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An incoming MD replacing a founder/outgoing MD – a tricky balancing act

February 29, 2024

As an incoming MD, possibly taking the place of the original founder/MD who may be moving into a chair role, you’re there because the business needs a senior person who has skills and experience that don’t currently exist in the organisation.

Phil Gripton, partner at Waypoint Partners explains that the incumbent leadership team will have mapped out their ambitions and then realised they need additional firepower and expertise to bring their vision to life.

First impressions

In the early days you’ll spend plenty of time with the outgoing MD and SLT learning about every aspect of the business including what’s up for grabs and what’s sacrosanct. You’ll clarify your remit and where your focus should be.

Some new MDs can find that they aren’t always empowered to deliver against the remit and targets. Remember why you’re there. The leadership team has identified you as the person with both complementary and differentiated experiences, skills and knowledge that are valuable in helping the business achieve its goals.

You are a change agent who should be additive to the business and clearly demonstrate the value you bring. Fight your corner hard and negotiate for what you need in the best interests of the business. But also listen to what’s worked so far – you don’t want to throw everything up in the air and unsettle good people.

In the early days as you’re making an assessment of the business, there’s a useful Harvard Business that new leaders often call on: The First 90 Days. It will help you to analyse the environment you find yourself in, use a structured framework to address its needs and have a common vocabulary that facilitates focused communication and reduces the risk of miscommunication or interpretation errors.

Identify allies and detractors

There may be some tricky conversations along the way. Not everyone will want you there. Your arrival might spark suspicion and fear and you have to deal with that. Under-performers or those hiding away in fur-lined ruts are right to worry. Moreover, someone else might have wanted your job, ouch!

Where you’ve been hired to shore up the performance and economics of the business, you’ll probably uncover habits and behaviours that that have been allowed to continue unchecked and need to be dealt with quickly.

You’ll quickly identify the naysayers who aren’t open to change, but more importantly you’ll also spot your natural allies who will appreciate the changes and value you’re bringing in that will lead them to greater things. You’ll work out where the power base sits in the company – not always where you expect it.

You can’t win everyone over and my experience in this kind of role has shown there’s little point putting effort into people who sit firmly on the “other side of the fence”. Either they come over of their own accord or not at all and will eventually move on. That group usually only represents a handful of people but if it’s anything sizeable then you’ve got to work to neutralise that threat quickly.

Be human!

During this tricky transition phase, it’s vital that you appear as a strong, visible leader and communicate with the wider team to secure buy in and galvanise them in a collective undertaking. Make sure to listen to everyone and their analysis of where the issues lie, while adapting your leadership style to suit the needs of key team members where that’s required.

If you want to win hearts and minds you have to come across as a leader who is human and genuine. You might have to make your own cultural adjustment, for example if you move from a big corporate to a start-up where the tone is very informal. And making that transition in public can be a good way of showing the team you’re prepared to make an effort to fit in. It could be something as simple as showing up on day one in a suit and tie, and gradually adopting a much more relaxed look that aligns with everyone else. Showing that you can be vulnerable and authentic in this way can be very powerful.

Communicating your plans

People like to know what’s going to happen. Signal how long the initial assessment phase is likely to last and when a clear plan will be announced. You might have to break it up into several stages. A short-term plan with some initial quick wins as proof of concept – especially if performance has been rocky recently – can be a great way to calm the water, build confidence and show the positive impact you are making.

Longer term planning might be about ensuring ongoing corrective growth, for example. It could focus on building in processes to bring in higher quality leads, or reducing the long tail of unprofitable clients. If it’s about supercharging the sales/new business engine, then build initiatives that people can latch on to.

Why you’ll need extra support

Speaking as someone who’s been in this situation, coming in as MD can be the loneliest job on earth. You owe it to your team to give them the leadership they need, not the leadership you want to give them. Part of your remit is to constantly inspire them to do great work.

And while it’s important that your decision making is fast but considered, decisive but transparent and you show authentic vulnerability, what you can’t do, at least in the early days, is show when you’re struggling or are not sure what direction to go in. It’s vital therefore to alleviate some of the loneliness and pressure that comes with the job by organising support, either through a non-exec, coach or mentor.

The combination of a considered recruitment process and an enlightened leadership team who recognise they play a part in helping you deliver should mean the appropriate external support is put in place. Your success is everyone’s success – you’ve been brought in to do an important job that no one else in the business can do. Making you feel as though you’ve been abandoned in what is already the loneliest of roles is in no one’s interests.