Chapter 4. The Wild Years: Go-Go

Developing a company is just like planting a tree; Don't plant it one day and then pull it up next week and look at the roots to see whether it's growing.

—Anonymous

Figure 4-1: Go-Go

What is a Go-Go organization? In Courtship, we see the formation of an idea. In Infancy, committed founders put their ideas to work. Now, the idea is working, the company has good cash flow, and sales are up. The company is not only surviving, it's flourishing, and success makes the founder and the organization arrogant-arrogant with a capital A.

Opportunities as Problems

The greater the organization's success, the more arrogant its founders.

Some feel they are invincible. Consequently, Go-Go companies get into trouble when they go in too many directions at the same time. Go-Go companies are like babies first learning to crawl. They're into everything. They never see problems-only opportuni- ties. Everything they touch they either want to eat or try to break. Likewise, for Go-Go companies: Everything is an opportunity. On Friday night, the founder of a Go-Go company, a shoe business, goes away for the weekend. On Monday morning, he walks into the office and announces, "I just bought a shopping center." This does not sur- prise the employees. It has happened before.

"The real estate business? How did we get into that?"

"Well, I got a deal that was too good to pass up. Anyway, what we did for the shoe business we can do for real estate!"

DIBUJO

Present success has made the founder forget the difficulties of Infancy. The success of Go-Go is the realization of the founder's dreams, and if one dream can be realized, why not other dreams, too?

Pathologic Go-Gos are mini-conglomerates. They are involved in many related and unrelated businesses. Unfortunately, this diversification usually means that Go-Gos are spread much too thin. The leaders inevitably make the mistake of getting into a business about which they know nothing. The company loses more money overnight on a shopping center than it made in a whole year selling shoes.

In Go-Go, almost every opportunity seems to be a priority. At a meeting of one Go-Go organization, managers each listed the organizational priorities as they perceived them. As a group, the managers listed 173 different priorities: Too many priorities mean no priorities.

When I organize Go-Go companies, I sometimes feel as if I were watching a cat give birth. Just when I think that the last kitten has been born, another head emerges. I always ask managers in a Go-Go organization, "How many businesses are you in?" When they have finished giving me all the details, someone invariably remem- bers just one more deal, one more business, one more opportunity they are exploring or have already committed to. The founder of the International House of Pancakes described the Go-Go period he went through. He told me, "At that time, I felt the world was on sale." In the Go-Go stage, sales are up fast and easy, so founders become sloppy. They don't plan for results. They simply expect them. Frequently, they pay the price.

Go-Gos have so many irons in the fire, they cannot and do not give attention to each one. And it's not unusual for them to get burned by one or more of them.

Reactive Sales Orientation

In Infancy, organizations are product-oriented, and in Go-Go they turn to their markets. However, turning to the market does not mean there is a marketing orientation. It indicates only a selling orienta- tion. What does that mean? Marketing is the thinking part of selling: deciding what products to sell at what price, through which channels of distribution, and specifying how to promote them. Marketing is a planning and positioning function. It is not only deciding what to do but also what not to do. In Go-Go, the arrogance of success is such that a discussion of what not to do is premature; Go-Gos on the typical path consider such discussion almost sacrilegious. Selling is a producing and doing function. Marketing calls for defining and carrying out plans, providing information on the effectiveness of theThe Wild Years: Go-Go 55 plans in the marketplace, and reacting to those results with necessary adjustments to the plans.

While Infant organizations are product oriented, Go-Go organizations face the "crowd" and become sales oriented to the extreme. "He would sell his mother-in-law if he could," said one executive about the founder of a Go-Go company. The sales orientation is addictive, and more means better. The organization equates sales with success, and it exploits rather than plans for opportunities. The organization is opportunity-driven rather than opportunity-driving. Management responds to the environment rather than planning the environment it wants. 1 More means better for a Go-Go, thus the decision to focus on what not to do is not very popular-yet. In the rush to get the product to market, people make promises before they know how the company will fulfill them. The company ships unfinished products, without manuals, and with no spare parts available. It's a nightmare for the customer. The company is con- ducting on-the-road engineering, virtually chasing and fixing the product as it makes its way to the customer. That means engineering never actually releases the product for mass manufacturing. The company sells the product before engineering finishes it and before manufacturing even designs it for manufacturability.

I encounter this problem in almost all start-ups, and I consider it abnormal rather than pathological. It is not pathological because experienced customers apparently are used to it. They complain, groan, and moan, but they plan for disappointment in their projections. It's a game everyone plays, but it isn't normal because it can be avoided.

