Many CEO’s, owners, and executive directors feel an itch they aren’t sure how to scratch.

Particularly if they are in their 50’s. Give or take a few years.

There is a sense of something else they want to pursue.

This something else is often some kind of growth, or leadership transition, or an exit.

But what any of that means may not be very clear. Each one feels like a door to the unknown.

This can create a dilemma for a leader.

When a leader stares at a dilemma, for too long, it often becomes an organizational dilemma.

So, what does the leader do?

Growth, Transition or Profitable Exits Follow the Same Path

The good news is that the path for organizational growth, leadership transition or a profitable exit is basically the same.

That may seem surprising.

Whether you want to grow your organization in some way, or you want to change the nature of your role; perhaps sell, or retire—there are basic steps that you’ll want to consider:

1. Separation / Disentanglement: We lead out of who we are. Leadership is a relationship. Two truisms that help leaders focus on how to develop and grow as a leader.

When a leader is a founder, has been in their position for a long time or has had a particularly influential role, they’ve usually played a major role in defining “what is” in an organization. However, those two truisms also define points of challenge for growth, transition or an exit.

In each case, “what is” in an organization is often an expression of the personal interest or passion of that leader. In a way, it is a personal reflection of the leader. Additionally, “what is” is often a set of relationships or ways of relating that felt natural to the leader.

Growth requires that at least some of “what is” to change so that “what can be” has an opportunity to take root and grow. Transition and exits are more obviously a letting go of shaping “what is” and the nature of the relationships that come with it.

It is the most common experience for an experienced, effective leader to have blurry lines between where they stop, and their organization begins.

The reverse is also, often, true. The organization or people within may be so respectful of or reliant on the leader, they don’t know how to continue if there is to be a change in their relationship with the leader. Their own identity and sense of efficacy as a team are challenged with the idea of change.

It becomes crucial for a leader who is planning for growth, transition or an exit to be aware that to be successful – they may need to disentangle themselves from certain aspects of the organization.

This may mean creating clearer boundaries around lines of authority or decision making. This will nearly always mean taking the risk to delegate authority to others. It means letting go.

Even for leaders who aren’t exiting – but are growing their organizations – they can only do so by regularly letting go. They need to let go of certain ways of relating, comforts, and control to grow an organization.

It is impossible to hold tightly to the past when trying to create a new future.

2. Stabilization of Culture: All organizations develop their own culture. This is a natural and consistent sociological dynamic. By this, I mean they develop a set of accepted values and ways of relating that are viewed as normal and appropriate. They develop ways to enforce or support those values and ways of relating.

This will happen accidentally or intentionally. Organically or by design. But it will happen.

Strong, healthy cultures experience a very high level of clarity and consistency. Particularly in their values and how those values are to be lived out in decision making, behavior and performance.

The benefit of a strong and healthy culture is that it allows an organization to “self-manage.” It creates a healthy consistency and predictability. Because everyone knows what is expected, they are more likely to make decisions, behave and perform to cultural standards – without needing close management.

In situations of growth and transition – this reduces the intensity of “felt” change. It provides common touchstones that everyone can refer to – even if there is some level of uncertainty. It creates predictability.

When thinking of an exit, organizational culture is often an asset. If there are clarity and consistency internally, it becomes much easier for an organization to determine a good match for a new leader or owner. When there is a good match, it is easier for the new leader to quickly get on-step with the organization.

3. Development of Systems: Systems, processes, and procedures create consistency and automation within an organization. It is very difficult to create sustainable, scalable growth without developing organizational structures to support that growth.

A system is, essentially, a way of programming a desired set of behaviors and expectations into an organization. It allows a leader to translate their values and expectations into clear behavior and performance guidelines.

The adoption of systems is what made the industrial revolution possible.

A franchise business’s use of systems allows for decreased risk and increased ease for business investment and growth.

A pilot’s use of checklists is part of what contributes to air travel being one of the safest means of transportation available.

This serves everyone else because they don’t need to consult with the leader for each decision. They can just follow the system. The leader doesn’t need to try to remember how it was best done last time. New leaders don’t need to figure it out from scratch.

When an organization takes the time to develop and maintain their systems, a leader finds that there is a significant increase in overall effectiveness and performance.

There is consistency. Growth and improvements become easier because systems reduce variability within the organization.

Leaders who are thinking of selling their business will find that it is usually worth very little if it doesn’t have well-developed systems. (One of the easiest ways to rapidly increase the value of a company is to simply create or codify the systems that are used to create performance.)

