The Transfer of Power

Today is the last day Pope Benedict is Pope.  The CEO of the Catholic church.  A very interesting run.  It’s a historic day, since it’s been 600 years since a Pope has deliberately stepped down to step aside for a new Pope.  It’s an interesting day for historians and political scientists that study transfer of power.   Most of the time, blood is shed in some way when power transfers.  Just look at what the Muslim Brotherhood has brought to Egypt.

Pope Benedictus XVI

Pope Benedictus XVI (Photo credit: Wikipedia)

However, this transfer when viewed through the lens of business is also very interesting.  Many people cynically call the Catholic church the biggest business and cartel on earth.  Parts of the church are organized like a business because it is so large it operates better that way.  Many other churches and religious orders on earth are also adopting some business structures to efficiently take care of their flocks.  I don’t see anything wrong with that.

But this transfer of power is interesting both to established business leaders and startups.

For established business leaders, Pope Benedict took control of the church after it had been lead for 27 years by a charismatic and beloved Pope, John Paul.   Many times when business lose their long time figurehead, there is great upheaval.  If the leader has made great strides, like John Paul had, the next leader consolidates and makes efficient those gains.  Many times a long term leader is replaced by a shorter term leader who paves the path for the next long term leader that can revolutionize the company again.

Pope Benedict has lead the church for 7 years.  That was enough time to do what needed to be done.  There is always housekeeping to do after long term leaders depart.  My guess is whomever the conclave elects, it will be a charismatic leader that will be expected to lead the church forward for a long time.  He won’t wait long, and will hit the ground running.

When big companies enter into mergers and acquisitions, many times the transfer of power is done clumsily.  Usually the company suffers.  So does the workers inside the company.  Very few companies are good at integrating other companies.

When viewed through the lens of a very different kind of business, the startup, the transfer of power becomes a little more distinctive.  Usually when there is a change at the top of a startup, two things have happened. The original founder couldn’t hack the leadership role they were thrust into with first round funding.  They get moved out and replaced before the company fails.  Or, the startup founder has guided the company to a certain point, and the company needs new leadership to take it to the next level.

Most founders of companies aren’t the person to drive it from startup to exit.

Troy Henikoff of TechStars Chicago told me an interesting anecdote once and I think it has a lot of wisdom in it.  He said (paraphrased), Managing a company from 0-100 employees is a lot different than managing one of 100+ employees.  It takes a different skillset.  Once you are over 100+ employees, a lot of your time is spent on HR and operations issues, not the fun strategy and building product and scale stuff.

As a founder, having an innate sense of what your skillset is can make a massive difference over the success or failure of your firm.  Being able to recognize what you are good at early, and more importantly what you are not good at helps the CEO delegate responsibility and build a cohesive team.

Great CEO’s are the ones that trust in their team, and create an environment for that trust to develop.  CEO’s that micromanage, back seat drive and constantly look in the rear view mirror aren’t going to take the company anywhere.

Great CEO’s also know when to step out the door.  One of the worst things they can do to a company is stay too long.

I have seen both great CEO’s and poor CEO’s at large companies and startups.  Many if not most of the time, they are the difference between success and failure of a business.      That’s why they get paid the big bucks.

Godspeed to the Pope.  By resigning before his death, he did a great service to his church.  He set a huge example for leadership going forward.  He was a person that played within himself, and seemingly brought out the best in his team.  That’s great leadership, and something we all need to learn from.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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