A proactive marketing orientation calls for identifying new client needs and designing services and products to satisfy them. It's too early to do that in Go-Go. 2 The organization is still captive of and wants to capitalize on the needs already identified in Courtship and developed in Infancy.

The Climate

In the Courtship stage, there is a vision. As an Infant, the organization experiments with the vision of Courtship, working toward a product orientation.

That experimentation carries the organization into its Go-Go stage with a sales orientation. That sales orientation can lead to abnormal outcomes. Some Go-Gos assume a fixed profit margin on all sales, believing that increasing sales automatically mean higher profits. However, their cost-accounting systems are useless in the face of uncontrolled expansion. They are selling more, but rather than seeing their profits climb, they find themselves losing money. Anxious to maximize sales, Go-Gos award discounts to distributors, commissions to salesmen, and rebates to clients. But, because their elementary cost-accounting systems haven't kept pace with their growth, many find they don't know the real cost of goods sold. It's not unusual for companies at this stage to be selling their products at prices that don't even cover their costs. Obviously, the more they sell, the more they lose. If their sales grow rapidly and cash comes in bountifully, they may be so thrilled with what looks like overnight success that they become arrogant. No longer suffering the pains of Infancy, they perceive their climbing sales as proof of runaway success. They see themselves as the genius stars of rags-to-riches stories, and they undertake all manner of ventures. All too often, they have no business being involved in the ventures they choose.

If Infancy is management by crisis, Go-Go is crisis by management.

Parents of a two-year-old know they cannot let the toddler out of their sight. Children that age constantly get into trouble. Everything looks exciting to them, and they are ruled by a very short attention span. They open drawers and spread the contents throughout the house. What a mess. Following a toddler around, parents are always saying, "No! No! No!" Go-Go companies need the same kind of attention. In the transition from Infancy to Go-Go, a company's vision broadens from its narrow, nose-to-the-grindstone perspective to a wide-ranging panorama of endless possibilities. The Go-Go company has an insatiable appetite for quantifiable growth, and its one-and-only leader is not a good listener. Go-Go leaders do not listen because single-mindedness is what made them successful in Infancy. Back in the early days, people told them that what they aimed to do could not be done. It was too risky. They didn't heed those naysayers, and they have proven them wrong. Now that they are successful, they know for sure that they don't have to listen to anyone's advice. After all, they achieved their high-flyer status despite earlier recommendations and cautions.

That arrogance and sense of omnipotence can take very unusual dimensions. The more successful founders perceive themselves to be, the more acute is their sensation of omnipotence. One founder I know truly believed that he was invincible. He truly believed that Jesus himself was guiding him and that he therefore could not err.

Don't expect Go-Go leaders to attend meetings. They rarely do, but if they decide to come, they dominate the proceedings. Nobody else will have the opportunity to say anything of substance. The leaders demean, demolish, and personally attack anyone who dares to disagree with them. If people dare even to suggest that a Go-Go leader's idea is not so sound, he considers it a deliberately personal offense. So people sit, listen, suffer, and wonder, "How can we work with this monster?" Even the board of directors fears a confrontation.

Why do people bear such treatment? I have found that leaders of abnormal Go-Gos overpay their subordinates as if to bribe them to follow. Because they are paid so well, many such employees feel they have no alternative, and they endure the offensive behavior. Those who cannot tolerate it quit, and their anger burns with hatred.

Go-Go leaders buoyed by successful sales believe in their own genius, and they surround themselves with people who behave as if they do, too. I refer to such worshipful employees as claqueurs. Claqueurs is the French word that describes the people opera managers hire to come on opening night to start artificial applause. After the show, those paid clappers may make faces and sneer in disgust, but during the performance they applaud enthusiastically.

In Go-Go companies, meetings are show time. Subordinates show reverence and enthusiasm for their boss's ideas no matter how half-baked and dangerous they may be. 3 After the meeting, you see the staff congregating around coffee machines wondering how in the world they can avert the disastrous decisions they just applauded. Fortunately, more often than not, Go-Go leaders change their minds: Their ideas were not decisions-only ideas no one should imple- ment. If people try to implement those wild ideas, their bosses may get angry because they have changed their minds. At the same time, everyone worries that the boss actually wants the idea implemented. The employees are in a bind. Should they or should they not do what they think they understand? They feel frustrated to the limits of their emotional endurance. They're damned if they do and damned if they don't.

