The Fine Art of Founder Succession

There are few things in life more terrifying than handing your baby over to another person’s care. Perhaps this is why most Founder-CEOs bolt in the opposite direction at the mere mention of the words “Founder succession plan.”

Recent surveys show that approximately three out of five small businesses have not articulated a leadership succession plan. These businesses run the risk of stumbling badly if a Founder-CEO suddenly needs to transition out or take a temporary leave to tend to a life event. For businesses that scramble to effect a transition, it is estimated that an astounding half fail outright and hobble the business’s long-term prospects. A topic this difficult and emotionally-loaded, then, is naturally postponed by most organizations.

Small businesses, however, are precisely the most vulnerable when an emergency strikes and creates a leadership vacuum. It behooves any organization to get ahead of the inevitable and lay the groundwork for succession. Doing so helps build natural safeguards and a robust, more resilient organization.

A succession plan need not focus only on the scenario in which a Founder moves out completely and a new CEO steps in. In fact, I argue it can be healthier for an organization to act early, and have the Founder stay actively engaged and support a new CEO’s transition – even overlapping for several months or years.

We at Upaya can speak from personal experience. In 2016, after five years at the helm, I transitioned to the role of Chief Impact Officer and welcomed Kate Cochran as Upaya’s CEO. This move had not been prompted by a sudden emergency. Rather, it was the result of asking ourselves some hard questions in 2015 about our growth and future. While it was somewhat influenced by health-related uncertainties, even more, it was my conviction that Upaya needed a fresh jolt of leadership to support this next chapter of scale and maturity.

Three years later, Kate and I are both full-time at Upaya, working in close partnership in our respective roles. Kate is the ultimate decision-maker and is accountable to Upaya’s Board. We find that we are more often in sync than not, and we’ve been asked by others how we’ve made this work. These conversations have pushed us to reflect on the reasons behind this smooth partnership:

Mission alignment: During the planning phase the Board and staff decided we would only select an incoming leader who was equally as passionate about the mission and vision as the Founder. It is easy for a candidate to parrot the public statements that an organization has made about its raison d’etre; the challenge is to probe and pressure test their commitment. What are their personal motivations? Why are they passionate about this focus? If asked to make a hard choice, which way will they lean? It is imperative that the Founder and CEO operate in lockstep with regards to the North Star … any deviation, however slight, can lead to differing priorities and conflicts in the mid- to longer term.

Professional compatibility: Kate and I were lucky in that we had had prior work experience with each other. We understood how the other managed projects, teams, and communication – basically the management style and soft skills that compose the rhythm for working with one another. And we both have similar leanings when it comes to how we organize and manage our professional obligations.

Often, when entrepreneurs think about a Co-Founder, CEO, or business partner in general, they default to friends or family, given the trusted relationships that have been built. Unless you have worked with that friend in a professional context, however, it can be a rude awakening to find you both have very different styles to approaching your work. Maybe you are more of a planner, a stickler for Gantt charts, whereas your friend is a free-wheeling creative type who churns out great content when inspiration strikes. Even if you have the same end goal in mind, the day-to-day steps to get there may be fraught with disagreements on how to get the work done. This drains energy and throws sand in the company gears. A well-functioning leadership team spends its time debating ideas, strategies, and programs – the what and not the how.

Clear delineation of authority: While you want to be aligned on the mission and management style, you want to guard against too much overlap across subject and functional areas. If you are going to be sharing leadership, it is important to find in an incoming leader an expert in functional areas that complement those of existing leadership. Each individual must have ownership and accountability in their area of expertise. It is not enough to verbally agree on what these domains are; rather, the autonomy must be reflected, maintained and respected through formal mechanisms such as titles, job descriptions, performance benchmarks, and organization charts.

In the first nearly 12 months of Kate’s term as CEO, I did not re-define my role, nor did I put specific boundaries around my responsibilities. I figured I could be most helpful by being flexible, helping her transition in, and working with her to plug any gaps on the team. I had heard that leadership transitions go awry because of inflexible attitudes, and thought I was doing everyone a favor by being the opposite.

During the first few months, however, my ill-defined and abstract role only created confusion among the team. What should they run past Kate versus run past me? What was I available to help with and when? In addition to this problem, interestingly and ironically, I started to feel alienated. Without clearly defined responsibilities, each day was different and after a while it was easy to feel that my role was randomized and directionless. Luckily, Kate and I both recognized this was happening, had a frank conversation, and re-defined my role to oversee our impact assessment activities. Not coincidentally, this role ensures Upaya’s adherence at all times to its founding mission.

Letting go: I will admit that this is the hardest part of it all … insanely hard. Entrepreneurship is an intensely emotional journey, and Founders will feel discombobulated when they cede the ultimate decisions to someone else. But you have to let go.

I recommend transitioning activities in stages, especially once you observe the incoming CEO has come up the learning curve. I also recommend jointly working with your team and Board to put an objective assessment and set of metrics in place. This way if a brand-new strategy is not meeting its goals, there is a path to revert to the old model, or at least course-correct. Remember, it is highly unlikely a new way of doing things will sink a company. This should alleviate some Founders’ deepest fears. With the right attitude, guidance, and support, a company can emerge stronger even after experimentation undertaken during a transition period.

Lastly, I encourage fellow Founders to think of handing over the reins not as a stepping down in their authority but as a “stepping out” into a freer, more liberating phase of their careers. In Upaya’s early years, despite having amazingly talented and supportive Co-Founders, I felt the burden of pushing the boulder slowly up the hill and constantly wondered if I was making the right decisions. Turning over that responsibility now to someone who has more experience in our industry has validated some of those early decisions, but more importantly, has given me space to focus on the duties I truly enjoy. Upaya is the better for it.

The new year is perhaps the best time for leaders of any business to reflect on the past and plan for future uncertainties.  If the words “succession plan” or “leadership transition” evoke fear or too much negative emotion, call it something else. Think of the exercise as an insurance policy for the organization’s longevity.

Even at Upaya, I realize that describing our current leadership model as a “Founder transition” is misleading. I hope circumstances will allow me to continue contributing to Upaya effectively for years to come. Putting faith and trust in Kate, supporting her leadership and vision, while ensuring Upaya stays true to its founding mission has been a rich educational experience for me and our stakeholders. It has made Upaya a more resilient organization and has given us a valuable blueprint for preparing the next generation of leadership – however far-off into the future that chapter may be. 

Sachi Shenoy is Co-founder and Chief Impact Officer at Upaya Social Ventures, and fundamentally believes that entrepreneurship and market forces can be harnessed in creative ways to expand access to productive opportunities for all. She is a seasoned entrepreneur and has over two decades of experience holding leadership positions in both the non-profit and financial services industries. Prior to Upaya, Sachi worked at Unitus, CDVCA, SKS Microfinance, JP Morgan Chase, and PricewaterhouseCoopers. She holds a BA in Economics and an MBA in Finance and Entrepreneurship from the University of Chicago.