Do founders insure against disruption?

Screen Shot 2016-03-08 at 8.42.21 AMI listened to a very interesting a16z podcast on disruption that involved a conversation with Clay Christensen and Marc Andreessen.

They cover lots of topics but the part that interested me was when Andreessen was talking about what he perceived to be a fast disruptive cycle in Silicon Valley. (I am not so sure about that — the first decade of a new entrepreneurial firm is a highly competitive one and so it may not be disruption but just competition.) Andreessen then put forward the thesis that firms that can survive disruption were those whose founder was either running or heavily involved in the business.

As an example, he considered Steve Jobs. What a founder like Jobs could do was (a) remember when the firm started and it was worth nothing so that the notion that it could be worth nothing again was real to him and (b) be able to propose things that seemed like heresy to deal with it but because he was the founder he could convince the rest of the organisation to rally around in a way that professional CEOs can’t do.

This is an interesting hypothesis and I haven’t seen it explored in the academic literature (and would appreciate anything I may have overlooked) except for the literature on family run firms. The hypothesis is that founder involved firms will be longer-lived than others. I think the mechanism that drives this is a response to supply-side disruption (as discussed in The Disruption Dilemma and also in this HBR piece). The idea is that to respond to architectural innovations that reconfigure the way product development and businesses are organised, you need to have deep knowledge of how all the parts of the organisation fit together. Who better to have that knowledge than the founder who put the organisation together in the first place?

That said, I suspect it isn’t a fully robust hypothesis but a tendency. When the founder CEO returned for a period of time to Yahoo! that didn’t seem to help. And now we are seeing an experiment being played out at Twitter. Nonetheless, it was an interesting thought on Andreessen’s part showing us again that disruption is not inevitable and can be managed.

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