Another aspect of that frustration arises from the entrepreneurial perception of time. Go-Go leaders' ability to estimate the time needed to accomplish tasks seems remarkably skewed. In their arrogance, they might announce that certain problems ought to be solved within an hour. Invariably their estimates are several hours short. The bigger their egos, the bigger this time bias. I, for instance, suffer from this same malady, and my coefficient of error is six. If I tell someone, "it will take an hour," it usually takes six hours. If I believe the task should be done in a month, it will take six months. And what I consider a delay feeds my managerial paranoia. "They must be fooling around. They don't work hard enough. They are sab- otaging the effort," I say to myself.

To make matters worse, most entrepreneurial types who lead Go-Gos have real difficulty articulating their ideas clearly. One listens and wonders, "What in the world does he want me to do?" The few who understand and can interpret the ideas become the people who get business rolling. They become critically important insiders- the Go-Go's trusted confidants.

Alan Bond, who led the Australian sailing team to win the America's Cup, was one of his country's most successful entrepreneurs. He went bankrupt three times, and the last time he ended up in jail, owing billions of dollars to the banks. I've known Bond since his heyday, when nobody could get a minute of his time. He was Go- Going galore, buying and selling companies as if they were stacks of cards. His company was a stack of cards, and I told him so. I warned him that the time of reckoning would come. His company had no infrastructure, and there was no one to tell him that he was hyper-ventilating managerially. Believing himself invincible, he thought he could survive and escape any problem or trouble. Did he not go bankrupt twice before and survive it? These entrepreneurs behave like kids who want to test the limits of their power and the only way to find that there is a limit is to cross it. So they take more, harder, and bigger risks, challenging fate-and healthy logic.

It appears as if they plot miracles on their critical-path project- management charts. Should anyone dare to challenge them, they smile as if to say, "You can't understand, but if you just watch, you will see." Leaders of Go-Gos test their limits and challenge their fate. Alan Bond had his right-hand man, and he was the only person who understood what he said. When, however, Bond appointed that man to an executive position in one of his companies, he lost his "brakes." No one really understood what Bond wanted, and nobody dared to ask for clarification. And anyone who did understand dared not challenge Bond. After all, he was so very successful-a real genius in his own mind. Besides, they were fabulously well-paid. Why rock the boat? Bond, like so many other Go-Go leaders, believed his own press releases. But his success was a balloon, and a mere needle could make it all collapse.

Go-Go leaders do not pay attention to details. And we all know-or should know-the Arabic saying that the Devil is in the details. It takes only a "detail" to deflate a balloon full of gas.

Go-Gos have tremendous appetites for results and growth. Their leaders don't listen to criticism or warnings about difficulties of implementation, and they lack organizational structures that define who should do what. 4 Go-Gos can fall prey to a pathological condition: lack of accountability. With no accountability, nobody is responsible for results. Everyone claims inadequate information or authority to make the right decisions. Everyone is the victim of decisions other people made. Under such conditions, few decisions are final, and directions are always too vague for efficient implementation. I am describing a prescription for a disaster.

Inevitably, disaster will strike. The questions are: When will dis- aster strike, and what form will it take? Will it be a stockholders revolt? A suit from the Federal Trade Commission? A class action filed by customers who feel duped? A product liability case because there was inadequate quality control? When disaster strikes Go-Go companies, no one takes responsibility. No one feels accountable. Go-Go leaders are frustrated beyond belief. They feel people let them down. They feel betrayed. No one warned them of the tricky dangers ahead. Everyone just let them fall and watched them fall. The subordinates turn against each other. No one takes the blame. No one owned the decision or knew what exact part was his to carry out. So fingers point in all directions, and no one survives unscathed.

The finger pointing and bickering don't start with the surfacing of problems or failures. Go-Go leaders subconsciously nurtureSO What Is Going On? mutual mistrust. 6 Because their aspirations for their companies exceed their accomplishments, Go-Go leaders harbor paranoia that their people aren't working hard enough and lack adequate commitment. They share those suspicions with their subordinates-one at a time. Picture, for example, a Go-Go leader: He tells Adrianne how bad and unsuitable John is, he tells John how betrayed he feels by Joel, and to Joel he confides that Adrianne is terribly unproductive and unreliable. The leader turns people against each other and all of them against himself. On the surface, the company seems to be doing fine. The sales curve is pointing to the sky, but in its heart, soul, and guts, something is very smelly in the Kingdom of the Go-Go.

