of their management prowess, but that is clearly not how it works. So what are the qualities founders need to transition into great leaders as their enterprises grow? What other qualities and skills - apart from passion and the ability to inspire people - do they need to deal with challenges that accompany scale?
Read more from our special coverage on "RAHUL YADAV"
Right-brain thinking
"I never took a day off in my twenties. Not one." This famous declaration by Microsoft co-founder Bill Gates probably rings a bell with every entrepreneur/founder, echoing the sheer effort, ideation and sacrifice that go into a new venture. But it takes more than just hard work to get the show on the road.
Many entrepreneurs come to believe that their enterprise is their "baby". "A founder doesn't work for wages," says TV Mohandas Pai, Infosys veteran and Aarin Capital co-founder. Emotion and self-belief also carry founders through bleak moments in business. "Only a certain cussedness can keep an entrepreneur going when all evidence points to a depressing future," says afaqs.com co-founder and director Sreekant Khandekar.
Clearly, a lot of emotion is involved, which enables the founder to work much harder than professional managers, sometimes compromising on health, private life etc. In many cases, founders are known to initially work without high compensation, often less than some of their professional managers. Such emotional attachment begets its own set of problems, the presence of ego being one of them. "The quality of your 'ego' matters," adds Alok Kejriwal, founder, games2win, and creator of entrepreneurial social network, TheRodinhoods. "Take a Steve Jobs, who was egoistic about himself leading to a dislike for him in the organisation, versus a Tim Cook who is the picture of humility personally, but is egoistic about Apple."
It is like this: one needs different mindsets while designing a car and while driving it. What sets a successful founder apart is realising which part of the journey he is at and whether he wishes to transcend from there. This leads to the next point: when does a founder realise he cannot run a one-man show? How best should he handle the transition?
Delegate, delegate, delegate
"While entrepreneur-founders are very decisive and hands-on, corporate leaders are generally better people managers," admits Rajesh Magow, co-founder and CEO, MakeMyTrip India. In cases where founders don't scale quickly or if their vision is limiting the company's potential, the professional manager can step in to improve execution. "At Housing, initially I manned the sales team, and all department heads reported in to me. Now I have made clusters of departments and layered the reporting structure," says Housing.com's Yadav. "If you are slow at delegation, you will hit your limit as workload increases."
A founder needs to create a team with exclusive skills, allowing room for a leader to emerge to whom the founder can eventually hand over the reins of the organisation. People skills are, therefore, key. A founder too needs to play different roles at different points of the organisation's life cycle. "One of the challenges that a founder faces includes knowing when to let go," muses Anil Sachdev, founder and CEO, School of Inspired Leadership.
Escalations to the founder are very common initially, which means he also needs to possess negotiation and conflict resolution skills. "Take Uber as an example," says Vijay Shekhar Sharma, founder, Paytm. "The company shoulders legal blame in virtually every market, but the founders have been successful in training management teams or else it would not have expanded so much so soon."
Furthermore, being too experimental later on may backfire. The startup style, useful when a company was small, flexible and agile cannot be applied later as it takes a long time to implement decisions. "If I have a 10-member team, I can change my mind every two days, but if I am running a 30,000-strong organisation, I cannot do that. Founders must accept this reality," says Praveen Sinha, co-founder, Jabong.
Connecting the dots
Because an entrepreneur has been working at the company from day one, he knows every nuance of his business rather well. Take media mogul and News Corporation founder Rupert Murdoch. On acquiring The Sun (London) in 1969, his proposal to convert the newspaper from a broadsheet to a tabloid, faced opposition from printers who said the printing machine couldn't be accordingly adjusted. In one meeting, Murdoch reportedly climbed atop one of the machines, opened a cabinet, and pulled out a bar that, when placed in a certain way, converted the machine to a printer of tabloids. An important lesson: being in control of the finer aspects of a business ensures you are never out of the game.
One great advantage founders have is that they move keeping in mind the big picture. "Infosys' NR Narayana Murthy was very clear about what he wanted to do with the company - to build it into a global business," says Pai.
One could argue that some of these qualities of a founder can also be found in a professional manager, but one must understand that leadership is the superset here. A few elements of leadership can make a founder, but all founders may not be great organisational leaders.
The question, really, should be about when should an organisation move from the energy of the founder-creator to that of a leader-manager.
Kavil Ramachandran
Expert take
A good founder spots an untapped opportunity, passionately pursues it, show willingness to bear hardship and work hard while plunging into the unknown. He has to be persistent in raising complementary resources, often financial, and pursue the goal vigorously. It is a lonely journey. The key qualities required to build a venture are not all the same. One has to be a visionary with strategic thinking and capabilities to scale up through successful execution. This will demand building a team with excellent communication and influential skills.
In such a transition, a founder will have to realise that not everyone would agree with the approaches and solutions identified by him/her. One should be able to listen to others and work with 'detached passion'. Flexibility has to be a fundamental value as assumptions and realities could be quite different in a turbulent environment. This is particularly so when entrepreneurs have to work with outside investors who may have different views of the situation.
In essence, founders have to hit the ground running. Boys will have to grow up to become men. They can no longer be driven by impulses, but will have to show wisdom. Only then will they leave the founder's phase and become entrepreneurial leaders.
Kavil Ramachandran,
Executive Director, Thomas Schmidheiny Centre for Family Enterprise, ISB
Executive Director, Thomas Schmidheiny Centre for Family Enterprise, ISB