System design and development is the non-sexy side of leadership. It is where good leadership overlaps with good management.

4. Growth of Value: Most leaders who are pursuing growth understand that growth accompanies an expansion of value (i.e. more of a service, new product, better services, new locations, etc)

What leaders planning a transition or exit often overlook is that they often mistake their personal timeline with that of the organization.

It is common for once visionary leaders, as they near transition or exit, to stop dreaming for the organization. Their “vision generator” is often calibrated to what they personally feel the passion to create.

When they no longer feel the interest, energy or passion to build or create new value—the organization begins to plateau. It risks slipping into a malaise.

While there is value in not launching a dramatic change or growth during a transition or exit – it’s also unwise for an organization to just drift into coasting.

In high school, I was part of the 4X100 relay team that set our school’s record. We practiced so that handoffs took place at full speed. This took preparation and planning.

The result was: We lost no speed during a hand-off. This was our edge over most of our competition.

Ultimately, it doesn’t usually matter if an organization slows a little bit to process a leadership transition. But it is an error when value creation is fumbled or set on hold.

Leaders should always look for ways to add value.

5. Planned Handover: At this point, things start to diverge slightly depending on whether a leader is growing an organization, transitioning or exiting. Regardless, leaders still need to hand-off or hand over whether they are moving up, out or elsewhere.

Anyone can somehow get a baton into the hands of someone else. But to do it without slowing down let alone dropping it, stumbling or fumbling is the key.

In an ideal situation, most organizations benefit from planning & preparing for a hand-over 3-5 years in advance. Many changes related to separation, stabilizing culture, developing systems and creating value can comfortably take place within this time frame. It allows changes to take place without unnecessary urgency.

The norm, for most privately held businesses and non-profits, is to avoid the topic until the final year of the outgoing leader. This usually creates challenges.

A fast-growing company that knows how to create and delegate (handoff) leadership can expand and grow. If a leader is not able or willing to do this, growth will be limited.

A company that is prepared and ready to hand off will sell much easier and for a higher price. When a leader waits they often find that they have a difficult time finding a buyer and their valuation is far lower.

An organization with established systems and a plan for leadership succession doesn’t have to slow down for a year, or more, for the new leader to try to get caught up and on-step.

So, even if in your organization you wait until the last year – mapping out the various dance steps of transition or the exit will dramatically minimize disruption.

6. Personal Vision: I’ve found that many leaders struggle to know how to relate to change in their leadership role.

Even if they feel tired, or they’ve lost their passion for what they are doing, they struggle to know what to move to.

What I’ve found is that many leaders feel lost outside of leading in the way that they are used to.

If they don’t have a clear sense of what they are moving towards they tend to not let go of where they are. To put it plainly, they tend to gum up the process.

This is unfortunate, particularly in the case of highly respected leaders. Their staff and boards end up in the awkward position of trying to maneuver around them without disrespecting them. It takes the shine off their legacy.

However, when a leader has a clear sense of their future, and the next chapter they want to write for their life, they are able to move up or go out on a high note.

They can put positive energy and focus into both passing their role on as well as preparing for their own future.

They pivot well.

Should you start preparing?

If you knew that your organization was about to face a critical challenge, you would prepare. If you knew that challenge had the potential to make or break the future, you would prepare.

Any significant change in leadership is that challenge. It’s also an opportunity. You should begin to prepare if, within the next five years:

You are interested in creating rapid, scalable growth.

You are thinking more about your future than the future of the organization.

You can’t imagine having the fire in your belly to pursue the vision of the organization.

You know you’d like to retire.

You’d like to just do something different.

You’d like to sell your company.

You can pass the baton in a shorter time frame. But less time you give yourself, the less likely you’ll be able to create a transition you’ll be proud of.

Begin to prepare.

Take good care,

Christian

Are You Unsure of How to Prepare?

Do you feel like you don’t have five years to prepare—change is happening now? Are you unsure of the steps you’d like to take to prepare? Are you concerned about how your staff or others would relate to change? Is there a legacy that you’d like to finish building?

If so, contact me to schedule a complimentary strategy session. During that session we’ll explore:

• Your goals and timeline.
• Key challenges that you anticipate.
• What’s “on the line.” Why is preparing well important to you?
• Key principles to guide you as you prepare for your growth, transition or exit.

Contact me to learn more: christian@vantageconsulting.org or 907 522-7200.