When I lecture, I say that no company-absolutely no company-should let its sales skyrocket. I make a hand movement that starts low and rises exponentially pointing to the sky. "In this case," I say, "the company can go only one way." And the audience knows the answer. "Down!" everyone roars in a chorus.

I continue my lecture. "Let's say you have the foundation for a three-story building. But the neighborhood is flourishing, rents are rising, and you are doing so well, you decide to add a fourth, fifth, and then, a sixth floor. If you continue, eventually, inevitably, what is going to happen?" I ask. Everybody knows. The building will crack. Before you expand, you must reinforce the foundation. Think of a gold mine. If you only dig, dig, dig, the mine will collapse on you.

After you have been digging for a while, you must shore up the infrastructure.

Go-Gos need continuous restructuring. They are like growing children who keep outgrowing their clothes. Pants that last week were dragging along the floor, this week are barely grazing the ankles. Leaders of Go-Gos attribute little importance to structure, managerial processes, or systems. They are preoccupied with the external world-sales, joint ventures, strategic alliances, sales, and more sales. Most Go-Go leaders get their kicks from their capability to beat the competition head on. Even when the leaders are women, the behavior of Go-Go leaders seems to be dominated by male testosterone.

Budgets, organizational structures, roles, responsibilities, and reward systems all require attention to detail, discipline, and self-The Wild Years: Go-Go Sl restraint. And those qualities are quite alien to an entrepreneur. I see them suffering when they sit in planning meetings. The step-by- step process of defining managerial detail causes them pain and discomfort. They crack their knuckles, squirm in their chairs, contin- ually check the time, talk incessantly to their neighbors, write memos, try to leave the room, and fail to show up for the next session. They criticize me privately and publicly, asserting that the meetings are a waste of time. What they want to talk about is growth, ideas, and opportunities. They insist on making the meeting agendas to suit their own psychological needs rather than the organization's needs.

Go-Go leaders say they want help resolving personal issues, but, in fact, they want space to vent their managerial paranoia. They rage against others, accusing them of failing to perform. They rely on guilt to motivate, saying, "You could do better and more if only you would ... " Rather than realizing that their system needs fixing and that their employees are as much victims of the nonproductive system as they are, they personalize the problems and attack their people.

In Go-Go companies, physical space is scarce because the organization is growing so fast. They acquire new office space as it is needed or long after they've felt the squeeze. It's not unusual to find a Go-Go company scattered all over town-or all over the country.

The rapid growth the company experiences has organizational manifestations. In Infant organizations, you won't find organization charts, job descriptions, or real salary administration systems. They are like healthy families, and everybody does whatever needs to be done. When there is money and the founder is in a good mood, peo- ple might get salary increases, but don't expect performance appraisals. With everybody knowing what everybody else is doing, such formal appraisal systems are perceived to be unnecessary. That behavior works in Infant organizations. It is to be expected. For Go- Gos, however, it can be abnormal, and can become pathological.

Lack of Consistency and Focus

At the Go-Go stage of development, a company might have a broad array of incentive systems, and employees with diverse capabilities. Who does what and for how much remuneration is determined by a random patchwork of decisions. Lacking systems and established policies, the Go-Go hires employees at different times, under widely divergent agreements. Some are highly qualified, and some are not. The Go-Go organization has neither the time nor the focus to weed out incompetents.

Arrogance bred from success, a reactive sales orientation, and ambiguity about tasks and responsibilities shrink the attention span of most Go-Gos. Managers jump from task to task, trying to cover all bases simultaneously. Both the organization and its managers lack focus. If this lack of focus continues, the organization may go bankrupt. Survival depends on developing policies about what not to do, rather than on what else to do.

Company Organized around People

In Go-Gos, people share responsibilities, and tasks overlap. For example, the president of a Go-Go I knew well was the chief buyer, the top salesperson, and the designer. The salespeople also did some buying, and the accountant was the part-time office manager. If you ask for an organizational chart, they ask with a smile: "Which one? Last night's or this morning's?" If you ever do get an organization chart for a Go-Go company, it looks like a piece of paper a chicken has walked over: dotted lines, straight lines, and broken lines drawn in every direction. If you ask an employee, or even an executive, "To whom do you report?" you get a vague, confusing answer. "I mostly report to Sam, but sometimes I report to Lee. However, whenever there is a quality problem, I report to Jane, and come to think of it, to Alas well." And so on.

