Growth
The Founder Bottleneck: When the Person Who Built the Business Starts Restricting Its Growth
There is a point in the development of some successful businesses when the person who has been instrumental in creating that success can inadvertently start making further growth more difficult.
There is a point in the development of some successful businesses when the person who has been instrumental in creating that success can inadvertently start making further growth more difficult.
This isn't usually because the founder has become less effective. More often, it happens because they are extremely effective.
They know the customers, understand the products, hold many of the important relationships and can solve difficult problems faster than almost anyone else in the business. When something really matters, everybody knows who to ask.
That works remarkably well for a long time, but it can also create an organisation that becomes increasingly dependent on one person.
Dependency often develops for sensible reasons
When a business is small, having the founder involved in most important decisions can be efficient. There are fewer people, communication is quick and much of the organisation's knowledge sits naturally with the person who created it.
As the company grows, the number of decisions and relationships grows with it.
Quotes still need approval, customer problems get escalated, recruitment decisions need signing off and managers check important decisions before acting. The founder's diary fills up and the organisation starts waiting for them.
This can create an odd situation in which the founder feels overwhelmed by the number of things requiring their attention while simultaneously being frustrated that other people don't take enough responsibility.
The two problems are often connected.
Delegating work is easier than delegating responsibility
Businesses frequently try to solve this by giving people more things to do.
That helps with workload, but it doesn't necessarily reduce dependency.
Someone can be responsible for completing a task while still needing the founder to make every meaningful decision associated with it.
Genuine delegation requires greater clarity. People need to understand the outcome they are responsible for, the decisions they are entitled to make, where the boundaries sit and when something genuinely needs to be escalated.
Without that clarity, checking with the founder is often the perfectly rational thing to do.
Managers need room to become managers
As an organisation grows, the management layer becomes increasingly important.
Giving somebody a management title is relatively straightforward. Developing somebody who can make good decisions, lead other people, deal with performance issues and accept genuine responsibility takes longer.
The founder has a role in that development too.
Other people will sometimes make decisions differently. Occasionally they will make the wrong decision. Customers who once dealt directly with the founder may need to build relationships elsewhere in the business.
If every mistake results in responsibility being pulled back to the centre, managers quickly learn that apparent authority isn't real authority.
A useful question for any founder
One question we have found particularly useful with business owners is:
“What still depends on you that really shouldn't?”
Looking at the founder's diary usually provides some clues. So does examining the decisions that routinely reach them, the customer relationships they personally own and the problems that repeatedly land on their desk.
Another useful test is what happens when the founder is away for a couple of weeks. If decisions stop, problems accumulate and everybody waits for their return, the business is revealing something important about its level of dependency.
Changing the founder's role isn't about making them less important
The objective should not be to push the founder away from the organisation they created.
It is about moving their time towards the things where their experience and judgement create the greatest value.
That might mean spending less time solving operational problems that other people could handle and more time thinking about customers, opportunities, strategy, leadership and what the organisation needs next.
For many SMEs, making that transition is an important part of becoming a genuinely scalable business.
Our perspective
We have seen the founder bottleneck appear in businesses of very different kinds, and it is rarely solved by simply telling the owner to delegate more.
The organisation around them has to become capable of accepting greater responsibility. Managers need developing, roles need clarifying and people need the confidence and authority to make decisions.
The objective isn't to make the founder redundant. It is to stop using their time for things the business should have learned to do without them.