The Chinaman Mindset – Part 2

By Prof. Enrique Soriano

I want to continue what McNamara wrote in his book, “Founder’s Syndrome: How Corporations Suffer and Can Recover,” the common problems experienced by organizations as a result of the “founder’s syndrome” are:

a. Many founders cannot make this transition. As a result, the organization remains managed, not in a manner that provides reliable services to customers, but according to the personality of the founder.

b. Often, the organization experiences the same problems over and over again. For example, plans are not implemented or the organization struggles from one crisis to another and no one really seems to know what’s going on.

McNamara highlights that most founders are “dynamic, driven, and decisive” and that “they carry a clear vision of what their organization can be.” They also know their customer’s needs and are passionate about meeting those needs. These traits are strong assets for getting the new organization off the ground. But founders have a dark side as well, and these are the troublesome attributes as described by the author, “There are other traits of founders that too often can become major liabilities. For example, they are highly skeptical about planning, policies, and procedures.” These founders prefer speed over structure and avoid the additional overhead they perceive as a “waste of money,” especially when formal structures are introduced. Like the Malaysian-based PKT founder I described in my last article, most founders will always argue and often believe that they have a better, cost-efficient way to get things done. It is clear that founders are struggling in this transformative stage of the family and business.

The real source of this dilemma is the founder’s misunderstanding of his or her role in a complex organization. When decisions revolve around him and he is reluctant to pursue change, the likelihood that pressure will build up from many dimensions—the family, the business, and his own mortality—escalates. As the stress to effect change mounts, the founder becomes increasingly anxious and defensive and soon resorts to blaming others. As he weakens due to old age, decisions begin to slow down, he becomes a bottleneck for growth, and the business suffers. At that juncture, when death or incapacity of the founder occurs, the unprepared offspring ends up confused on how to move forward and the showdown for power and control assumes center stage.

So how can you tell if your organization is going through this founder’s syndrome phase?

Here are some common warning signs:

• The organization is mainly founder-centric.
• Strategy and planning are limited or non-existent.
• The organizational structure is weak. With few systems in place, implementation can be very slow.
• Despite the organization’s lack of focus, the company continues to pursue an opportunistic approach. Any new business opportunity will always be a top priority. This practice can impact the already stretched resources of the firm.
• There are meetings that are mostly unplanned, and many decisions are made based on gut feel. In most cases, meetings are exclusive only to family members.
• There are silos across different departments due mainly to the lack of communication among unit heads.
• There is the tendency for the founder to micromanage, and new ideas that are unfamiliar to him will never move to first base.
• Capable employees feel helpless and are unable to contribute effectively. Many of these employees will end up leaving.
• Succession planning is erratic and, in many cases, gets sidelined.
• Consultants, managers, and new hires are chosen primarily based on their loyalty to the leader instead of their skills and experience.
• Organizational focus is more on serving the leader than the overall vision and mission.

McNamara declares that “without ongoing coaching and support, it’s likely that the aging founder will struggle in his last few years or, even worse, the organization will suffer. When there is no intervention, it can break apart. There are actions that founders can take to avoid these tragic outcomes.