This Question was asked this week in the FT influenced by the embarrassing debate over the future of Andrew Mason, founder and CEO of Groupon. The answers by an investor, a current CEO and an academic were helpful and can be summarized as:
- When someone else can do the job better.
- When the best interests of the company are not being met.
- When the founder has moved way beyond his level of competence?
However being an operational guy I want to take this massive issue a stage further and give founders some specific tests. 10 questions, 1 to 5 scoring. Less than 35 and founders really need to bring someone else in to help them. Ideally in the COO role. A score below 25 means founders should find a CEO. By the way in all cases founders should not underestimate the power and profitable insight they can offer as Chairman. Scoring of 5 for a question suggests the answer is a definite yes. Scoring of zero suggests the answer is a definite no.
Tests
- Are you still passionate about what you do every day?
- Do you still believe in your story your web site is telling the world?
- Are you optimistic that your team and products can gain profitable market share over the next 3 years?
- Are you proud of your top five managers?
- Are all operational priorities aligned with the company’s strategic objectives?
- Is it fair to say that legacy products DON’T dominate the Sales line?
- Is it fair to say that no one customer accounts for more than 5% of annual sales?
- Is it fair to say that the business is not dependent on you?
- Do you spend at least 30% of your time acquiring and developing talent?
- Do you understand the difference between how you improve the life of your customers compared with your top 5 competitors?
Great post Ian. I would add a fourth point to the summary (or perhaps an 11th question in your test):
When you feel that there is something else more important that you should be doing, if you could just stop being a a CEO.
Some believe that being a CEO is their purpose in life, the lucky ones recognize that this is just another “role”; that their most meaningful and purpose-driven work is outside of an office.
Great point Paul. You are absolutely right. The CEO and founder has a choice, a chance to change their purpose.