It’s been quite the couple of weeks in US politics. Momentous events in the space of just a few days. Based on how much has happened in such a short time, it may be quite a long ride to November! I thought this week I would be “opportunistically topical” and talk about succession in the business context.
The first thing to say is you will experience the pros and cons of succession many times in your career. Tenures are typically quite short. Average tenure of CEOs is about 7 years, but the median is less than 5, reflecting a minority of long service CEOs and the rest lasting about one “presidential term”. CMO and CFO tenure is shorter still, often as little as 2-3 years. So, in a 30–40-year career you are going to see a lot of succession, much of it churn. This remains one of the critical reasons that founders often win. They enjoy longevity of tenure, strategy and focus which allows sustained strengthening of execution because of that stability. It’s also why the long tenure CEOs often have better track records, even if they experience some inevitable bumps along the way. The corporate model often eschews stability. My belief is that’s because many businesses don’t have multi-year strategic vision and roadmaps, so the price of change is misunderstood. The long-term is often reduced to thematic missions and the business is run-in short-term cycles defined by a cost saving transformation or a particular project like a piece of M&A or a major innovation. Hence once again, and apologies for repetition, the absence of strategy puts everything in play, including leadership churn. Inevitably, it follows that succession will be opportunistic as there is no roadmap to recruit against. In fact, often the succession plan is designed to delegate the design of a roadmap to the new incumbent, with all the uncertainty that will likely bring, especially if they design a solution purely for the next short-term cycle.
Well organized succession has various dimensions. Firstly, optionality. If you have a long-term plan and leadership, you will not know when succession will happen and will be able to look at people “ready now” and focus on some high-fliers “getting-ready”. As circumstances and your business evolve, you will be glad for this optionality. Second, I continue to believe far too much emphasis is placed on CEOs only. The best organizations will have long-term plans and long-term management teams with all the requisite skills to implement the strategy. Balance is needed in functional skills, experience, tenure and contribution to the team. Building the right team and seeing it prosper at full potential is a multi-year task. Prioritize continuity so that the team maintains momentum and adapts as the strategy demands. Finally, disruptive succession is a high risk, high reward play. When the current strategy and team has run out of ideas, or often just energy and vision, a more radical external solution can be sought. When this is the case, the challenge is to be extremely thoughtful and focus the disruption. Avoid “blank check” hiring where you look for someone to mix things up but without any constraints or continuity. This rarely works efficiently, nor is it necessary. When you do need to go outside, filter on leaders with a clear playbook you can understand in detail. Ensure they have followership, which means they can bring in key lieutenants to activate that playbook. Partner them with adaptable internal leaders who can embrace a new approach but also provide continuity and context in a trustworthy way.
Succession is something to be well prepared for, but to act on only as much as strictly necessary. Learn from founders that know the power of building something. Embrace multi-year strategy and long-term leadership groups that can turn ideas into much bigger reality. Give them time and tenure when they have a real roadmap to pursue.