For CEOs of start/scale-up companies, managing the relationship with their board is one of the most critical—and challenging—aspects of leadership. A healthy, productive CEO-board relationship can drive strategic success and growth. Conversely, misalignment, hidden conflicts, lack of trust or power struggles can derail even the best-laid plans.
It’s common for startup founders to transition out of the CEO role as their companies grow, often due to the evolving needs of the business and the board’s assessment of leadership requirements. Research indicates that by the time startups reach three years of age, 50% of founders are no longer serving as CEO, and this figure drops to fewer than 25% by the time of an initial public offering (IPO) (Uluventures, 2019). In some cases, venture capital firms have reported high rates of founder-CEO turnover; for instance, Sequoia Capital noted that 45% of their founding CEOs were replaced within 18 months. ( Openviewpartners.com, 2019). The primary reasons for these transitions include negative surprises in cash management, failure to recruit top talent, and consistently missing milestones.
What makes this relationship so complex? To think that it is only down to missed milestones would be somewhat simplistic. We can sense that it covers only half the story, but it has not really been possible to consider the other side of the coin, the subtle realm of systemic dynamics, or what is often described as “what’s really going on”.
It’s the interplay of two distinct layers: the functional and the systemic. While most CEOs are well-versed in the functional aspects—like governance processes, reporting structures, product strategies —many struggle with the systemic dynamics that influence decision-making, power, and influence.
The Functional Layer: Structure and Accountability
The functional layer of the CEO-board relationship is about the explicit roles, responsibilities, and processes that govern interactions. It includes Governance and Oversight ( The board oversees strategy, risk, and performance, while the CEO is responsible for operational execution). Decision-Making Processes (Formal approval mechanisms, voting rights, and meeting protocols.) Performance Metrics and Reporting (KPIs, financial performance reviews, and strategic updates.)
These functional aspects provide structure, clarity, and accountability. They are explicit and measurable, designed to create a balanced power dynamic between the board’s oversight role and the CEO’s leadership role. However, even with well-defined functional processes, CEOs often face challenges such as misalignment on priorities, resistance to change, or political manoeuverring and power plays. These challenges are rarely about functional gaps. Instead, they stem from systemic dynamics that shape behaviors, decisions, and influence and are not easily visible.
The Systemic Layer: Power, Influence, and Hidden Dynamics
The systemic layer involves the invisible forces and relational dynamics that shape the CEO-board relationship. These forces include:
- Power Dynamics and Influence: Unspoken hierarchies, alliances, and political positioning. For example, a board member with historical ties to the founder may wield more influence than their role suggests.
- Emotional and Relational Dynamics: Trust, loyalty, and unresolved tensions These emotional undercurrents shape how open or guarded communication is, influencing strategic decision-making.
- Organisational Culture: Past leadership decisions, legacy issues, and cultural norms that impact the present. A board that previously experienced a leadership crisis may exhibit heightened risk aversion.
- Interdependencies and Patterns: Decisions in one area impact others, often in complex and unpredictable ways. For instance, a strategic pivot led by the CEO may causeresistance disguised as “strategic caution.”
These systemic dynamics are implicit and intangible but have a profound influence on the board-CEO relationship. They shape perceptions, decisions, and even the power balance in the boardroom.
Why CEOs Need to Master Both Layers: High-performing CEOs understand that success doesn’t come from mastering functional governance alone. They need to navigate the systemic dynamics that influence board relations, strategic alignment, and leadership effectiveness.
- Strategic Decisions are Influenced by Systemic Dynamics: A well-crafted strategic plan can be derailed by hidden resistance or power plays. For instance, if a board member feels their influence is threatened by a strategic shift, they may oppose it for reasons unrelated to the strategy’s merit.
- Board Relations are Highly Systemic:While board roles are functionally defined, power dynamics and political alliances are systemic. Understanding these dynamics enables CEOs to build influence, anticipate resistance, and engage stakeholders effectively.
- Change Initiatives Require Systemic Insight: Change isn’t just about new strategies or structures. It involves addressing fears, conflicts, and loyalty tensions that drive resistance. CEOs who understand these systemic drivers can lead change with empathy and influence.
Systemic Business Constellations: A New, Efficient Way to Solutions
Systemic Business Constellations offer a brief, cost effective and efficient solution oriented way for CEOs to understand and navigate the interplay between functional and systemic layers in board relationships. Here’s why:
- Insights into Dynamics: Systemic constellations make influences and power dynamics in a simple 1.5-2 hr process. visible. Not unlike a chess board, using spatial arrangements and representative positioning, they bring to light misalignment, tensions or relational blockages that impact decision-making.
- Gain Strategic Insights and Clarity: Constellations provide a helicopter view of the board-CEO relationship, like a map of interdependencies. This enables CEOs to see the bigger picture and ripple effects of dynamics.
- Resolve Conflicts and Build Influence: By identifying previously unknown conflicts, blocks or tensions, systemic constellations enable authentic CEOs to build trust, navigate political landscapes, and foster strategic alignment.
In conclusion, it is crucial to develop systemic awareness for strategic success: To navigate the complexities of the CEO-board relationship, CEOs will benefit from going beyond functional competencies. They need to understand and influence the systemic dynamics that shape power, influence, and strategic decision-making just as much as strategy, numbers and process.