The Academy

What Entrepreneurs Should Learn From Uber's Leadership Crisis

How quickly business fortunes can change. The travails of Uber, transformed in recent months from a case study in high-growth entrepreneurialism to a business with a leadership vacuum following the ousting of its founder and chief executive, is a salutary tale that all start-ups should learn from. The moral of the story is that running a successful and sustainable business require mores than the ability to develop and execute a great business model.

This is really an issue about skillsets. It takes a great deal to get a new venture off the ground – to convince investors of the business case, to get the thing actually working and to persuade customers they’d like to pay for your product or service; no-one should underestimate the effort required, or deny founders the credit they deserve. Equally, however, running a business day-to-day will require a very different range of skills – and as the venture scales up, lacking those attributes can very quickly catch you out.

Business founders understandably often feel they are indispensable to their companies – that without their passion, insight and leadership, the venture would fail. In truth, however, if the business is to grow and prosper over the long term, it can’t afford to be dependent on the skills of a single person. It may even be more successful if the founder gives way to another leader, or at least expands the senior leadership team to broaden its expertise and experience.

Who you hire and in what role will depend on your ambitions for the business. Do you need a leader with day-to-day operational expertise or someone with experience of a particular transition, such as a move into overseas market or an IPO, for example? Are you looking for someone who can put the business on a firm governance footing, or institute the sort of financial rigour that companies need as they expand? Maybe you need someone who has done the job at a company that has the scale to which you now aspire.

Businesses such as Facebook, still run by its founder Mark Zuckerberg, are the exception rather than the norm for start-ups that have matured into large enterprises – and even Facebook has recruited a strong management team around its leader. Google did something similar before its founders eventually stepped back from their roles at the helm. LinkedIn’s founder hired two external CEOs in the run-up to its eventual sale.

There are all sorts of ways to bring more expertise into your organisation. The hire of a non-executive chairman, for example, with specialist expertise in your sector, typically gained at a large and established player, can be a very smart move. Working alongside the founder CEO, the chairman adds his or her more conventional skills and experiences to the entrepreneurial skills already in place - and very often arrives with an invaluable contact book.

Working more closely with your investors – who are in any case likely to demand input in return for their funding – is another tried-and-tested formula, particularly in private equity and venture capital. These investors bet on founders’ vision but bring experience, operational skill and contacts to the party, as well as their money.

In many ways, however, taking such steps can be the hardest thing the founder has to do once the business is up-and-running. What we’re really talking about here is letting go – to a greater or lesser extent, founders have to be prepared to share responsibility and give up some control. It’s easier said than done.

Written by David Prosser, a contributor on Forbes