Leading executives can become totally focused on their operational role. Yet at some point, a trigger results in them losing their mojo for working in one business. What type of role is better suited to their next phase in life?
I posit that it is a meaningful transition for them to coach entrepreneurs and manage a portfolio of startup investments.
I’d like to illustrate my hypothesis by exploring two case studies.
Finding His Creative Mojo: From Ad Agency to Angel
David is a successful CEO of a world leading advertising agency. He has been focused for the last 12 years on growing the business, its reputation and its people. When he first approached me he felt that something wasn’t quite right. he had used an executive coach for many years, so understood the paradigm. Yet he realized that he needed to work more with a transformational coach. A coach who not only understood the business landscape, but also had firsthand knowledge and understanding of and empathy with people going through a transformational journey.
He loved to sing in the shower, especially on mornings before a big pitch, or when he was traveling on business. But he found himself no longer singing. This was the initial signpost for him to realize that it was time for him to go on a different journey. Many people ignore these early warning signals until it’s too late for them to change.
We spent our initial time together exploring what had excited him before. We delved into what areas he most feared. We explored if there were deep, unresolved issues that could stand in the way of him making a transformational shift. It is always best to work through such issues in the early phases of a transformation. They may cause blockages in your ability to perform. They could also act as blinkers to you discovering what you find purposeful.
We started the process of getting him to hear his inner voice. It had been suppressed for many years by his ego. This voice is always there in every one of us. We may suppress it to the point were it is so faint that we cannot hear it. What we were looking for from his inner voice was a deeper understanding of what resonated for David. What was his true soul work? In his 20s, he had worked with some start up companies on their market positioning. He had also been active in creating a technology spin out from his advertising agency.
He came to the realization that it was time for him to move on from running the operational, day-to-day side of his agency. It was time for him to get back into the world of creating. At his core he was a creative, which is why he had been so successful in the advertising arena. In particular, though, it was time for David to move deeper into the world of startups. Meaning and purpose for him was about building companies that were making a difference in the world.
This was never going to be a binary process, with him being an operational executive one day and a startup portfolio player the next. We had set that expectation early on. He knew it was a significant journey. It would have many moments: some positive, some negative.
A thought leadership position can benefit the move from operational CEO to Non Executive Chairman. David had no interest in writing books, but was keen to do outreach activities. He joined the board of a not-for-profit organization in the medical health arena. He was invited to be be a regular on a well-known, news-related television show. This significantly raised his profile. He took two further board seats of large companies. This positioning helped him make the mindset shift from single focus to portfolio player. It also ensured the right circles noticed when he made the announcement of his transition to Chairman and startups.
The next transition activity was a robust succession plan within the advertising agency. He identified two executives who had the skill set, drive and passion to step up into joint CEO roles. They were both positive about taking over the operational aspects of the agency. They began working with executive coaches to assist them in this process. David also began the discussion with his Chairman about his decision. They mapped out a plan for him to transition into the role of Non Executive Chairman within 24 months. The Chairman volunteered to take a less active board role.
We then began exploring the role that David should play within the start up space. He didn’t want to take on a CEO or other operational role in any one company. Instead he wanted to build a portfolio, working closely with startup CEOs as a coach. He wanted to ask the hard questions. He wanted to accelerate their growth and keep them on track as they scaled up. He preference was to invest into these companies, rather than consult to them. Their upside would be his upside.
He was comfortable working as an independent agent, as a lone wolf. Although he could see the benefit of teaming up with other investors when it made sense. He was suited to becoming an angel investor. He had significant net wealth at that point. His financial investment portfolio was diversified and included properties and blue-chip stocks. He could afford to allocate a few million dollars towards his initial startup portfolio. He was also of the mind that this was risk capital. He wanted to deploy his capital into companies taking bigger risks that had above average goals. He was mentally prepared for the fact that he may not receive a positive return on investment from this activity. It was to be a learning experience.
We worked closely on how to place him within the entrepreneurial ecosystem. He began to get a feel for how he could determine whether a startup was worth looking at closer. He crystallized his Investment Charter. This set out his strategy for the kinds of companies, types of technologies, geographical preferences, stages of development and many other factors that assisted him make investment decisions. The aim was to ensure he was targeting the right kinds of businesses that could deliver him significant return on investment.