Go-Gos organize around people, not around tasks. Their growth is unplanned. They react to opportunities rather than plan, organize, or position themselves to exploit future opportunities they create. They don't control their environment. Their environment controls them. They are driven by opportunities, not driving them.

Behavior is reactive, not proactive, and as a result, people are assigned tasks based on their availability rather than their competence. I know, for instance, of an organization whose department of Canadian sales reported to engineering because the head of engi- neering had grown up in Canada. It's not unusual to find the staff of,The Wild Years: Go-Go 83 say, Region A, reporting to Mr. Z, solely because Mr. Z happens to have some free time. I discovered a most extreme example of assign- ment-by-availability: The founder of one of my client companies assigned one of his employees temporary responsibility for a rather significant job. "Why you?" I asked the employee. "I think," he replied, "it's because I just happened to be riding the elevator at the same time."

My sister told me once that "there is nothing more permanent than continuous temporary." Imagine the fellow who got the assign- ment in the elevator. Years go by, and the temporary assignment is still his. He feels he owns it. Should the boss decide to reassign the responsibility, he'll have to give him something else in exchange. In other words, the structure is a patchwork of decisions made under duress, and expediency is the ruling factor. How can anyone really know who is supposed to do what? Under such conditions, whenev- er a question arises, to whom does everyone turn? Obviously, to the one-and -only.

While the one-and-only may, for a while, find his or her indispensability a reassuring comfort, eventually it will become overwhelming. Go-Go leaders feel they are under tremendous time pressure, and they cannot free themselves. The more they delegate, the greater the confusion, conflicts, and problems. Exasperated, they stop delegating, only to find they cannot go it alone. They desperately search for a savior, someone who will take over and finally free them from the mess. Of course, the first thing the saviors want to do is to put an end to all the turbulence. But what is the source of the turbulence? The Go-Go leaders themselves. Thus, as should be expected, the savior managers-the professionals-try to insulate and isolate the leaders from their companies, launching their com- panies into the next stage in the lifecycle.

Although I often use the term "founders" to designate company leaders, the word should not be understood literally. By the time companies reach the Go-Go stage, their original founders might be long gone. Nevertheless, the people who head Go-Go-stage compa- nies usually behave as if they founded and own the companies they run.

A normal problem of Go-Gas is that everything is a priority.

As the companies grow up, they learn what not to do by making the inevitable mistakes. They engage in a trial-and-error process of learning, and when the Go-Gos make major mistakes-and lose market share, a major client, or money-they are thrown into the next phase of their lifecycle. A major crisis cures organizations of their arrogance. And the magnitude of the Go-Go's success and arrogance defines the size of the crisis that will induce the organization's management to recognize the need for rules and policies of business conduct. The development of rules and policies indicates emerging emphasis on an administrative subsystem and the transition to the next stage of development, Adolescence. Failure to focus on administrative systems signals a pathology called the founder's trap.

Courtship organizations that lack sufficient commitment to pass the test of reality slip into a premature death called an Affair. What, after all, is an affair? Lots of enthusiasm with no real commitment. An Infant organization dies young if it doesn't receive ade- quate feedings-cash-or if the love and commitment of the founder die. Go-Go organizations that cannot develop their administrative systems and institutionalize their leadership, fall into the founder's trap.

What is the founder's trap? From Courtship through the Go- Go stages of the lifecycle, founders are their companies, and the companies are their founders. They are inseparable. When young companies need bank loans, their founders must pledge personal

DIAGRAMA

DIBUJO

Founders are simultaneously their companies' biggest assets and biggest risks.

Companies outgrow the founders' capabilities to implant their personal leadership styles and philosophies. They can no longer act as one-person shows. That's when founders attempting to delegate authority and responsibility end up decentralizing and losing con- trol. It usually does not work well. How does that happen?

A Go-Go will get into more trouble and lose more money the first week it ventures into real estate than it made all year in the shoe business. And the typical reaction to such calamities is to implement controls. Whenever those super entrepreneurs find themselves losing control, they respond by announcing, "We need to get organized. We need better controls around here."

The Go-Gos then create rules and policies, but who are the first to violate them? The one-and-only founders. In an alternate scenario, a founder might call management together and say, "As you all know, and have constantly reminded me for the past few months, this company is just too big for one person to call all the shots. I'm starting to delegate authority around here. You each have your own areas of responsibility and you're free to start making decisions as of today. However, ask me first before you make any big decisions. And don't make any decisions I wouldn't make."

They try to delegate authority. But rather than delegating, they end up decentralizing. Let me explain the difference.

