When a Leader Like Bezos Steps Down, Can Innovation Keep Up?
To sustain innovation after a visionary founder turns over the reins, give people throughout the organization the license to innovate.
When the founder CEO of one of the world’s most valuable — and innovative — companies steps down, it’s bound to raise questions about the future of the business. Jeff Bezos’s decision to step back from day-to-day operations at Amazon provokes particular concern because the company has been an unbelievable innovator under his leadership. Similar worries have persisted about Apple post-Steve Jobs. Will these innovative companies lose their way without the founder’s drive and creativity?
The fear is legitimate, because research validates our hunch that founder-led businesses truly are more innovative. One such study, focused on S&P 500 companies, found that those where the founder was still at the helm generated 31% more patents than those led by professional CEOs. But in the post-founder phase, many companies lose their innovation mojo and turn into sclerotic bureaucracies.
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Why do companies avoid becoming resistant to change, even as they grow into sprawling enterprises, if a founder is still in charge? My research with Jeff Dyer on the world’s most innovative companies suggests that it’s because founders have unique license to innovate. When they decide to champion a surprising idea inside their company, a project that would normally be destroyed by slings and arrows launched from all sides manages to survive. Salesforce founder CEO Marc Benioff calls this founder superpower innovation capital. In a recent book by that name, colleagues Jeff Dyer, Nathan Furr, and Curtis Lefrandt took that concept further to frame innovation capital as a set of personal capacities that enable some individuals to do better than others at winning the resources to innovate. After all, founding and leading a successful, innovative company requires great skill in the art of persuasion.
But there’s also another reason, even decades after the company’s start, that a founder has so much innovation capital compared with others in the organization — a reason that is more positional than personal. Simply by virtue of the fact that they founded the company, their vision of the company’s future is accepted as authoritative. No one else can claim to have as good a sense of the company’s raison d’être and what new challenge it is called to take on next. Contrast this with the typical post-founder company, where any number of people may be competing to be seen as the true keeper of the flame.