How to cultivate leaders you trust

This is the fourth and final post in our series, How to Build a Business That Doesn't Depend on You. You can read the first post here, the second here, and the third here.

Okay—let’s say you’ve taken all the necessary steps to build a self-sustaining business.

You’ve made a clear decision to do it, and you’ve let your desire build.

You’ve let go of unproductive beliefs and are thinking like an Entrepreneur. You’ve come to see your business as a process designed to produce a desired result without you.

You’ve envisioned a business that doesn’t depend on your personal production, and you’ve written your vision down. You’ve imagined a culture where your employees are committed to your picture of the future and share your view of what really matters on the way there.

You’ve freed up your time to work on your business, not just in it. You’ve built systems in every area of your business that stand for what you believe in, and you’ve continuously improved them until they generate consistent, predictable results. You’ve set standards that everyone on your team lives by.

In other words, you’ve created a world of your own that can operate without you.

It’s an incredible accomplishment...but are you done?

It depends.

Would you like to be able to take days or weeks off at a time, feeling secure that things will function smoothly in your absence? Then, yes—you’ve probably arrived at your goal.

But if you’d like to take months off at a time or fully free yourself from the leadership of your company, then someone has to replace you and lead your company into the future—even if you continue to do the things you love to do inside your business.

This might be the most challenging part of the process.

At least, it was for me.

When I retired as EMyth’s President in 1999, founder Michael Gerber took over the day-to-day operations of the company. By 2004, we both realized it was time to bring in experienced leadership. Michael was spending more and more of his professional life speaking, traveling, and writing one E-Myth book after another. I was focused on raising our two children and doing some serious soul searching into where my life was going.

Though Michael and I had recently divorced, we decided to continue to co-own the company, something we did very well together. We shared a commitment to growing EMyth, a company that was built to operate without us. And finding the right person to lead the company forward was the right answer at the time.

Since this was the first time we’d looked outside the company for executive leadership, we were both pretty uncertain about it. We asked a business associate—a successful investment banker and business consultant—to guide us through the process. We hired a local search firm to locate candidates and told them exactly who we were looking for: a leader with a track record of business growth who could expand the EMyth brand and our systems-oriented, values-based, customer-centric coaching company.

What I remember most about the search process was how often our advisor counseled us on the importance of letting go, giving an experienced leader the room to make their own decisions and be their own person. It was an unsettling message given our desire to control the future of the brand.

The candidate we eventually chose to take over the leadership of EMyth had all the right business credentials. Just as important, he grew up in a small business family, was eager to immerse himself in the leadership of a company that served a market he knew sorely needed help, and loved what EMyth stood for.

But after an initial honeymoon period, things became very difficult. While he grew the company to annual revenues it had never seen before, there were constant battles about strategy (and control) at the board level. After four years of constant tension, we let him go.

At the time, I thought we’d chosen the wrong person—that he just “didn’t get” our business. In retrospect, I’m not sure. I’ve come to understand that there’s a handoff process between an owner and an incoming chief executive that’s necessary for a successful transition. And that process is something I just didn’t understand at the time.

Regretfully, it took me too many years and too many leadership changes to realize that our advisor’s counsel about letting go wasn’t quite accurate, and that our need to hold on wasn’t unreasonable.

I wish I’d known sooner that stepping away from the top leadership position of your company is about more than finding the right person. Of course, you want someone who shares your values and your dreams for your company; someone with a proven track record of producing results. But whether that person is someone you know well—a daughter, a son, an existing member of your team—or someone you’ve recruited through rigorous vetting, the process by which you transition from your leadership to theirs makes all the difference.

The handoff process has to be as rich, carefully-crafted, and aligned with your vision as the company you’ve created.

In order to do this, an incoming leader has to explicitly recognize and accept that their primary purpose is to achieve the owner’s vision. A vision that includes the reason the business exists as well as its results, culture, customer characteristics, customer experience, processes, etc. That’s not to say that the company vision won’t change over time as relationships evolve—just that the owner needs to be clear about what aspects of the vision are non-negotiable. For example, if you own a residential construction company that builds affordable housing in transitional neighborhoods, and if that’s where your heart is, then you need to know from day one that the leader you hire to replace you knows it’s a waste of time trying to convince you to cultivate the high-end construction market.

Once that’s established, the owner and the incoming leader need to share an appreciation for the knowledge transfer that has to occur between them. While the incoming leader will never think or act just like the owner they’re replacing—and doesn’t need to—there’s a tremendous amount of invaluable experience living in the owner which has to be carefully imparted to the new executive in order to successfully achieve the owner’s vision.

This knowledge transfer is typically a nine- to twelve-month process (and sometimes even longer) involving hours of time spent meeting with each other each week. I spent as many as four and a half hours a week with our CEO during his first year: getting to know each other; building trust in each other’s judgment; and creating continuous opportunities to share how I think, how I approach problems, and how I produce results.

This time is also a chance for the owner to share the company’s history so that the incoming leader understands how it informs the present. There’s no better predictor of an owner’s success in replacing themselves than a knowledge transfer defined by openness and curiosity.

Then, the owner needs to make it explicit who’s going to make the decision if there’s a disagreement. Major strategic decisions are made at the board level. As long as the owner plans to remain on the board, they’ll have a significant say in strategy. But on an operational level, this is a very useful way for the owner to give themselves the flexibility to either hold a boundary when necessary to support the vision of the company, or transfer authority to the incoming leader when it’s more important that they find their own way. As long as trust has been able to grow during the knowledge transfer process, it should be relatively easy for the owner and incoming leader to move through disagreements according to this principle.

And then, at some point, the owner has to let go. If the knowledge transfer happens with the mutual care that’s required, this will happen organically in one area of the business after another. The owner will realize as trust builds and they experience the incoming leader’s respect for what they’ve created and their ability to make it better that there’s nothing left to try to control. The authority for running the company is where it belongs: in the hands of the person they’ve hired to free them.

These handoff principles are not the norm. The conventional wisdom in business seems to be pretty close to the advice we received in 2004: An owner has to just suck it up and let go, trusting the background and experience of the incoming leader to do what they feel is best. I’m guessing that if more business owners recognized that there was a better, healthier way to effect this transition, they would be more inclined—and less afraid—to build a business that could operate without them and actually give up control. Letting go might become a more joyful and viable option.

I’d love to hear how this blog series on building a self-sustaining business impacted you— whether it spoke to you, what you found helpful and what wasn’t. You can reach me through the comments section below or by emailing me at support@emyth.com.