Delegation involves transferring tasks down the organization hierarchy and creating a sense of commitment for carrying them out.

Tasks can be to make decisions or to implement the decisions. When a task calls for implementing a decision that has already been made, the designated authority is only tactical in nature. That is delegation. When the task calls for initiating decisions that involve strategic change, that is decentralization.

A Go-Go organization cannot decentralize well. Workable decentralization requires a system of control. Decentralization pro- vides a centrifugal force, which requires management to impose a centripetal force if it hopes to retain control. Centripetal force is provided by policies that describe what the decentralized units can and cannot do. Those policies maintain unity in spite of decentralization.

The administrative subsystem-rules and regulations-acts as the centripetal force. In Go-Gos, this administrative subsystem has yet to be fully developed, and the one-and-only usually disrupts its development by being the one least likely to adhere to it.

Founders who try to delegate without a system of controls unintentionally end up decentralizing. People begin to take initiative, and the founders feel threatened when the employees' judgments, values, needs, and preferences don't reflect their leaders' own judgments, values, needs, and preferences. Let us not forget that when they were in the Infant stage, the founders delegated nothing at all. The sudden jump from autocratic centralization to decentralization is justifiably frightening to the founders, and their subordinates don't believe thatThe Wild Years: Go-Go 87 the founders will really do it. The founders fear they are losing control. So, in fact, founders are saying to their people, "You make only those decisions I would have made myself." When the subordinates fail, and that is inevitable, because only through trial and error can they learn what is expected of them, the founders recentralize authority. And the subordinates say, "We have been to this movie before!"

Once again, the founders find themselves with too much to do. They cannot embrace and control their companies so they turn back to delegation, which ends up as decentralization. The founders again feel a sense of betrayal and loss of control. The relationship between founders and their Go-Go companies is like a yo-yo. "You are in charge. No. I am in charge." With so much turbulence, people suffer pain and mental anguish, complaining that "Nothing is going to hap- pen here until the old man-or woman-dies."

Some companies try to escape this mess by implementing matrix organizations, in which the leaders, who recognize their inability to manage everything, appoint groups of leaders to oversee certain markets or products and take responsibility for results. What they do not do is change the functional structure of their companies. That, they fear, would introduce too much political turmoil and might threaten their control. What they fear is what happens. Matrix managers have responsibility with little authority and end up frustrated and ineffective. By postponing the pain of restructuring, the organization suffers years of prolonged anguish.

DIBUJO

If you are a sailor or like to go boating, you probably do not like seagulls. When you see them coming, you know they're going to crap on your boat, and you do your best to chase them away. Leaders of Go-Gos frequently are seagulls to their companies. I know a CEO whose employees referred to his helicopter as "the silver seagull."

What is the Seagull syndrome?

What began in Infancy and Go-Go as a founder's loving embrace becomes a stranglehold that stifles the company's contin- ued growth and development. But the founder is also frustrated. Measured in terms of sales, the company is successful: Climbing sales are proof that the product works. Incredible economic success gives founders the impression that they have really made it. Proud that they have made their marks on the economy, these founders want to extend their reach. They want to move beyond the day-to-day oper- ation of their companies. They become enchanted and interested in community organizations, politics, health, travel, and other business- es that are not even remotely related to their previous successes. Simply bored and frustrated with the details of running complex organizations, they yearn for the excitement of Courtship and Infancy: That's when everything is new and fresh and so easy to do.

Looking for anything that will provide more meaningful outlets for their entrepreneurial energies, they get bored selling pizzas, or shoes, or whatever put their names in lights. Those whose companies have rewarded them with substantial fortunes might prematurely cash in on the fruits of their labor. They want to take advantage of the wealth to fulfill the dreams that used to be beyond their financial means. The chairman of Wells Fargo Bank told me that bankers watch out for the founders who take out loans for their businesses, experience some success, and start acting and dressing like different people. The bankers aren't surprised to see such types returning to the bank for a loan to buy a fancy car, a boat, or a plane. Finally, they come for financing for the most expensive luxury of all, their divorces.

Have you noted the complicated dynamic of the Go-Go stage? The founders want to escape day-to-day management, but they don't want to yield control. The founders' incremental distancing and the difficulties of delegation impose a remote-control embrace-the worst possible situation. The founders leave, but no one else has the right, the chutzpah, or the courage to make decisions. The Go-Go leaders believe that after they delegate authority, their subordinates will run the show. So they take off. But not forever or for a predictable period of time. When they do reappear, they return like seagulls. Everyone watches the sky, hoping the founders will not crap on them that day.

