Thursday, October 4, 2012

[VIDEO] Restructuring for Fantasy Land Founders

When I walk into a restructuring situation, my biggest challenge is to understand the interaction between the CEO and his executive team. Most frequently, I find a CEO who is the only one believing his own direction, a founder who dreams with no rational action plan, a leader without followers.

While team members realize the situation, they are prone to stay silent as they have seen former colleagues get thrown "under the bus" and shown the way out. And so my dialogue starts with trying to bring that CEO to perform a reality check on his surroundings, to self-assess his behavior, to come down from his make belief world and put his feet on the ground.

If these contained steps fail, and they frequently do when the emotions of a founder are involved, it becomes imperative to push towards a hands-on board governance. In other words, to induce board members to get more involved with the company so they themselves come out of the fantasy land that the CEO has painted for them. Unfortunately, boards do not react until red ink shows up in a major way on the books. But by then it is too late, too difficult for the company to raise further funding, for customers to continue involvement. Key resources leave and spread the word out about the company.


No video can paint a better picture of the "Fantasy Land Founder" preaching to his staff than the professor in the Rodney Dangerfield classic "Back to School".