The Founders Trap

The other day, I asked a friend why they buy all of their cars from the same dealership.  The response? “We know the Owner and he takes care of us.”

Interesting. Reflecting on their answer, I weighed what might be the reality of the situation; does he actually take good care of them or does “Knowing the Owner” offer that illusion. After all, we are talking about a car dealership, and the owner is nothing more than a “Celebrity” car salesman.

This way of thinking isn’t limited to car purchases.  Growing up, I remember eating at the same restaurants, shopping at the same electronics store, and consistently buying sporting goods from the same little shop.  The common denominator? It was a family relationship with the owner.

I recall how boring it was to eat at the same restaurant but my father loved the food. What pleased him even more was that the owner always came by and said hello and showed genuine concern that we had a great experience.

Upon further reflection, I began thinking about my business and the relationships our company has with its customers. Does our leadership team engage frequently with those responsible for our success? After all, we are a 62-year-old family company that started out as a small mom/pop service shop on Belmont in Chicago.

To be completely honest (and why wouldn’t I be?), the answer is No.  It wasn’t a conscious decision to ‘stop engaging’; rather, it was the apparent necessity for senior leaders to be more significantly involved in the internal operations and strategy.  This is, for many companies, the natural progression within a growing business.

The consequence is that direct customer interaction is released by leadership and left to others – those on the front lines.

Despite the reality that leadership ‘disappearing’ from customer view is common for growing companies doesn’t mean it’s not a drawback.  In fact, I’m convinced that it is an unfortunate business malaise and coined a name for it: “Founders Trap”

In short, the Founders Trap is the act of disengaging from your customers in order to grow your business.

This paradoxical yet common behavior is often a consequence of too many irons in the fire, not enough trust in your employees, and, occasionally, a complete mental breakdown by the founder.  (See Delusional Business Person: An owner that believes others will serve their customer with the same passion as they did)

Very large organizations are susceptible to this, often due to the circumstance of having to build scale.  This effort to grow makes the company very tall, creating several layers of management between the brass and the people interfacing with the customer.  The goal is to build processes and procedures (based on the always entertaining premise of “Best Practices”) so the customer receives a consistent experience.

While processes are great, I think it is pretty safe to say that there isn’t a best practice that can be provisioned to clone your sales team to illicit the same passion as the brand visionaries.

It can happen in any growth organization and we have seen it happen in large enterprises, a recent example being Michael Dell.  He founded and built Dell into a leader in the PC industry.  He innovated and revolutionized the business model while continuously growing the company under his thumb.  Upon his departure from the CEO role, the company lost its vision, its prestige, and its profitability.  It was his return that enabled the company to get tracks after a number of turbulent years without him.

So if it can happen to a large global enterprise like Dell then it’s safe to say that it can happen to your company.

With all of this “doom and gloom”, what’s the solution to this dilemma?  After all, we want to grow our businesses and we have to entrust certain activities to more than just the founders and senior leaders.

  • The cure for “Founders  Trap” is subjective but I submit a few specific considerations:
  • Continued engagement by leadership with key customers
  • Regular direct correspondence to the customer base (Perhaps an Email via Constant Contact)
  • Hire the BEST possible sales force to engage your customers (who ARE you when in front of the client)

Leave operations to others…maybe (it’s easier to find finance and operations people than it is to find entrepreneurial employees that will give your customers the same attention as you did)

The Founders Trap isn’t an insurmountable roadblock for business growth but something to bear in mind during growth.  There are many success stories of companies that grow to great scale even without owner presence. After all, it’s your passion that got you there. It will be your persistence that keeps you there.


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10 Responses to The Founders Trap

  1. Ted Coine says:

    Daniel, I have two words for you: Bra-vo! I went through exactly this growing pain with Coine Language School. Every time I turned my attention from our clients and students to operations and “growth,” the vehicle of that stupendous growth – our customers’ good will – began to lose steam. It took a while, but finally I learned what you clearly describe above: the internal positions are easy to fill. It’s the customer-facing ones that matter most.

    • Ted, Great to have you stop by. I am a big fan of your work.

      I must say that this blog was inspired by a reality that is all too often the downfall of companies with great potentials.

      I look forward to chatting in the future, and appreciate your continued support and friendship.

  2. Erik Sover says:

    Another good read. One correction. Original store front was on Addison Street. FYI.

    Thank you.


  3. Dan,

    If you recall what I said when Idea Chef and I first met you. The same comment goes here. Very few CEO’s and company owners (let alone other members of their companies senior management) have the passion and drive that you do (and communicate it regularly). It comes out when you speak and if people miss it, they are not listening. Idea Chef and I meet owners and CEO’s on a regular basis where this passion is lost for all sorts of reasons: bad economy, lost business opportunity, lack of motivation in their teams and a whole host of other reasons. But you hit a key item here. Lack of touch with their customers. Even if other CEO’s talk about their desire and passion about customers, they rarely communicate it. You touch upon some amazing yet simple concepts that is missing in US business’s. How leadership can be responsible (and yes drive) customer experience. From the very first point of the sale, the customer is left to their own, experiencing what the company has to offer. I would take your Dell example and go to banking, car dealers and others across many verticals. Once you walk away from your purchase, you are entered in the system for a possible email maybe touching you in a few weeks. Opening a checking account is not about “thanks for your business” but where is the rest of your money?

    Guess where is the single biggest opportunity for new business? By serving your existing customer base is such way that they talk about you to their entire network(love all your suggestions about this Dan). If you are already doing this, then you are successful :)

    As always great job.

    • First of all Amir. Thank you so much for your kind words and nice commentary.

      I strive to keep the audience thinking. This particular problem is all too common and can be a catalyst to failing businesses.

      Have a great week!

  4. I love this post b/c of the car dealership example (“Celebrity” salesman).

    One area that I might disagree w/ is the “…does he actually take good care of them or does “Knowing the Owner” offer that illusion.” Consumers make decisions for different reasons. We’re all different. I think knowing the owner may not get you the best deal, but it’s personal and you have some recourse. In the end, that recourse builds a level of trust. It also ensures that the employees treat you right (they don’t want to lose their jobs). My point is that trust and recourse are important. Trust is at the center of every relationship, and consumers (human nature) fear the unknown.

  5. Great thoughtful post Daniel I really enjoyed reading this and totally agree. When leadership concentrates on processes and systems it is managing not leading. Leading requires addressing issues which are not solved through such technical solutions.

  6. Doc_1 says:

    Good post Daniel. When a company grows sufficiently it becomes difficult to interact with the customers. While it is important to keep personal contact with “key” customers, it is equally important that the people you put in the front line have your same heart and care for the customer and they are trained to know your business beter than you do.


  7. qstreet says:

    I’ve seen this time and time again with clients – it’s heartbreaking to watch as they justify and rationalize their disconnection and resulting isolation, sometimes until it’s too late. i think there’s something else that enters into the picture. It’s emotionally challenging to stay “related” to customers, requires you to be at risk on a level that working with staff doesn’t. Customers have a “power” that our workforce doesn’t have over us and if we can’t figure out how to bridge the “authenticity” space then other business activities become more compelling. We don’t even realize that we’re diverting ourselves from the discomfort because the calling seems so valid, reasonable, rational… I liked this – thank you for writing it…

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