Business Organizations

Founder's syndrome: When founders try to hang on to control to the detriment of the organization is widely identified as an issue for non-profit and for-profit organizations. Recently, it's emerged as a concern in the world of tech start-ups, where founder identification with the business or product is often as passionate and personal as that of social entrepreneurs. The common thread in founder's syndrome across sectors is the type of person who establishes a non-profit, tech firm, or social entrepreneurship. In all instances, these individuals tend to be passion-driven people with a sense of personal mission that translates to their organization.

They are, understandably, highly identified with the organizations they create, and this individual sense of commitment is often critical to bringing the organization through its early growth stages.There is no doubt the founder is central in the early days of social entrepreneurship. Later, during the growth stage, the founder may retain leadership importance to a significant degree and, according to Johnson , there is evidence that founders, with their charisma and persuasive ability, are vital to attracting investor capital during the scaling stage.

At the critical growth stage, it is necessary for businesses to replace individual leadership with corporate leadership, establishing the governance systems and processes required by larger, more complex, and necessarily more accountable, organizations. Founders who cannot or will not let go of personal influence when this moment arrives inadvertently endanger the future of their organization and its mission with their determination to stay in control. None of this may ultimately be the founder's fault. In fact, rather than being seen as a failure on the part of the founder, founder's syndrome is seen as a failure of a more extensive organizational leadership that allows a focus on the founder to distract from a focus on business strategy and mission.

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Businesses that neglect to create governance systems create a climate where founder's syndrome (among other issues) can adversely affect the company. Good governance practice provides a way for organizations to make a smooth transition from founder-led to governing board-led organization. Establishing a strong, unified, independent board with robust accountability and decision-making systems makes companies capable of avoiding some of the worst negative impacts of founder's syndrome without destroying the positive benefit the founder brings to the organization or sacrificing the connection between mission and business established by the founder.

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