Even the most casual reader of my blogs over the years knows that I am intensely interested in styles, techniques, and nuances of leadership and management. As organizations become more complex and as the business, technology, and social environments become more labyrinthine, there is no doubt that success, or its opposite, is due to the effectiveness of leadership and management. Organizations succeed not because they have the right bureaucracy, but because they have an approach to leadership best tailored to the company and its circumstance.
Being fascinated by new concepts in leadership and management, I have followed with great interest the recent conversation about what to me is a fresh framing of leadership styles: the relationship between “founder mode” and “management mode.”
A Challenge to the Conventional Wisdom
This conversation began with a very important talk given this September by Brian Chesky, co-founder and CEO of Airbnb at the Y Combinator, a San Francisco-based startup incubator program. Paul Graham, co-founder of Y Combinator and a popular essayist, documented Chesky’s key points, and the discussion gained momentum from there.
Here is what Chesky had to say.
At its inception, Airbnb, like all startups, was in what Chesky called “founder mode,” a term Chesky used to characterize a period of quick action, major change, and rapid growth, all directed by hands-on involvement of founder-leaders.
By the time Airbnb had achieved a certain level of scale, people around Chesky had a piece of advice on which they all agreed: “Hire good people and let them do their jobs.”
In other words, Chesky was advised that for Airbnb to succeed as a larger, more mature organization, he should rotate away from the hands-on, unformulaic leadership of founder mode and into a more predictable and systematic state in which leaders delegate according to an established organizational structure. Chesky called that state “management mode.”
Chesky figured that if everyone was giving him the same advice, they must be right, even if he had his doubts. The advice certainly echoed the conventional wisdom about the cycle of company growth from inception to maturity.
There was only one problem. According to Chesky, the advice turned out to be wrong.
Management mode at Airbnb, said Chesky, was a disaster. A steady and systematic approach to management simply was not suited to a fast-moving, highly competitive environment. Having the founder sensibility separated from day-to-day decisions and operations meant that the company was allowed to drift in unproductive directions. On a recent podcast, Chesky recalled, “The less hands-on I was, the more I got sucked into problems. And by the time I got sucked into a problem, it was like 10 times as much work.”
Using Apple’s Steve Jobs as one example, Chesky rotated Airbnb back to founder mode, with the results to date positive. Graham notes that “Airbnb’s free cash flow margin is now among the best in Silicon Valley.”
Characteristics of Founder Mode
Founder mode is by no means an established methodology. According to Graham, leaders who are trying to implement founder mode are still trying to figure out how to apply the characteristics of running a company of 20 to a company of 2000…or for that matter, 20,000 or more.
However, it is possible to identify some key traits of founder mode and why it may be the right long-term leadership style for an organization.
The most cited trait of founder mode is the propensity to work across the established organizational chart. Graham describes the way organizational structure informs management and decision-making as follows:
“The way managers are taught to run companies seems to be like modular design in the sense that you treat subtrees of the org chart as black boxes. You tell your direct reports what to do, and it's up to them to figure out how. But you don't get involved in the details of what they do. That would be micromanaging them, which is bad.”
In contrast, founders tend to create a new organizational chart for every situation, identifying the people with the most appropriate skills, traits, and roles for the present need, and then communicating with them directly, rather than through the established chain of supervision.
This casting aside of the organizational chart and its accompanying concept of delegation has at least two extremely important potential benefits. One is speed—speed to decisions, speed to solutions, and speed to market. This is the way a CEO avoids the situation Chesky described of being “sucked into a problem” so late in the process that solving it requires “10 times as much work.”
Perhaps more important, this cutting across the organizational chart is the most direct way to get the founder’s vision of the company’s values directly into everyday work. An organization’s singular values are part of its founder’s DNA. Leadership that focuses relentlessly on that set of values provides clarity in direction and priorities. It helps shape and maintain culture. And it helps avoid drift. “As the company grows,” Chesky said, “the only way to do it is through values.” A structure that puts layers between the founder’s vision and the rest of the organization will not get that done.
What might this approach to founder mode look like? Steve Jobs used to hold an annual retreat for 100 people at Apple. Not the 100 highest ranking people on the organizational chart, but the people Jobs believed to be the 100 most important people at the company.
I have no doubt that trying to institute something like this would drive professional managers to distraction. Perhaps understandably. Perhaps the disruption would not be worth the benefit. But such a meeting also would be the most direct way I can imagine to translate an organization’s core vision and values into immediate and effective action. A founder would be more likely than a professional manager to be willing to risk possible disruption to achieve the potential benefit.
Challenging Ourselves
The debate about founder mode vs. management mode has drawn a healthy diversity of opinion. Perhaps not surprisingly, founders tend to emphasize the benefits of founder mode. On the other hand, some management scholars suggest that what Chesky describes as management mode is in fact just an example of poor management. Still others split the difference. Venture capitalist Henrik Torstensson, for example, points out that some founders are likely more gifted than others in management, while some professional managers embody the leadership characteristics of founders.
Refinements aside, the topic of founder mode vs. management mode has struck a chord for executives because it highlights two very different leadership styles and techniques, contrasting one that is well accepted with one that challenges tradition.
As leaders, we have the obligation to be aware of the latest insights about how to run an organization. And we have the obligation to question the conventional wisdom, to test our own habits and beliefs about how to run an organization, and to consider how each of us might push ourselves to employ new, and possibly uncomfortable, ways to lead our organizations to success.
The point is not whether one style of leadership is right or wrong, but the value of debate and discussion, always considering new ways of leading very complex organizations in very complex economic circumstances.
