In life science start-ups, we know that one thing is likely (aside from death and taxes): At some point, you’ll want to move on to lead another start up. Handing over the reins of your current one, however, is never simple.
I read with great interest an exclusive interview of Hubert Joly, former CEO of Best Buy, in Chief Executive about “10 Keys to CEO Transition” https://chiefexecutive.net/is-your-company-ready-to-make-a-ceo-transition-here-are-the-10-keys-to-success/ , and that really got me thinking. Would the advice he shared in that interview work for life science start ups? Yes…and no.
No, because much of the advice assumes there is a broad and deep organization from which to select and groom successors, or deep pockets to recruit a seasoned CEO to take over for you. That simply is not the case in a life science start-up.
However, I definitely agreed to some parts of the advice, but with caveats.
- Start with a long term succession plan.
While doing this roadmap virtually right from the start may seem premature – even crazy! – having been on boards of such companies I can assure you that in the back of most your early investors’ minds is the concern. “What if you got hit by a truck?”
Often in such small companies, the CEO is the brain and muscle behind the science and still intimately involved in leading the research. You go, the company goes.
In big corporations, they either have CEO successors groomed or are prepared to recruit from a plethora of other big corporations. However, in the life science company filling your shoes may be nearly impossible unless you have selected people who can smoothly take over the reins to keep the R&D on track. And to do that, they need to be intimate with what you are doing and how you do it. So keeping each other informed is critical. This doesn’t mean a plethora of emails. It means more than working closely. It means taking extra time to discuss, share and ensure that what you know could be taken over and continued by them at any moment, with minimal disruption. You can easily test their readiness by taking short vacations or breaks and letting them take over for you while gone, and not hitting the pause button, but do be available for consultation. And when they do something differently than you would have, don’t jump down their throats. Understand what they did and why they did it that way. If not, it’s a learning opportunity for them (and you). You even may realize they do have better ways or ideas!
- Focus on executive development, not succession
I couldn’t agree more.
I hear from CEOs of life science companies, “If I groom them to potentially take over from me as CEO, and don’t make that happen, they’ll leave.” Yes, you might lose them to another company, but if you don’t mentor and prepare them for future leadership roles, you are more likely to lose them faster than when you do show you value them now and want to build their value even more for the future.
But make sure you don’t imply or commit to a timeline. Be flexible, see how they develop. Your greatest success would be that they eventually are capable of taking over from you as you pursue other interests – whether in one year or five.
- Do formal assessments
My observation of most start-ups is that most lack good fundamental HR processes. “IDPs”, or Individual Development Plans, are a given in big corporations. But in small ones, they tend to be ignored. The whole focus is in research development, not people development. Bad idea.
A regular and structured performance review process allows for both parties to ensure that the requirements for success are clear. It also should foster an open and transparent discussion of managerial development needs. Think they don’t need that? Think again.
If you aren’t strengthening their future leadership skills along with keeping them on top of their field in science and medicine, you’ll never be able to replace yourself. And while you are in that discussion, don’t forget to ask them for honest feedback on what you could be doing better, to be a better manager, mentor and leader of them.
- Implementing the Transition
Now, you are ready to move on to the next start up. The Board and you have agreed. Done? Not even close. This is perhaps the trickiest part.
If you haven’t already groomed a potential CEO replacement from within the company, you’ll need to recruit one from somewhere else. In fact, your Board might tell you who the new CEO should be. When that CEO is announced, you risk some of your best – indeed, most critical – team members jumping ship.
The dilemma is that if you select someone over others in your small team, this may happen anyway.
To effectively manage this transition, use a consultative approach. (A great time to do this is during that IDP discussion.) Ask them for their thoughts about future CEO succession planning. You might be surprised by their answers – not so much about considering them, but considering other team members or the type of person they would like to see take your place. Then, bring that person in, not as the CEO but in an important line leadership role that would make sense to the team. An experienced and approachable CFO or COO is the most likely type of candidate, but not the only choice.
The point is, that by the time your successor is announced, ideally the team should already have accepted, worked under and worked well with that person.
There is another, even more likely scenario, rather unique to life science start-ups.
If you as the CEO also are that brain and brawn of the science, the Board is likely to make you make a hard decision: Either be the CEO or be the Chief Scientific Officer. Do you relish and are you truly qualified to handle the financial management and fund-raising aspects of the job? Are you good at dealing with investors and constant pressures of cash flow? Possibly – probably – not. So the Board could decide to replace you with a “numbers person”, likely one with the Street experience, great at schmoozing with investors.
What we do know is that at some point, you will have to make that hard choice or it will be made for you by the Board. So think about your own transition – what skills do you need to develop for yourself to transition from bench research to business management?
The hardest thing to imagine is how to let the company you started be ‘given’ to a seasoned financially savvy CEO. Yet, it might just be the best thing you do. So in planning for succession, consider your own transitioning – not necessarily to start a new life science company, but to be able hand the reins over to a CEO whom you will work side by side. After all, this gives the start up an even greater chance for success while letting you focus on what you feel most fulfilled and capable doing anyway: great research.