As he started doing meetings and due diligence on potential investee companies, we continued with his education in this area. The aim was to make sure that he was not making emotional investment decisions. It was also to ensure that he was able to draw on his significant business experience. He became comfortable that he could add significant value to the companies that he chose to invest in. He wasn’t keen to join a formal angel group. Nor did he want to become part of the herd that chased investments at pitch competitions.
Some of the companies that he was targeting already had angels circling them. In some cases he had a meeting of the minds with these investors. This was one way he was able to start growing a network of angels he was comfortable to invest with. He also reached out to senior executives were either already active, or wanted to get active, as angel investors. Within a matter of months he had four different informal networks that he was teaming up with.
David went on a three year journey from operational CEO to having a portfolio of board seats and angel investments. He has not only found his inner voice but is also singing in the shower again.
Adventure Capital: A Venture Guy’s Journey
Tom was the CEO of a large communications service provider. He had been in this role for six years, having worked his way there from inside the organization.
Similar to David, he reached a point where he no longer saw colors. Tom’s world became black and white. He approached me with the realization that he needed to make some significant changes in his life. He had worked with an executive coach for a number of years and so understood the power of coaching.
He wanted to explore how best he could get excitement back into his life. He had also become enamored with the entrepreneurial fervor that was sweeping the world. He initially sat on the investment committee of his company’s corporate venture capital group. He found that he enjoyed spending time with their investee companies.
His company had already created a succession plan and there was no need for us to revisit that. He was also well known in the business arena. He had a high profile thought leadership position that we could leverage. We could move forward at a fast pace.
Tom decided to make a clean break from his company. We explored the best positioning for him within the entrepreneurial ecosystem. He didn’t want to operate as a lone wolf. He was more comfortable being part of a formal group that had significant track record and a brand name. He preferred to work with a group of partners from whom he could learn the ropes.
Through his corporate venture capital exposure he realized that he didn’t want to work with very early stage companies. He found this time in a company’s development frustrating. He was well suited to work with companies that had already reached product market fit and were experiencing rocket ship growth. For example, startup companies that were about to receive a significant Series A investment.
It became evident that the best place for him to play would be as a partner in a venture capital firm. He had discussions with venture firms that his company had done deals with. He got on well with some partners of these firms. He started receiving offers from VC firms. He chose to join a well-known firm. They were raising a new fund. This meant he could both participate as a limited partner in the fund and as one of the general partners deploying the capital they raised.
I continue to coach him in his position as a VC. There are many VC nuances he is finding a deeper understanding of – for example,
* the healthy tension between being an individual VC and a partner within a partnership;
* the potential for conflict between a venture guy and their investment companies.
* how best to coach portfolio CEOs – what kinds of questions he should be asking, what signs he should be looking for that they are on target and on track both operationally and emotionally.
Both David and Tom have not only stepped up through their transformations. They have also proven the power of having a virtuous circle by referring some of their portfolio CEOs to me and some of their former colleagues have also expressed interest in coaching.
1. Be aware of trigger signs that a transition is imminent. You may miss the signs and find yourself in a trough – it is significantly harder to catalyse a transformation the deeper you fall into a trough. Heeding the signs earlier is better. This ensures there is no urgency to your transformation journey.
2. Be prepared for significant change. Transformation is never linear and this organic journey may take you places you didn’t initially imagine. Go with that flow.
3. Be prepared to listen to your inner voice. You may have a tussle with your ego not wanting to let go. Eventually your inner voice will win out.
4. The world of startups is not for everyone. Nor is being an entrepreneurial investor. Go there for the right reasons – it resonates deeply with you, you enjoy creativity, you have the right risk appetite and profile. Don’t go there because you’ve read in a business or in-flight magazine how hot startups are or how much money you could make in the space.
5. Don’t burn bridges. Once you’ve made your mind up to transition, do so gracefully. Ensure the right succession plan is in place. Leverage your current position to create your thought leadership position. This will ensure you optimize your transformation trajectory. You already have a solid network in place, they want to help.
[Note: Names and situations have been altered for confidentiality reasons]