In the year 1978, my grandfather opened his first retail shop. It was a year after the brutal murder of Steve Biko and the townships were a volatile and frankly uninspiring place to do business. My grandfather started the business with a single mission: To create an extra income for his family.
In that same year, some Stellenbosch entrepreneurs gathered to start a retail chain. They built what is now the most successful retail chain in Africa. My grandfather’s spaza shop died when he left us in 2005. These Stellenbosch entrepreneurs have grown to become a R118 billion business, doing in essence what my grandfather did, selling household items to communities.
We recommend: Vusi Thembekwayo’s Winning Lessons For Success
While I know that the reason my grandfather couldn’t build a successful business chain was because the government of the day had effectively outlawed black entrepreneurship with draconian apartheid laws, trading limitations and zoning, for the purposes of this article, I will talk about how to make the change from founder to CEO, growing a large organisation in the process.
The Great Divide
There is very little evidence to suggest this is possible. There tend to be two types of founders: Those who sell their businesses and exit with handsome payouts; and those who continue to run their businesses because they provide a certain lifestyle, but sooner or later fade into the abyss of irrelevance.
Certainly, these businesses are often difficult to sell because they are so firmly dependent upon the founder’s networks and skills set.
Founders lead with heart and emotion. They galvanise people with similar value systems. They build niche teams that tackle big problems with limited budgets. They don’t believe in bloated labour forces.
CEOs lead with rationality and emotion. They are equally attuned to the heart of the business and the strategic issues it faces. They often want to ‘take over the world’. They worry about personnel numbers relative to return on assets and are driven by shareholder returns as they are making a difference in society.
We recommend: Vusi Thembekwayo on How he Financed Growth
Here are five things to do in making the transition from founder to high-growth CEO.
1. You Don’t Need a Suit
In the movie Jobs, you see Steve Jobs change his hippie attire for a suit symbolising that he had become the CEO of the firm, no longer the founder. Wearing a suit does not a CEO make. It’s about the mental state, not the dress code.
2. Delegate, Don’t Obfuscate
This is the most important lesson I had to learn when making the transition. Just because I had delegated a task to someone in my team, didn’t mean I was no longer responsible for that task or its implications.
Yes, I must hold that person accountable, but I retain the ultimate responsibility for that task. So what you want to do is set up a matrix of delegation that helps you manage who you have delegated to, what their framework of delivery is and what the reward or consequences are for non-delivery or over-delivery.
3. Create Financial Accountability
This is the Achilles Heel of most founders. They are accountable only to themselves. Getting in someone that you can be accountable to around the financial decisions you make is the single purest way to help you make the transition.
It forces you to think about what you are doing, why you are doing it and how it will generate a return for shareholders. For purposes of achieving this, I gave 5% equity to my mentor. This bought time to reflect with him every quarter but also created a greater sense of responsibility and duty.
4. Transfer the ‘Soul’
This is the most challenging thing to do. The ‘soul’ of the business is the reason you exist. If you cannot transfer this, the business will lose its direction. The soul is the directional underbelly for everything that you do.
Here you need to hire people that not only see what you see but can execute in a direction consistent with your reason for existing. Right people. Consistent vision. Right beliefs.
5. Build the Team
Great businesses are great teams. Building that team is the CEO’s responsibility. Make sure you have people who will take the business forward, who are as capable as you and give them a percentage of the upside. So before you decide on where the bus is going, ensure that you have the right people onboard seated in the correct seats.