"Founderitis" Is a Thing - and It Can Kill a Business

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WAYNE RIVERS: Hi everyone. This is Wayne Rivers at Performance Construction Advisors where We Build Better Contractors.

Time's running out for that February Boot Camp in Dallas. So contact Charlotte, get your folks enrolled as soon as you can.

This week, our vlog goes out specifically to Steve Stevens at Landmark. Steve sent me an email last year about a vlog we did on succession planning and he said, "I didn't go deep enough. I'm going deep today, brother." This is for you. I want to read first, well, we're going to talk about Founderitis. Founderitis. Founderitis is a thing and it can kill a business. This comes from an article from the Executive CEO Network newsletter by Mark Debinski. And it's a good one. It really got me thinking.

So first, I want to read an email from Chris Cullum at Cullum Mechanical down in South Carolina. "I'm a second generation owner of a family owned mechanical construction company. We have 250 employees and are doing about X million in annual revenue. Very interested in the truth or myth of the failure phenomenon discussed in your video referencing shirt sleeves to shirt sleeves. I've seen both failure and success in generational transitions and construction businesses. We are in the third year of a 10-year plan." Wonderful.

"To transition to the third generation, the strategic planning process is a vital component of the proposition for sure. I know of several hundred plus year old contractors that are thriving. So that evidences the possibilities. What I've seen in transitional failures typically seems to be routed in the current generation leadership not getting out of the way. Probably an indication of a lack of strategic and succession planning."

"I never would have grown up if my dad did not get out of the way. I never thought he would, and I was worried about that. Figured he would die in his chair in his office. Fortunately, for the company, he did a great job of succession planning. Got out of the way and we made the first transition successfully. At 60, I'm starting to understand that statement. We need to get out of the way so fresh blood, energy, and modern management skills and technology can build the future." Shouts out to his dad, Firm and Cullum. Well done, sir. And I think that's a great... I love getting emails from you guys. That wisdom is just tremendous. I couldn't have said any of it better myself. Now this is from an article, also from a Chief Executive.

"I've seen families stall because a senior generation can't let go or a child won't step up. For current leaders, the business is off of their identity," and that's a thing. "But true leadership is knowing when to step aside and let others lead, even if it means the business exits the family. Clinging too tightly can destroy what you spent your life building. Don't assume succession will work itself out. Plan early, talk openly. Give the next generation space to grow, fail, and choose. And above all, remember, it's not just about continuity. It's about creating the conditions for success, even if that success looks different from what you imagine." Letting go is an act of leadership. What about this is important to you? That's what I want you to understand. Letting go is an act of leadership.

Failing to let go is contra-leadership. It's the opposite of leadership. Founderitis might sound funny. It's haha. It's funny, Founderitis. It's a thing. I can tell you. It is absolutely a thing. Today, as we're working with second, third, fourth generations of leadership in construction companies, they're much more sanguine about their own capabilities, lack of capabilities, the need to do strategic and succession planning. When I was a younger man and we were dealing with the first generation, the founders of construction companies, wow. They clung so tightly to control. And there were several occasions, I could think of two in particular. One gentleman in his 80s who refused to do succession planning. Another whose son died, the president of the company died and the 90 something year old dad stepped back in as day-to-day president, which was a shock to everyone.

Founderitis is a thing. How do you recognize Founderitis? One person typically is a bottleneck for decisions. They have an excessive need for control and attention. They are a barrier to technology, systems and processes improving. They cling to the successes of the past. They have a reluctance to professionalize the business. Their identity is tied up completely in who they are as the leader of the company, and they resist succession planning. The biggest hurdle to overcoming Founderitis is this. And it's a tough one. It's a tough one. They can always fall back and say, "Look at all the challenges we've overcome in the last 12, 30, 40 years, whatever it is. Look at all the challenges we've overcome. Why do we need to do that? Look at how successful we are." Their very success blinds them to the need. It causes overconfidence and blinds them to the need to do modernization, professionalization, et cetera, et cetera. What happens when there is a resistance to let go or reluctance to do succession planning? Loss of talent.

When you've got great people on your team and they see a stall at the top, they see no path forward. They see status quo thinking. There are a lot of places talented contractors can go these days. Don't think they won't. They may love you. They may hold you near and dear in their heart, but not as near and dear as they hold themselves. And they owe it to themselves, their families, and their careers to find the best spot to land. Internal dysfunction and stagnation, see it all the time. Poor morale. Golly, Moses. That's a real thing in construction companies too. And then status quo thinking, status quo behavior throughout the organization, just a failure to modernize. I saw this. I walked into a construction office one day and the lobby was dusty and unkempt. And that started me thinking. And I looked down at the coffee table in the lobby and the magazines were 8, 10, 15 years old. That said something to me. Once I got into the back office and started talking to the two brothers that ran the company, they had some challenges. They're not around anymore.

But it's those little things you can see status quo thinking. In a construction firm, you've got to pay attention to detail. And if the magazines in your lobby are 12 years old, somebody is not paying attention to detail. All right, what do you do? What do you do if you've got Founderitis, if you've got a roadblock, a bottleneck, and you can't break through? The first thing I would say is talk to your peers and your trusted advisors. I remember at a peer group one time, we reviewed the host company, and at the end, one of the members said, "You guys have an almost perfect construction company. But the problem is, you haven't done any succession planning and every decision rests with the two of you." And he was right. They were making money in the 2008, 09, 10 period when nobody was making money. Their volume didn't fall off very much. Again, a miracle. They just had a business engine going, but it was completely dependent on those two people. And their peer did them a favor by pushing them towards succession planning.

The second thing you can do is encourage leadership development, get those high potential people out there, get them into Boot Camp, get them into some kind of executive training, let them see what's happening in the outside world and let them bring those ideas back into the company so they can flower. Move forward with your systems and processes. You're still doing your estimates on great big spreadsheets with pen and paper. No, no. You've got to modernize, you've got to get some new things in place and that creates a momentum all of its own. And then finally, form a succession team to think about a different future. So I remember talking to a guy one time and he was a founder, really resistant to succession planning. And we sat in the conference room with him and his three children and I said, "Okay, how would you advise your children if you got struck by lightning, if you got hit by the proverbial bus, whatever it is, if you weren't here tomorrow, how would you advise your children?"

And he said, "I would do this." And he had a mental list of about nine things. "I would do this, this and this and this. I would have them talk to this person, that person." And I said, "Why wait? Why would you wait? Why not do that now while you're here to help guide them and shepherd them and steward them into their leadership?" He went, "Oh, okay. Well, that makes perfect sense." Form a succession team, go ahead and think through that process and that situation. If you weren't around anymore, how would you advise your next generation of leaders to proceed and go ahead and walk down that path? It makes perfect sense. Letting go is an active leadership, I'd like to hear from you, what do you think? Is Founderitis as a thing? And if so, what have you done perhaps successfully to get past that?

This is Wayne Rivers at PCA where We Build Better Contractors.

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