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You are here: Home / Other / Balancing Legacy with Change: Lessons from the Founder-CEO Transition at Marshall Industries

December 6, 2024 By Geoff Smart Leave a Comment

Balancing Legacy with Change: Lessons from the Founder-CEO Transition at Marshall Industries

Originally published in Psychology Today – December 6, 2024

  • Immortalize the founder’s values.
  • Clarify and communicate roles.
  • Act boldly to drive change; identify and implement the right people, technology, and branding to build the most competitive and successful company possible.

When Rob Rodin took over as CEO from Gordon Marshall, founder of Marshall Industries, he encountered a challenge familiar to many leaders stepping into a founder’s shoes: balancing respect for the founder’s legacy with the need to drive the company forward in a rapidly changing, competitive market. This challenge is at the heart of effective founder-to-CEO transitions.

The Unique Challenges of Founder-to-CEO Transitions

Gordon Marshall was a towering figure—literally and figuratively—who built Marshall Industries from the ground up. “He was 6’5” with little to no patience,” Rodin recalls, describing the visionary founder as a man who had strong principles, valued frugality, and deeply respected customers. The founder’s influence was rooted in the company’s culture, but to remain competitive amidst changing market demands, global competition, and rising customer expectations, Marshall Industries needed a dramatic transformation with a new leader at its helm.

For Rodin, the transition was unique due to his rapid ascent from sales manager to president and, ultimately, to CEO—a journey that required him to shift from being seen as “a kid” in Gordon Marshall’s eyes to embodying a confident leader. “He saw me as a kid for so many years, and then one day, I was doing his job,” Rodin reflects, acknowledging the delicate task of earning respect while leading with conviction.

This transition wasn’t just symbolic; it demanded material structural changes to shift from Marshall’s hands-on, sales-driven approach to Rodin’s operational focus – necessary to respond to rapidly accelerating customer demand.

Preserving Core Founder Values Amidst Change

Every founder-CEO transition raises the question of what parts of the founder’s vision and values to preserve. For Marshall Industries, keeping the founder’s core principles at the center of the company was key. Rodin recalls, “Gordon Marshall’s persona, values, and culture were timeless… his DNA was that good.” Recent Harvard Business Review research by ghSMART highlights that, similar to Marshall, 86% of founders studied possessed the ability to inspire through passion, charisma, and loyalty – a superpower that fosters a deep sense of duty and followership.

To maintain these values, Rodin codified the founder’s DNA within the company’s culture. He recorded videos of Marshall discussing core values for new hires and created a yearly MVP award symbolized by a three-foot brass eagle, which Marshall loved. To integrate Marshall’s customer service orientation and cost-consciousness, they lined the office with his quotations about customer service and frugality.

These acts honored the founder’s spirit, reinforcing that, while the company’s strategy might evolve, its core values would stay constant. “What didn’t change was the value system. What changed was how we’d compete to win—with new people, IT platforms, tactics, and branding,” Rodin reflected.

Clarifying and Communicating Roles: “A Bright Line Defined”

To ease the transition, Rodin set clear boundaries with Marshall, a step he called “a bright line defined.” Out of habit, employees were used to going directly to Marshall for decisions, which would interfere with the focus, precision, and coordination of “big-time change management. “People had a habit of walking by Marshall’s office – and as he waved them in, suddenly new policy was not being made,” Rodin recalls. To ensure progress, it was necessary to establish clear lines of authority and define a constructive division of labor.

Rodin addressed this directly, explaining to Marshall, “If you want me to be CEO, it’s my job to build the most competitive business possible. I believe it’s my job to carry out your vision. We can’t confuse the company with our priorities and focus.” He continued, “Let’s define, for the staff, a bright line of our responsibilities – for example, you can do anything you want above that line (such as promoting the firm and culture), but you can’t make operational policy that is south of that line without a conversation with me.”

After reaching a mutual understanding, Rodin encouraged Marshall to communicate their arrangement to the team. Together, they held a meeting with one hundred employees at headquarters, where Marshall outlined the new roles. Marshall grew comfortable redirecting employees, saying, “I need to talk and coordinate with Rob” when asked for approval. This reinforced their unified front: “no light between them.” Like 60% of the non-founders analyzed in ghSMART’s founder research, Rodin brought the operational excellence and metrics-driven mindset critical to unlocking the next level of growth – a crucial complement to the founder’s vision.

Managing Pushback and Establishing Credibility

Founder transitions often bring resistance, especially when a new CEO’s approach differs from the founder’s. Rodin faced this challenge head-on. When Rodin proposed the “Free, Perfect, and Now” enterprise framework for a contemporary platform (that incorporated an entirely new IT platform, 24/7 service infrastructure, and next-generation Web initiative), Marshall expressed doubt, labeling it “This Internet B.S.” Rodin challenged this conservativism, moving forward with a new competitive platform despite Marshall’s skepticism—a decision that led Marshall Industries to dramatic, accelerated growth, cost efficiencies, and to becoming the #1 B2B website globally.

Rodin describes these moments as occasional “knock-down, drag-out” confrontations that were essential for establishing his credibility as CEO to lead a radical transformation. Remaining humble and respectful of the founder’s legacy, Rodin stood his ground even when Marshall remarked, “Hey kid, you don’t know what you’re doing.”

This commitment to progress paid off: Marshall Industries grew from $300 million to $3 billion in revenue, expanded from 1 to 30 countries, and shifted from manual to technology-driven processes.

Conclusion: Lessons for Leaders in Founder-CEO Transitions

Rodin’s journey at Marshall Industries is a compelling example of how a leader can respect a founder’s legacy while advancing the company’s operational and strategic goals. The balance he struck allowed the company not only to preserve Marshall’s values but also to expand to new heights. “The celebration of the founder’s journey…those values have to be codified, propped up, and overt,” Rodin reflects, affirming the importance of preserving Marshall’s cultural legacy.

Studies show a direct correlation between employee satisfaction and belief in the organization’s culture and values (Deloitte). For Marshall Industries, the legacy endures: over 600 alumni gather every other year to honor their shared experiences. “Gordon used to say to me, ‘Why do they still care?’ I said, ‘Because of you, your spirit, and what you did for them,’” Rodin shared.

For leaders navigating similar transitions, Rodin’s story offers powerful lessons in clarifying roles, preserving founder-led cultures, and embracing change. Even 70 years after the Marshall Industries’ inception, the founder’s visionary DNA remains timeless.

About ghSMART and Dr. Geoff Smart

ghSMART is a global leadership advisory and analytics firm. It exists to help leaders amplify their positive impact on the world. ghSMART’s Glassdoor ranking is #1 in the Consulting industry.

Dr. Geoff Smart is chairman and founder of ghSMART and is the New York Times bestselling author of Who and Power Score.

About Rob Rodin

Rob Rodin is CEO of RLH Equity Partners and author of Free, Perfect, and Now.

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