group of people huddling up

Losing a Founding Member of Your New Venture Doesn’t Have to Be a Bad Thing  

By Sarah Steimer

Founding leaders of successful venture teams often bring the inspiration, ideas, and resources necessary to spur innovation within the company. Turnover is, however, a fact of business, and these individuals and other members of the firm don’t always stay with the venture. But with the right planning, the creative rearrangement that comes with these changes have a net positive effect, according to a study published in Strategic Entrepreneurship Journal. 

And perhaps an even bigger highlight of the research: You don’t need to wait for a departure to take advantage of this potential for creative recombination. For example, the study’s co-author Brian C. Fox of Bentley University, points to OpenAI and how it benefited from some strategic reshuffling.  

“While I only have a rough sketch of the timeline, OpenAI underwent a pretty big transition in the spring of 2022 and released ChatGPT soon afterwards,” Fox says, referring to the rearrangement that included the promotion of Mira Murati to CTO in May 2022. By identifying the talent that already existed on the team, OpenAI was able to stimulate the type of creativity that led to an enhancement and repackaging of its earlier products in a novel way — by the end of that same year. Just this month, OpenAI formed a dedicated team to manage the risks of superintelligent AI, once again shifting existing team members into the roles of leading the effort. (It’s also worth noting that one of its co-founders, Elon Musk, departed in 2018.) 

Fox, along with Zeki Simsek of Clemson University, and Ciaran Heavey of University College Dublin, took their insights by studying 440 new ventures over eight years, tracking the team members’ comings and goings.  

Initially, they were curious about whether those involved in a venture’s founding would have a lasting influence on the firm’s ability to be innovative into the future. They found that if the company stays static, it has the ability to leverage insights of experienced founding team members. Should those individuals leave, however, they found that there is actually an unexpected side benefit to that loss: A venture can use the team processes that accompany membership fluidity to stimulate creativity and spur innovation. 

“If an innovator leaves, you get the detriment of losing that person, but also the benefit of creative recombination that comes with having the team turn over,” Fox says. “So even when that individual departs, we do see a positive net effect.” 

Fox and his co-authors describe three ways that new ventures undergoing member change (which includes gains, losses, and turnover within the founding team) can boost innovation. First, they can add new team members who have relevant experiences. Second, they can take advantage of the opportunity to pause and reflect on team processes when membership changes occur. And lastly, the authors suggest trying to mitigate the disruptive effects of change by using best practices to smooth transitions. 

Fox emphasizes the positive effects of having reflective episodes, or periods during which companies can carefully consider what competencies it already has within the team and how they can be gainfully put into conversation with one another. He also notes that these episodes can occur without waiting for a major disruption like a turnover: “You might be able to do it on a smaller scale by having retreats or perhaps getting rotations where you’re shuffling the composition of the team to get that fresh perspective.” 

The Strategic Entrepreneurship Journal, published by the Strategic Management Society, attracts the most influential managerially oriented entrepreneurship research in the world. 

Based upon: 

Fox, B. C., Simsek, Z., & Heavey, C. (2023). Venture team membership dynamics and new venture innovation. Strategic Entrepreneurship Journal.