Important Disclaimer - these events took place at an unnamed company during the 2005-2007 period. It's been long enough now that it is safe to talk about it now.]
Summary: I (among others) recently had to deal with a company founder that had a severe case of "Founderitis", where he was convinced that the BOD, investors, and everyone else in the company was an idiot and he was the only one who had the insights and skills to manage the company. Never-mind that he had been the CEO of the company for a number of years and managed to show little, if any, technical progress and certainly no commercial progress. These situations take careful maneuvering to fix, and here are some notes about how we got through it. The conclusion was that it did turn out OK, but the in retrospect, it took way too long to get there.
Background: The person I'm talking about here is a college professor who had a novel insight into how to solve a particular technical problem. The insight mostly worked, but never could be scaled into production. Many of the professor's insights were correct, but for some reason, they never could be reduced to commercial practice. He managed a R&D group that tried in vein to make the process work for a couple of years before the BOD stepped in and started making changes in the company. The BOD was aware of the need to deal with things, but also had a philosophy of keeping the technical founder in the company for as long as possible. This professor was a winner of numerous technical achievement awards and considered himself to be a real "rock-star" in this field, which only made things harder. The company was also located in a remote city where few outsiders had been before, so recruiting people to this geography proved to be exceedingly difficult. Pretty much the only people who would consider it were ones that were born in the area (or their spouse was) and they wanted to come back for family reasons.
First Change: The BOD recruited a CEO to the company who had a great reputation in the industry (also his wife was from the area), but because of the professor's strong position in the industry and the company, the decision to split the President/CEO position into "two in a box" and make the professor President (dumb idea in retrospect). The CEO tried for a number of months to make things work, but soon it became obvious that the technology problems were not being solved and that the situation was largely out of his control. After several months on the job, the CEO pretty much gave up on fighting and just decided to go with the flow. The BOD noticed the complacency and soon fired the CEO. The professor wanted the company to all report to him, but by now the BOD was tired of his antics and decided to have the Chairman of the Board become the acting President/CEO.
Second Change: The next change was to recruit into the company a number of experienced operations people to see if they could help bring some commercial best practices to the situation. They fixed many small things around the edges of the real problem, but the main issue remained and the company still could not produce the product in volume yet. The professor decided that the operations people were idiots, so they wound up leaving the company.
Third Change: The Chairman recruited one world class technology expert into the company to start a more systematic approach to solving the problem and to bring more current industry practices to the table. The new technologist made great progress, but the main technology problem, while it was much better, was still not good enough to go into production. This new person took over all R&D, and the professor became Chief Scientist of the company. There was a natural tension that developed between the professor and the new CTO. The professor didn't think the CTO understood the nuance of the technology and didn't appreciate all that had been done previously. The CTO thought that the professor was not very systematic about his efforts and that conclusions had been reached based on gut feeling rather than hard data. The tension sometimes escalated to the point of shouting matches.
Fourth Change: After about a year of struggling with the technology and watching the very slow convergence on a solution, I suggested that it was time to consider a technology "Plan-B" where we would implement something that was well known in the industry, but that could be produced in a unique-enough manner to allow the company to have differentiated products in the marketplace. This proved to be one of the right things to do, but it is always a matter of timing on when to pull the trigger on it. This further added to the tension between the CTO and the professor, since the professor's technology was no longer the only focus of the company and the CTO was no longer working on the professor's dream.
Fifth Change: After the new technology started to work, some amazing developments started occurring on the old technology and soon enough, there were product ranges where the older technology made sense to commercialize. The old technology is not robust enough to be used across all product ranges, but there were places where it definitely made sense. The company started shipping commercial volumes of both types of products and now the issue was how to get margins improved enough to make a good company.
Sixth Change: The company was really starting to hum along now. Both versions of the technology were showing where they are good and where there are still problems to be addressed. The employees are pumped up because they are busy and are starting to see results. The management has done a good job of communicating to them, so they are in the phase of development where "success breeds success" so they were definitely in a good spot.
Conclusion: The company has since gone public and made a good return for the investors, team and even the professor. The Professor is now back at the University with an enhanced position given his industry recognition. There were a few lessons along the way that are worth repeating:
- Be careful with geographic location - people who move want a viable "plan-B"
- Splitting the job of President & CEO is a dumb idea
- Don't try to produce a technology before it is ready for production
- Competition is good - even inside a single company
- Employee's motivation is never static - there is either a "virtuous" cycle, or a "vicious" cycle - nothing else
This was a tough problem to deal with since it involved strong personalities on every side. Even when you set aside all of the human issues, the lessons on what we did right and wrong are worth remembering for the future.