In the world of startups and small to medium-sized businesses, the typical assumption is that the entrepreneur or founder wears the hat of the CEO. However, as businesses evolve, it’s not uncommon for a distinct CEO to be appointed, with the founder taking a backseat, and for an advisory board to be introduced. This new dynamic can be potent if managed correctly but requires clear delineations of roles and responsibilities.

Distinct Roles: Entrepreneur/Founder vs. CEO

When a business reaches a certain size or complexity, the founder may choose to appoint a CEO to lead the day-to-day operations. The reasons can vary, from the founder’s lack of expertise in scaling businesses to wanting to focus on innovation rather than operations.

• Entrepreneur/Founder: In cases where they aren’t involved in daily operations, founders often transition to roles where they can concentrate on long-term vision, product development, or external relations. They may adopt titles like “Chief Visionary Officer” or simply “Founder” to indicate their shift in focus.
• CEO: The CEO becomes responsible for executing the founder’s vision, managing daily operations, leading the executive team, and ensuring the company’s financial performance.

“To me, a leader is a visionary that energizes others. This definition of leadership has two key dimensions: a) creating the vision of the future, and b) inspiring others to make the vision a reality.” – Vince Lombardi

The Role of an Advisory Board

An advisory board is typically a group of experienced individuals who provide non-binding strategic advice to the management. Their primary function is to offer insights, support, and objectivity. An effective advisory board:

• Serves as a sounding board for both the CEO and the founder.
• Provides expertise in areas where the current leadership might lack experience.
• Assists in networking and opening doors to potential clients, partners, or investors.

Ensuring Harmony and Effectiveness in Leadership

For this organizational structure to work harmoniously, several practices need to be in place:

• Clear Communication: Regular communication between the founder and the CEO ensures that both are aligned in terms of company direction and objectives.
• Defined Boundaries: While the founder has a strong emotional connection to the business, they must respect the CEO’s decisions in daily operations. Establishing clear roles and responsibilities can prevent potential conflicts.
• Build Trust: This is crucial. The founder must trust the CEO’s capability to run the business, and the CEO must respect the founder’s vision and insights.
• Transparency with the Team: It’s essential for employees to understand the distinct roles of the founder and CEO. This clarity prevents confusion and potential loyalty conflicts.

Navigating Personal Relationships

A founder often has longstanding relationships with key members of the organization. To ensure the CEO can effectively lead:

• Establish Professionalism: While the founder might have personal ties, it’s essential to cultivate a culture where decisions are based on business needs and not personal relationships.
• Onboarding Process: Ensure the CEO is adequately introduced and onboarded, helping them forge their own relationships within the organization.

Questions to Consider:

1. How can the founder provide support to the CEO without overshadowing or undermining their authority?
2. What mechanisms can be put in place to resolve potential conflicts between the founder’s vision and the CEO’s operational decisions?
3. How frequently should the founder, CEO, and advisory board meet to ensure alignment and address concerns?

In conclusion, while introducing a CEO to an organization founded and grown by an entrepreneur can introduce complexities, with the right structures and understanding in place, it can also propel the company to new heights. It’s all about ensuring roles are defined, trust is built, and open communication channels are maintained.

From the Author, Paul Segreto, CEO & Founder, Acceler8Success Group

If you’d like to discuss your entrepreneurial experiences, challenges, or aspirations, or if you need guidance or coaching concerning your small business, restaurant, or franchise, please don’t hesitate to contact me. You may send an email to me at paul@acceler8success.com or you may reach me by text or phone at (832) 797–9851. I look forward to helping you.

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