A “STAR” IN THE POSITION OF CEO IS NOT THE BEST SOLUTION

How to entrust your business to reliable hands and maintain strategic vision? How do you transfer business management to reliable hands and maintain the owner's strategic thinking? My experience shows that choosing the right CEO requires patience, trust, and readiness for change. Here are five conclusions on how to find a replacement.

I resonate with the idea, that a business owner's "shelf life" is about 25 years. After that owners often become less effective as managers. To maintain the ability to think strategically and objectively evaluate a company’s situation, market position and prospects, an owner must eventually hand over management to someone else.

Speaking from my personal experience—it’s incredibly difficult. Not all entrepreneurs are ready to entrust the management of their life's work to another person.

I have built my company from scratch and managed it for 20 years. At a certain point, though, I realized I was becoming less effective. To avoid making critical mistakes it was time to step away from daily operations.

The process of preparing the company for my exit took three years. It was the time, needed to structure the organization, find a CEO and transfer responsibilities.

The journey wasn’t perfect. Not everything worked from the first attempt and I have made many mistakes. But eventually it worked out—I stepped away from management just a couple of months before COVID-19 hit. Even during the full-scale war, when I felt tempted, I didn’t return to operations. Without me the business has continued to thrive.

How to find and prepare the right CEO—someone ,who will manage more effectively than the owner and, if needed, lead the company through a crisis?

Here are five lessons from my experience.

Start your search within the company, not outside

I don’t believe in the effectiveness of external hires—those “invited Vikings” who held high positions in other companies. While they may have delivered excellent results elsewhere, their experience often proves less useful in a new environment. Every business has its own unique characteristics.

In large international corporations everything is standardized, with processes, refined over decades. In our case the story is entirely different. Each company has its own rules, traditions, quirks, and, of course, “skeletons in the closet.”This applies to both- processes and corporate culture. A person, accustomed to working within one system, faces challenges when adapting to another.

Speed is not on your side

As an owner you’ll need to be patient and spend one to two years observing employees: how they perform in their daily work, the results they deliver, their attention to detail and their sense of responsibility.

The right choice isn’t always obvious, so don’t limit yourself to deputy directors or department heads. For instance, my CEO started as a junior manager in the company, later became head of marketing, and eventually took on the role of marketing director.

Initiallyyou might be drawn to the "stars" in your team—they exist in every organization. However, a "star" is not the best choice for the CEO position. Stars tend to burn out quickly, often act on emotion and their overconfidence can lead to critical mistakes. A suitable candidate should be composed, balanced and responsible—in short, the right person.

If there’s only one candidate, the decision is straightforward. But what if there are several? Conduct a "management duel."

This is a simple, yet effective tool: present the candidates with a strategic task and ask each to propose a solution. By comparing their approaches, you’ll quickly determine who is better suited for the CEO role.

However, there’s a caveat: the losing candidate may feel demotivated or harbor resentment, which could jeopardize their future in the company. Plan ahead for this possibility by deciding how to integrate the unsuccessful candidate into the new structure or discussing their prospects to avoid conflicts.

Transitioning leadership takes about a year

Immediately after appointing a new CEO, a formal handover of responsibilities occurs. However, in practice, it takes time to truly "live" with the new leader: to understand their worldview, thinking style, and work approach. In my case, this process took a year.

By the end of this transition, all processes should be clearly documented, and employees should understand who is responsible for what and whom to approach for specific issues.

Some employees may resist changes or question the authority of the new CEO. In such cases, the owner must persistently, yet gently, uphold the new order.

CEO – responsibility, owner – strategic observer

The owner must demonstrate to the new leader ,that they are ready to support their decisions, even if they are controversial. I always told my CEO: "I will accept any decision you make, even if I dislike it. It’s your right, and I respect that." If an owner appoints a CEO but then undermines them, it destabilizes the entire management system.

No matter how much an owner distances themselves from operational processes, it’s crucial to establish "red flags"—signals indicating the need for intervention. Every business exists for two main goals: profit and growth. Everything else serves these purposes.

Typically, a strategic session is held once a year. The team presents their plans, the owner approves them, and then everyone works to achieve the objectives. Throughout the year, the owner monitors key metrics and compares them with the approved plan. If results deviate from the set course, a careful intervention may be necessary.

The owner and CEO should function as one team, built on mutual understanding, support, and the right to make mistakes.

Without trust it’s better not to start

I intentionally saved this point for last because what comes at the end is often remembered most—it’s fundamental.

If you cannot trust the person taking the helm of your ship, it’s better to remain in operational management and continue overseeing all processes.

Like you, I imagine, I’ve had painful experience in partnerships. I’ve parted ways with partners twice. After these tough episodes one might think I would stop trusting people. But no, I continue to trust, because living in a state of constant paranoia makes it impossible to build something truly great.

Sharing unique experience

I should clarify,that this article is not about corporate practices in large international companies, as described in MBA textbooks. It reflects the experiences of first-generation Ukrainian businesses, the group I’m fortunate to be part of.

This is a unique experience as we have built our companies under conditions Western authors of management books couldn’t imagine even in their worst nightmares. I firmly believe we must share this knowledge—both among ourselves and with the next generation of Ukrainian entrepreneurs.

Some employees may resist changes or question the new CEO’s authority. In such situations the owner must remain firm yet tactful in defending the new order.

The CEO leads, the owner observes strategically

An owner must demonstrate to the new CEO that they are willing to support their decisions, even if those decisions are controversial. I always told my CEO: “I will accept any decision you make, even if I don’t like it. It’s your right, and I respect it.”

If an owner undermines the CEO after appointing them, it destabilizes the entire management system.

Even if the owner distances themselves from operational processes, it’s essential to identify “red flags”—signals that indicate the need for intervention. A business exists to achieve two core goals: profit and growth. Everything else is secondary.

A strategic session is usually held annually. The team presents their plans, the owner approves them and everyone works toward achieving these objectives. Throughout the year the owner monitors key performance indicators and compares them against the approved plan. If results deviate significantly from the target, careful intervention may be necessary.

Ultimately, the owner and CEO must operate as a unified team, built on mutual understanding, support, and the freedom to make mistakes.

I’ve intentionally left this point for last because it’s the most important takeaway. If you can’t trust the person taking the helm of your company, it’s better to remain in operational management and continue overseeing everything yourself.

Like many of you, I’ve had painful experiences in partnerships. I’ve parted ways with partners twice. After these difficult episodes, one might expect me to lose trust in people altogether. Yet, I’ve chosen to keep trusting. Living in a state of constant paranoia makes it impossible to build something truly great.

It’s worth emphasizing that this article isn’t about corporate practices from large multinational companies, described in MBA textbooks. I’m sharing the firsthand experience of a first-generation Ukrainian entrepreneur—a unique perspective shaped by building businesses in conditions that Western management authors couldn’t imagine, even in their worst nightmares.

I firmly believe this experience is valuable and should be shared—not just among ourselves, but also with the next generation of Ukrainian entrepreneurs.