Recently, we have been hearing about the difference between Founder Mode and Manager Mode in the management of a business. This Mode terminology was coined by
Y Combinator co-founder Paul Graham, according to the September 9, 2024 Wall Street Journal article ”Micromanaging Is Cool Again in Tech” by Tim Higgins, which explains that Y Combinator is an “influential startup incubator in the San Francisco Bay area.” The article goes on to say that Graham “wrote an essay this month gaining a lot of attention in tech circles that pits his “Founder Mode against what he calls Manager Mode.” The article explains that “Graham tries to put his finger on the special relationship that entrepreneurs have with their companies that he argues outsiders just lack.” Quoting Graham, the article says, “There are things that founders can do that managers can’t, and not doing them feels wrong to founders, because it is.” The article points out that not everyone agrees that founders should hand over the management of their business to professional managers.
Based on my 25+ years studying business success and failure patterns, both Manager Mode and Founder Mode play an important role in business success. Manager mode is important because companies need to have methods in place to offer their products and services consistently in the same way, so that customers can repeatedly buy what they are expecting from the company. Founders may be strong innovators, but may not necessarily be strong at implementing the repetitive processes needed to run the company in a consistent way. Managers can often be far better than founders at putting these kinds of important processes in place.
Yet, Founder Mode is also important. Founders often understand the nature of their business so much better than professional managers brought in to improve how the business runs. Founders can often have a far better grasp of the nature of their company’s corporate culture and its strategy than do outside executives recruited for Manager Mode capabilities. Thus, there can be some risk that a Manager Mode executive recruited from outside will make too many changes that are not a good fit for the company.
A classic example of ill-fitting changes by a manager recruited from outside occurred when Penney’s hired an executive who was previously with Apple. Although Penney’s was far beyond Founder Mode when this occurred, what happened there does illustrate how badly things can go when a leader from outside makes ill-fitting changes. Outsiders recruited for Manager Mode expertise can be more prone to making ill-fitting changes than the Founder Mode executive who truly understands the business.
So, what this means is that both Manager Mode and Founder Mode play an important role in the success of a business. Founder Mode can help keep the business’s culture, strategy and innovation on the right track. Yet, Manager Mode can help make sure things get implemented appropriately and consistently. Thus, both are very valuable. However, how this is implemented in any particular company is not necessarily one size fits all. Businesses need to find an effective way of implementing the right mix of the two modes that can work well for their company.
