09/04/2018
Companies still run by their founders have a certain magic. That’s not just a hunch — among public companies since 1990, returns to shareholders were three times greater at firms where the founder is still part of the management team. In an upcoming book and in a recent article in Harvard Business Review, my coauthor Christopher Zook and I identify the qualities of “the founder’s mentality” and show how all organizations, even those whose founders have long retired, can harness its vitalizing effects. We believe that a company’s best hope to sustain profitable growth is to stay true to the characteristics that great founding management teams naturally possess.
The founder’s mentality has three components: It requires that companies view themselves as business insurgents, fighting on behalf of an underserved customer; that they have an obsession with the front line, where the business meets the customer; and that they foster an owner’s mindset, which keeps them fast, bold, and infused with a deep sense of responsibility for long-term results. As part of our research to understand these attributes, we interviewed scores of founders and ran dozens of workshops with leaders of the Founder’s Mentality 100 (a network of fast-growth, mostly founder-led companies). Almost all of the founders we interviewed provided useful lessons, but three CEOs in particular exemplified each of the qualities that make the founder’s mentality so powerful.
Robbie Brozin and the insurgent mission
In 1987, a Portuguese audio engineer named Fernando Duarte took a friend, South African entrepreneur Robbie Brozin, to a small takeout restaurant in a suburb of Johannesburg. Brozin found the chicken there so delicious that he made a radical move: He bought the restaurant, renamed it Nando’s, in honor of Fernando, and made plans to expand. In the years since, Nando’s has become one of the most successful chicken restaurant chains in the world, with more than 1,200 restaurants in 23 countries.
What’s the secret to Brozin’s success in a world with no shortage of chicken joints? He and his employees rally around an insurgent mission. Every day they make a conscious choice to be world-class at the few extraordinary capabilities that make it possible to deliver a better product or service to customers. Great founders focus ruthlessly on these capabilities — and they accept that they cannot be world-class at everything, only the things that truly matter.
This “spikiness” is the key to staying competitive, but it isn’t easy. To make everybody happy, to serve every need, to hedge every bet, many CEOs spread resources around democratically as their companies grow — and they lose the spikiness on the cost sheet that is the telltale sign not of profligacy but of focus. The result is a slide into mediocrity.
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