Organizational founder

An organizational founder is a person who has undertaken some or all of the work needed to create a new organization, whether this is a business, a charitable organization, a governing body, a school, a group of entertainers, or some other kind of organization. If there are multiple founders, each can be referred to as a co-founder. If the organization is a business, the founder is usually an entrepreneur. If an organization is created to carry out charitable work, the founder is generally considered a philanthropist.

Issues arising from the role

A number of specific issues have been identified in connection with the role of the founder. The founder of an organization might be so closely identified with that organization, or so heavily involved in its operations, that the organization can struggle to exist without the founder's presence.[1] "One practical way to cope with overreliance on a founder is to distribute management duties so that others are clearly responsible for important operations. If the founder is on the nonprofit's board, part of the solution is to make sure that the board is diverse, balanced, and regularly infused with new blood".[1]

Founder's dilemma

In some instances, the desire of the founder to maintain control over the organization becomes a problem because, when an entrepreneurial organization is successful, "[i]t outgrows the ability of the founder, or even of a small team around the founder, to control".[2] The Harvard Business Review identified this problem as the founder's dilemma, noting that in most successful companies, the founder is pushed out of control by investors within the first few years after the formation of the company.[3] In some cases, a company may have multiple founders, and a prominent source of conflict can be disagreements between these founders as the company evolves.[4] Efforts must be made to balance the responsibilities of each so that no one founding member feels involuntarily diminished in their role relative to the others.

Forgotten founder

Another problem that can arise is that of the forgotten founder, a person who participates early on in the formation of an enterprise, but leaves or is ousted before it achieves success, and then returns to claim a legal right to equity, intellectual property, or some other fruits of that success.[5] To avoid this problem, it is advised that the entity "incorporate early and issue shares that are subject to vesting over time".[5]

See also

References

  1. 1 2 Peri Pakroo, Starting & Building a Nonprofit: A Practical Guide (2015), p. 87.
  2. ↑ Colin White, Strategic Management (2004), p. 445.
  3. ↑ Noam T. Wasserman, "The Founder's Dilemma", Harvard Business Review (February 2008).
  4. ↑ Dharmesh Shah, "Avoid Co-Founder Conflict", in Brad Feld, David Cohen, Do More Faster: TechStars Lessons to Accelerate Your Startup (2010), p. 67.
  5. 1 2 Constance E. Bagley, Managers and the Legal Environment: Strategies for the 21st Century (2012), p. 650.
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