Handling the Transition When the Founder Leaves

Perhaps no one in corporate America is more closely identified with the company they founded than Steve Jobs, the chief executive officer of technology giant Apple. So when he emerged from his medical leave — he's been suffering from health problems following his 2004 surgery for pancreatic cancer — to unveil the latest iteration of Apple's computer tablet last week, analysts and investors breathed a sigh of relief.

In January, Jobs had turned over day-to-day operations at Apple to Tim Cook, the chief operating officer, but many still seem to believe it is Jobs' vision and passion that have made the company a global icon. Despite Jobs' recurring health issues over the past seven years, the company has apparently not made a convincing case that it can thrive without him.

Among the major food retailers, perhaps only one company founder, Whole Foods Market Co-CEO John Mackey, is as closely identified with their company as Jobs is with Apple. Mackey, who has suffered periodically from (self-inflicted) foot-in-mouth disease, made a smart move last year in appointing Walter Robb as Whole Foods' co-CEO, and Whole Foods has long emphasized the management-by-committee approach that its top executives take in running one of food retailing's most iconic banners.

That lesson apparently wasn't lost on its much smaller rival, Sunflower Farmers Market, whose founder and CEO, Mike Gilliland, was forced to step down last month following his arrest on allegations that he agreed to pay an underage girl for sex. For some time, Gilliland, who also founded Wild Oats Market, had been grooming Chris Sherrell, the former president who was named CEO following Gilliland's departure, to be the company's top's executive.

“Over the last couple of years, Mike has been priming me to take over,” Sherrell told SN. “Obviously this change happened quicker than anybody expected, but there really won't be disruptions to the business, since I was pretty much making [many of the key] decisions anyway.”

The change comes at a critical time for Boulder, Colo.-based Sunflower, which is in the midst of an aggressive expansion effort. Complicating matters, two of its biggest rivals in the farmers' market niche — Henry's and Sprouts — last month agreed to merge.

Within a couple of days of Gilliland's arrest, Sunflower issued a public statement, seeking to assuage its investors, suppliers and the public that it was “business as usual” and that Sherrell, who has been with Sunflower since its founding in 2002, was assuming the CEO post. The company also communicated the message internally to its staff.

“I have been unbelievably surprised and impressed with the way the team has come together and supported me and the company,” Sherrell said. “They realize that the company is bigger than just one person, and they work very hard toward one common goal, and they are not going to let one individual derail that.”

Sunflower should be applauded for its handling of the incident. If its swift and thorough reactions are an indicator of how well the company can face up to the challenges ahead, it appears as though it is on the right track.