Founders
Here’s a neat article from USA Today about the effect founders have on companies in the later stages. They point out some data showing that companies whose founders stay with them over long periods of time outperform the average, and from that data seem to conclude that founders run companies better than non-founders.
That’s a logical error however. It could be that founders have no bearing one way or the other, or even that they’re detrimental, but they are more likely to remain with companies that outperform the average than others. Perhaps they’re more inclined to stick with a company whose share price is rising rapidly, or perhaps they’re just as likely to do so as founders of average or underperforming companies but are less likely to be forced out by the board.
My hunch is that it’s a little of both. Founders of companies probably do flat out outperform non-founder CEOs, and founders of successful companies are almost certainly more willing and able to remain CEO than founders of companies that aren’t quite as successful as FedEx.
I’ve heard newspapers hire fact checkers. Maybe they should hire me as a logic checker.
August 24, 2007 at 2:44 am
Though USA Today failed to show cause and effect, I think their implication is the correct perspective. I think the success/original founder correlate results from a clear vision/direction for the company and care/passion for the product/service. There’s no reason to think replacement leadership would be any less competent, nor is there any strong reason to assume that success would keep original management in tact (unless the founder’s philosophy had always been to stay with the company indefinitely, which it rarely is). To the latter point, though anecdotal, it’s been my experience that successful original management tends to leave in short order for various reasons, e.g., quick profits, to enjoy their success through leisure, fear of future failure, i.e. get out while going is good, etc.
August 24, 2007 at 3:11 am
I definitely don’t disagree with their assertion, I just hate it when people mistake correlation for causation.