Replacing Founders with Partners to Preserve a Company's Progressive Culture
One of the main challenges for today’s progressive companies is to stay progressive once the pioneering founders (or other progressive-thinking top leaders) leave and new leadership steps in. Too often, we have seen that when professional managers replace pioneering founders of progressive companies, it is a matter of time before the firms turn traditional. Only consider cases like Oticon, BSO Origin, FAVI, and, more recently, Southwest Airlines. Often, the company's progressive nature gets slowly diluted before it disappears altogether. In other words, when progressive top leaders leave, their progressive ideas tend to leave with them. How can we tackle this challenge? Let's turn to the Chinese firm Alibaba for inspiration.
In his book, the Tao of Alibaba, author Brian A. Wong describes how iconic Chinese entrepreneur and Alibaba founder Jack Ma designed and implemented a system to preserve the company's culture for the long run. He called it the “Alibaba Partnership.”
The Alibaba Partnership structure is designed so that a group of key people (partners) takes over the role of protecting the company's culture if a founder or other key employees leave. These four points explain how it works.
1. Elected partners
Each year, new partners are elected into the partnership. Currently, it has around 40 members from all different places in the organization. A prospective partner can only join the partnership when they get the approval of at least 75% of the existing partners.
2. Exemplary leaders
Partners deserve a place in the partnership based on their experience, leadership, and commitment to developing the company's culture. They must be regarded as exemplary leaders who are particularly strong in their understanding of the company culture.
Wong lists clear guidelines that partners must meet:
A high standard of personal character and integrity.
Continued service with the company, affiliates, and/or certain companies with which the company had significant relationships for at least five years.
A track record of contribution to the business of the company.
Being a "culture carrier" who shows a consistent commitment to, and traits and actions consistent with, the company's mission, vision, and values.
3. Role of the partnership
The role of the partnership is to put in place a governance system that can ensure that the company protects its own culture by remaining focused on long-term objectives (i.e., purpose and values), not short-term metrics (i.e., shareholder value).
4. Authority of the partners
The partnership is not just a symbolic group with no authority—in fact, the partnership has far-reaching authority. For example, among other things, the partners have the exclusive right to nominate a majority of the company's board of directors, which can greatly influence decision-making at the highest level of the company.
Inspiration for myself and others
This system assumes that a group of partners who cherish and nurture the same progressive culture and ideals is likely the best option to stick to the company's progressive principles and ensures good decision-making for all people involved—in a long-term view.
It all makes a ton of sense to me. I really think this system of replacing founders with partners could be an inspiration for all progressive companies that struggle with governance issues or with leaders that will leave soon.
And that’s definitely something to think about.