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Exec Spin: The Second CEO

Thursday, December 13, 2018   (0 Comments)
Posted by: Gary Hotze
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Julia Kanouse, CEO, ITA

If you ask most people within the Chicago tech community about what holds us back from being a top-tier tech hub, you’ll hear mainly the same answers – no big consumer tech brand, midwestern humbleness, losing talent to the coasts, fly-over country, still in our infancy, etc. But I’ll dare to venture one that isn’t discussed often enough - we are too patient, especially with our founder CEOs.

Chicago differs from our coastal counterparts in many ways – most of which are in our best interest. But one place we need to emulate what happens in other regions more closely is in the amount of deference provided to our founders. There are only a handful of Chicago tech companies not currently led by their founder. Given the size and scale of our market, there should be, at least, 20 – 30% where a “follow-on” CEO has been brought in to help scale the business.

Although it may not be a popular position and certainly there are always exceptions (Jeff Bezos to name a big one), to reach top-tier status, we need our boards and investors to be a little antsier. Our patience and perseverance are holding us back. While our tech community is growing, it’s not growing exponentially. Only seven Chicago tech companies cracked Deloitte’s 2018 Technology Fast 500.

Of course, bringing on a second CEO is much more easily said than done. Anyone that has worked at a tech company knows that part of the magic in those early days in the involvement of what Peter Koenig, who has been studying the phenomenon for many years, calls “the source”. The source is the company’s visionary; the first person who invested themselves in realizing the idea. There is only ever one person in this role – even if there are multiple co-founders.

While the founder (or source) is often responsible for driving product vision, he or she may not be the right individual to drive the business forward. As Michal Bohanes recently wrote for Forbes, “Seeing opportunities in the world and launching businesses to solve them is a pretty special talent. Yet those who are blessed with it, spend most of their time not using it.”

Once an idea takes root, the business of running the business kicks in and while some founder/entrepreneurs may be competent in overseeing those activities, it may not be the best use of their talent. Bohanes continues that we rarely address this topic and in fact shy away from it because “there is a narrative in our business culture that glorifies the adventurer who creates something from nothing, continues to run it and builds an empire.”

Alphabet provides an interesting example of the separation of founder/source and CEO. With the creation of Alphabet Larry Page and Sergey Brin created a structure in which a strong CEO focuses on running the business (e.g., Sundar Pichai at Google). In this structure Larry and Sergey, in many respects, maintain the role and the magic of the founder, focused on finding and funding new opportunities. This arrangement is a unique one, which has paid dividends and definitely worth considering when a founder/source wants to remain focused on what they do best while someone else looks towards the future with a single-minded focus on future viability and sustainable scale.

Barring such a successful pairing, however, the right call may be to cut ties to build what's next. While loyalty and tradition are strong values at the center of Midwestern business, sometimes the tough decisions that are needed to take the organization to the next level aren't made or, at best, they are delayed.

We need founders that are able to acknowledge their weaknesses, challenge the status quo and step out of their comfort zone.In Chicago, a city of big plans, sometimes what is needed is beyond the capability of the original framework and framers. Reinvention and innovation are at the core of the “tech revolution” and are what will be needed to take our tech sector to the next level.

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