What happens when founders return to visit? Perhaps they hear about or notice changes that displease them. That's when all hell breaks loose. The founders always have better and newer ideas. The employees should have predicted, known, and followed them. In a matter of hours, the founders have recentralized power only to disappear once again. Nobody knows what to do or not to do, and everyone grows increasingly anxious. Trying to imagine what their founders would have wanted them to do is risky at best. Most founders are quite creative and, by the Go-Go stage, their arrogance defies second guessing.

The greatness of Go-Go leaders encompasses their ability to run their businesses by intuition. However, these geniuses are rarely capable of articulating their intuition or transferring it to others who can act in their stead. And their subordinates, incapable of action, let paralysis reign. And when the peripatetic leaders make their next appearance, the accusations and frustrations begin anew. They are upset that no one took action, no one dealt with the problems. Of course, when people have made decisions the founders question, heads roll. People begin to dread their founders' visits, adopting a fearful damned-if-you-do, damned-if-you-don't attitude.

Meanwhile, founders feel trapped by their creation. A frustrat- ed founder told me a riddle that illustrates this point.

"When do you stop making love to a 200-pound gorilla?" he asked.

I didn't know. "Whenever the gorilla wants to!" he said.

That good idea for a nice little company in Infancy got away from the founder during the Go-Go stage. What started out as a cute, What Is Going On? little furry thing is now a huge ape that demands its founder's attention. And at this stage, the founder is unable, doesn't know how, and no longer wants to give those attentions.

Go-Go is a dreadful period of love-hate ambivalence. The employees might not love their leaders, but they fear and respect them.

They characterize these leaders as "genius, crazy, eclectic but still genius; hard to work with but worthwhile if you can put up with the style." They want their founders to stay, but they wish they would change. And the founders are exhausted from their marathon races. They feel that the mountains they have been climbing don't offer the rewards they had expected. Granted they made money, but they are as fed up as the parents who complain that the child they've been raising has a mind of its own, refuses to listen, and is way too rebellious. Founders feel betrayed and unfulfilled. They want to leave and sulk, but they can't take off: There is no one to replace them, and if there is a capable replacement, the founders fear this new leader will hijack the company and steal their dreams. They tell the executives to change their behavior, and they are stuck in a stalemate. Everyone wants the other one to change. What they have to realize is that the entire organization must change. But they can't easily change it by themselves.

What is going on? It is highly influenced by who does the integration.

Who Integrates?

From Courtship throughout the Go-Go stage, founders are the integrative forces of their companies. They interpret market forces and synchronize sales with manufacturing, financing, and executive recruiting. Founders are the glue. In the advanced stages of Go-Go, that glue no longer holds everything together. There is not enough of it. It's not unusual, but it is a misguided solution for Go-Gos at this stage to try to find another person to act as the glue, to replace their founder. Founders hate the idea of being dispensable, and they will fight to retain their unique position. The organization needs to design a new depersonalized "glue" as part of the process of institutionalizing leadership. The Go-Go organization needs to move from absolute monarchy to a constitutional monarchy. If it fails, and it ends as a republic that guillotines its emperor, the founder will be fired, bought out, or replaced one way or another.

It is the difficult process of transferring the integration function that retards companies' abilities to institutionalize entrepreneurial functions. That's what makes it so difficult to escape the founder's trap. And founders do nothing to facilitate this transition. They sow disintegration by turning one executive against the other. This disintegration is not done consciously, mind you. Founders don't decide to create dissension and internal conflict. On the contrary. Suffering from the internal conflict themselves, founders don't know its cause or what to do about it. Why, then, does everything they do seem intentionally designed to foment disintegration?

With no formal, well-oiled system of controls, Go-Go leaders rely on rumors and other ad hoc information. Compounding a situation that is already fraught with suspicion, most entrepreneurs have tremendous aspirations that, more often than not, exceed their achievements. They suffer from latent and mild paranoia. If you talk to Joe, you'll hear what's wrong with Bill. And when you talk to Bill, he'll tell you everything that's wrong with Lucy, and Lucy will tell you about Joe, and so forth. I was fascinated to discover that in situations like these, there is one person who is always in the penalty box: That person is responsible for the company's problems. But if that person gets fired, someone else will appear-as if he had been deliberately chosen-to fulfill the scapegoat role. The scapegoat can be a senior executive. The leader rejects him and privately accuses him of being responsible for the company's difficulties. Rather than fire him, the leader just makes his life miserable.

