Succumbing to the challenges of growth

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Succumbing to the challenges of growth

Wednesday, 29 November 2023 | uttam Chakraborty

Succumbing to the challenges of growth

The removal of founders from the companies they birthed, is a complex and often painful process

British writer and theologian Frederick William Robertson has rightly quoted, “There are three things in the world that deserve no mercy, hypocrisy, fraud, and tyranny.” Power is a pervasive and fundamental force in human relations and plays a valuable role in social, political and economic interactions. Power differences in social groups are important in promoting group activities. Most people want power, and power has many benefits. However, power is a corrupting force in several instances.

The recent and short departure of Sam Altman from OpenAI and again returning to the company in the same post is a matter of surprise. However, founders being ousted from their organisations have been the larger picture for deliberations. This phenomenon is unfortunate, but not new. History has been witnessed with examples of visionary leaders who found themselves at odds with their boards or stakeholders, resulting in their removal. From the likes of Steve Jobs at Apple to Travis Kalanick at Uber, the stories are as varied as the industries themselves.

The Myth of Invincibility

The myth of invincibility continues. One common thread that ties together the stories of ousted founders is the perception of invincibility that often surrounds them. When a company is in its infancy, the founder is not just a leader but a symbol of the organisation's identity and purpose. However, as the company grows, the demands and challenges evolve, and the skills needed to lead a startup may not necessarily align with those required to steer a large corporation. Founders, especially those with a strong vision and personality, may find it challenging to adapt to these changing dynamics.

Sam Altman's exit for some days from OpenAI serves as a case in point. While he played a pivotal role in the organisation's early success, the need for a different leadership style to navigate the complexities of a rapidly expanding enterprise may have become apparent. Boards and stakeholders, driven by a duty to ensure the company's long-term viability, might make the tough decision to part ways with the very leader who brought the company into existence.

The Ashneer Grover Saga

The story of Ashneer Grover, co-founder of Indian fintech giant BharatPe can be thought of in this context. It is another chapter in the book of ousted founders. In his case, the clash was not just about strategic direction but also about clashes of egos and leadership styles. Grover's outspoken and sometimes controversial demeanour, which might have been tolerated or even celebrated in the startup phase, became a liability as the company matured.

This raises a crucial question: How much of a founder's identity is tied to the company they create, and when does that identity start to hinder rather than propel the organisation forward? The removal of founders like Grover suggests that companies may prioritise stability and a more harmonious internal environment over the charisma and idiosyncrasies of their visionary leaders.

The Travis Kalanick Case

The case of Travis Kalanick at Uber is perhaps one of the most infamous examples of a founder's ousting in history. The ride-sharing giant's rapid ascent was accompanied by numerous controversies, including allegations of workplace harassment and a toxic corporate culture. In this instance, the board's decision to remove Kalanick was driven not just by financial concerns but also by a pressing need to address the company's tarnished reputation. Kalanick's story underscores the importance of accountability in leadership. While founders are often given leeway in the early stages, the moment their actions jeopardise the company's integrity or public perception, boards are compelled to act. This raises questions about the delicate balance between a founder's autonomy and the responsibility they bear to the company and its stakeholders.

Adam Neumann’s Fate

WeWork's Adam Neumann is another founder whose grand vision ultimately led to his downfall. Neumann's ambitious plans for WeWork, including its IPO, were marred by controversies surrounding the company's financial health and governance practices. His removal was a necessary corrective measure to salvage the company and protect the interests of investors. The cautionary tale of Adam Neumann serves as a reminder that while visionary leadership is crucial for a startup's success, unchecked ambition and a lack of grounding, in reality, can lead to a founder's undoing. Boards and stakeholders must carefully evaluate whether a founder's aspirations align with the company's long-term sustainability or if they are veering into the realm of fantasy.

Steve Jobs’s Tale

In the pantheon of ousted founders, Steve Jobs stands out as a unique case. His departure from Apple in 1985 was a result of internal power struggles and disagreements with the board. Jobs's confrontational style and tendency to make unilateral decisions further fuelled the tensions within Apple. His unwillingness to compromise and his impatience with dissenting viewpoints alienated both colleagues and board members. In 1985, after a series of heated confrontations and a vote of no confidence from the board, Jobs was forced to resign as CEO. However, Jobs' eventual return to Apple in 1997 and the subsequent resurrection of the company's fortunes showcase the rare scenario where a founder is reinstated to lead their creation once again. Job's story is a testament to the enduring impact of a visionary leader and the potential for redemption. However, it is worth noting that Jobs returned to Apple with a tempered approach and a willingness to collaborate, a stark contrast to his earlier stint. This suggests that even in exceptional cases, founders must evolve and adapt to the changing needs of their organisations.

The Bottom Line

The recent and short departure of Altman from OpenAI is the tip of the iceberg.

Power, privilege, corruption and hypocrisy continue to rule everywhere. The removal of founders from the companies they birthed is a complex and often painful process. It involves a delicate balance between preserving a company's identity and ensuring its long-term success. While each case is unique, common themes emerge – clashes of egos, leadership style mismatches, accountability issues, and the perils of visionary excess.

The stories of Sam Altman, Ashneer Grover, Travis Kalanick, Adam Neumann, and Steve Jobs provide valuable insights into the challenges and pitfalls that founders may face as their companies evolve. The key lesson for both founders and boards is the importance of adaptability and a shared commitment to the organisation's well-being. In the ever-changing landscape of business, the question remains: Can founders successfully navigate the transition from startup visionaries to leaders of established enterprises? The answer may lie in their ability to embrace change, foster a culture of accountability, and, when necessary, make the difficult decision to step aside for the greater good of the organisation they helped create.

(The writer is an Associate Professor at the School of Management, Presidency University Bengaluru; views are personal)

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