When does a strength like trust become a barrier to growth? Most of the time, owners work on building trust in the organization. There have been whole books such as Steven M. R. Covey’s The Speed of Trust written on the subject of how to engender trust in the organization’s culture and the positive effects of successfully doing so. So why not trust all the time 24/7? Ignoring the exceptions when trust is inappropriate due to flawed character or behavior of another, there are times when trust is very difficult to achieve.
After the owner has worked for years to produce an organization that operates well, there comes a point in the journey from Owner Operator to Owner Investor that requires trust. This transition is so difficult, that many business owners wind up sort of trapped in their organization because they can’t get beyond this moment.
The reason for this is that in order to fully transition to Owner Investor, the owner must let go of the company. For some this is a no brainer. It’s actually the high functioning among us for whom this is most challenging. If you have been hiring better than yourself all along like you’re supposed to, you wind up with Tier One Leadership that truly do it better than you can. And one among them can be promoted to COO and eventually to CEO, allowing the owner to attend quarterly board meetings and be assured that in the meantime the business is being operated well.
However, for the high functioning individual, in a small organization that produces high earnings, this may not be the case. For instance, the tier one leadership team might include an excellent engineer, a power sales leader and a great director of customer care. But because the organization is small, the owner might retain the financial function (this is often a favorite function for retention by the owner), and one or two other functions like VIP sales and executive hiring. The result is a feeling, often supported by facts, that one cannot promote any of the tier one leadership team to the position of President, CEO or a similar position. They are very deep in their individual functional roles but just not ready or able to take on the full gamut.
At this point, even if the owner recognizes the situation, taking action isn’t so simple. It involves bringing someone in, typically a COO in anticipation of them ascending to the position of CEO eventually. But this feels very risky because COOs are expensive and if they don’t work out, it feels as though the investment in bringing them on-board and up-to-speed is wasted. And the worst part is that during that trial period the pressure is completely on the CEO to invest time to bring the COO up-to-speed and teach them everything they need to know about the organization in order to be able to lead it. …and of course, this is impossible. The CEO CAN’T teach the incoming COO everything they need to know. The should come with most of that knowledge frankly, and they need to be comfortable being completely transparent about what they know and what they don’t and where they might need help. The rest of the tier one team should be willing to assist as well.
The critical success factor that can make this work AND also to be (mostly) comfortable for the CEO is to establish a rapport with the COO candidate during the search process so that a trust relationship is established. The dialog goes something like this; “I trust you to do your best, and you trust me to be able to be completely transparent with me when you feel like you’ve hit a wall or like you could use some advice. I will leave you free to fail on your own, and you will keep me in the loop so that none of those failures threatens the beautiful machine that is the business I’ve built.” This still doesn’t take the fear out of it, but it will ease the transition so that you can sleep at night while the next generation is gaining mastery of the business. And if at some point, it becomes clear that mastery will not be achieved, since the CEO and COO have been honest with one another, the separation discussion will be easier if not easy.
At this point, the “cost” related to bringing the COO onboard should be acceptable. Afterall we are talking about being able to move on and start your next chapter whether this is retirement or the new, new thing. And the business can afford it right? (If the answer to this latter question is no, then the owner is NOT ready to transition to Owner Investor and he or she needs to go back one square and prepare the company for this transition at a higher earnings level.
Call To Action
If you are thinking about transitioning from Owner Operator to Owner Investor do the following:
1. Assess your business to determine how far you are from being able to transition (we can help with this);
2. Establish a plan with a timeline, but more importantly milestones, to close the gap;
3. Assess the organization’s benchdepth and success path as part of the assessment above and establish a plan to get the right people in the right seats to enable the transition.
4. When it’s time, begin a search for the COO that will make this work for you; and
5. When you find that individual, pull the trigger, but maintain control while the two of you feel each other out. It has to work both ways and you have to be able to trust them.
I hope you found something to apply to your business in this MBR. Let me know either way.
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