The solution then is to depersonalize the role of Integration. A single person should not do it anymore. It must be systematized, institutionalized in the governance function. So why doesn't the leader do that? "You can never see the picture if you are in it," someone once told me, and I realized that truth applies to me and my Institute, too. Despite my having "written the book" on the subject, I have suffered many of the diseases I describe here. I can do for my clients what I have a great difficulty doing for myself. In the abnormal situation when the leader cannot develop and implement the administrative subsystem and policies that institutionalize integration, an external force has to be involved, whether it is a consultant to whom the leader listens, or a necessary change in leadership.

If a company is caught in a founder's trap, it means that when the founder dies, the company might also die. A founder's trap can develop into a family trap if a family member takes over on the basis of ownership and bloodlines rather than competence and experience. In such situations, the company has failed to separate ownership from management. Management has not adequately depersonalized the leadership role; and rather than selecting a leader based on competence, management permits ownership to define leadership. This nepotistic behavior is poison to many companies. If the new leader is not competent, the competent managers will abandon the ship.

How many generations does it take to destroy a company caught in a family trap? I have posed that question in every country where I have lectured, and I always get the same answer: three. In Mexico, the folk saying is "Father-Merchant; Son-Playboy; Grandson-Beggar." In China, the saying is "From peasant shoes to peasant shoes in three generations." In the United States, the expres- sion is, "From sleeveless to sleeveless in three generations."

One of capitalism's most important innovations was to separate ownership from professional management.

For a company to preserve its hard-won gains, it must make the change from management-by-intuition and management-by-the- seat-of-the-pants-Go-Go management-to a more professional process. That should happen during Adolescence. Organizations that don't make that transition fall into the founder's or family trap.

A major crisis-caused by the mistakes of the arrogant Go- Go-is the catalytic event that introduces the transition to Adolescence. Go-Go companies, characterized by arrogance, uncon- trollably fast growth, centralized decision-making, and a lack of systems, budgets, policies, and structure are primed for crisis.

I have cautioned CEOs of Go-Go companies. I've warned them that they were sitting on the makings of a crisis. All that was missing was the spark. Most CEOs ignore my warnings, pointing to what they perceive as their irrefutable success. "Do you realize that our sales have been growing 180 percent annually? We appeared at the top of Inc. magazine's list of the fastest growing small companies in the United States. Our stock price has climbed from $2 to $12 a share."

Then disaster strikes. The company sells a product of poor qual- ity, and customers sue. Or maybe the company invests in a deal that "goes South" fast. A common textbook crisis is the result of planning-by-wishful-thinking. For arrogant founders, wishing is equivalent to reality. That lack of reason, and that ability to make dreams come true, to prove the doubters wrong, make Go-Gos viable endeavors; but when their companies are successful, their founders grow even bolder. They project exponential growth and spend money to prepare for that growth. Some of that money might cover such fixed costs as computers, office space, plants, and so on. What happens when the new dream doesn't come true?

What if the new markets aren't so welcoming as the first markets they penetrated? Cutting costs means admitting that the dream was not reasonable. It means accepting defeat, even if it is temporary. Unlike the earlier fights against the naysayers, the new difficulties are demonstrably real. Arrogant Go-Go founders nevertheless fight that reality and deny it. The more they fight, the more their companies lose. Only a major crisis can awaken the arrogant.

Problems of Go-Go

Normal	Abnormal
Self confidence	Arrogance
Eagerness	Lack of focus
High energy	Energy too thinly spread
Sales orientation	Sales and premature profit orientation
Seeking what else to do	No boundaries on what to do
Sales beyond the capability to deliver	Selling despite inability to deliver quality
Insufficient cost controls	No cost controls
Insufficiently disciplined staff meetings	No staff meetings
No consistent salary administration	Overpaid employees
Leader surrounded by claqueurs	Leader surrounded by fifth columnists (traitors in hiding)
Increasingly remote leadership	Seagull syndrome
Leadership's inflated expectations	Leadership's paranoia
Unclear communication	No communication
Hope for miracles	Reliance on miracles
Unclear responsibilities	Lack of accountability
Company subject to criticism	Company object of legal action
Internal disintegration	Diminishing mutual trust and respect
Cracking infrastructure	Collapsing infrastructure
Workable people-centric organizational structure	Unworkable people-centric organizational structure
Everything is a priority?	Everything IS a priority!!!!
Founder indispensable	Founder still indispensable, but beyond remedy