Sunday December 03, 2017

Visionaries don't always make the best bosses

Steve Wozniak (left) and Steve Jobs, co-founders of Apple Inc., are shown in a historic photo at a 2010 Apple press event. Jobs, known to be difficult, was ousted from Apple in 1985 before returning in 1997.

Steve Wozniak (left) and Steve Jobs, co-founders of Apple Inc., are shown in a historic photo at a 2010 Apple press event. Jobs, known to be difficult, was ousted from Apple in 1985 before returning in 1997. (Justin Sullivan/Getty Images)

Listen 11:24

You don't have to be Steve Jobs to have had a visionary idea that really took off.

Maybe there was a project or a business idea that you worked so hard to get off the ground. It became a part of you. The way you made it happen was second nature. Almost instinct.

But does that mean you're the right person to continue managing it?

Raffaella Sadun is an economist, and an associate professor at Harvard business school. She researches the role managers play in the performance of organizations.

Raffaella Sadun

Raffaella Sadun (Harvard Business School)

Spark host Nora Young spoke to Raffaela about a recent research paper she co-authored called, Are Founder CEOs Good Managers?


Raffaela Sadun: You know, first we should clarify that we're talking about manufacturing companies that are pretty mature. We don't have, in our sample, start-ups, where people might have this romantic view of the founder a la Steve Jobs. We are talking about normal organizations. What we argue in the paper is that we think these differences in the use of systematic processes actually reflect some fundamental issues, related to how much founders value control. And why do I say that? Because in a sense, if you adopt a process that lets other people do their job better, what you are doing is you're delegating control to other people, and you're letting the data, you're letting the process decide on how resources are located. And that, to a founder, might be a very emotional step. By definition if you create something from scratch you might excel perhaps in your strategic insight, or you might have some emotional attachment to your organization. And its very hard for managers to create enough detachment that you let the process take over.

Nora Young: One of the things you point out in the paper is that outside investors might prefer the kind of standardized professional manager over a founder. Why is that?

Raffaela: The idea here is that when you get outside investors to put money in the firm, these investors may want some sort of insurance that the manager might be replaced if things go south. To create a company you might have some sort of specific competence or knowledge, and if this knowledge is not diffused and is not systematized through processes, it becomes very hard for external investors to have that sort of insurance that they can replace the specific knowledge of the manager with another person.

Nora: Presumably the company is successful with a founder in the early going though. So what changes? Are there challenges that can't be met as the company gets bigger?

Raffaela: Definitely. You can imagine if you start a company and it's only a few people, it might be quite possible for a single person to oversee the operations and intervene when needed. However, as the organization grows, having that sort of personal touch becomes harder and harder. And so it's the time when you have more people that need to be managed where processes really become important. And sometimes what we see in the research is that there is an under-investment in these types of processes that make coordination easier.

Nora: I see. But isn't there something to be said for vision? For the leader that people really believe in because they've been there from the start?

Raffaela: Absolutely, and in fact I do believe that while I was a little bit cheeky in my initial comments talking about management, the paper is by no means a way to say that we don't need founders, or that they're not valuable. I think that there is definitely something to say for the strategic vision of a founder, for example. Or even just the ability to commit to a new idea that doesn't exist. This is all valuable information, but that doesn't mean that the person who came up with an idea or has a strategic vision is necessarily the best manager. There may be two very different types of competencies that are needed. And what's key is to engineer the organization in a way that both competencies can have their say.

Nora: I was just thinking about something like Google, where the original founders left, but now they're running Alphabet. So they're applying their strategic skill set while Eric Schmidt runs Google and runs the nuts and bolts of things.

Raffaela: You know, in many organizations where there is still a strong presence of founders, you will find that often when it comes down to the day-by-day management or even a combination of these strategic insights with execution, typically it's teams of people taking on this role. And I think that there what happened is the magic of having founders that are bright enough to understand where their skills end, and where they need help from some more professional roles. Facebook, with Sheryl Sandberg and Mark Zuckerberg, would be another example of a very successful team at the top of the organization.

Nora: It sounds like founders need to have a fair bit of personal insight and emotional maturity in order to be able to step down in a way.

Raffaela Sadun: I think you're absolutely right. And it's not easy. I don't want to make it sound like this is an easy step. It's hard for everybody to understand where their limits are. And it may be even harder, as I said, for somebody who has some emotional involvement with their organization and who might have incurred sacrifices to build their organization.

This interview has been edited for length and clarity. For more, listen to our conversation with Raffaela Sadun.