Most directors would likely agree that leadership succession is difficult to execute smoothly. Transitions from one CEO to the next are often ripe with drama. And when the process goes awry, the damage can be significant for everyone involved. News around recent or looming leadership transitions at iconic companies such as Apple and Disney highlight the energy generated when leadership changes become a topic for discussion and analysis by the man on the street and newsmakers, and the process itself is no less consequential for smaller companies.
Over the last dozen years or so, succession planning processes have continued to receive higher levels of attention by boards and other stakeholders. This is evident, for example, in the increasing attention to the topic in best sellers on how to be an effective board member, as well as in the increased reporting on apparent board strategies for succession. This attention is, for the most part, good news. One troubling aspect of most succession planning processes remains: the tendency for boards to be too focused on the past and insufficiently focused on the future when it comes to both the development and vetting of serious candidates.
The focus on the past is understandable. The word “succession” implies that the past is an important referent. Succession is what comes “after.” When a company has been doing poorly, boards are anxious to find someone “different;” someone who does not have the perceived weaknesses in personality, skill, ability, and/or experience of the incumbent. When a company has been doing well, there is a natural, hopeful tendency to find another just like the incumbent on a shelf. When a clone isn’t available it isn’t difficult to hear the gnashing of teeth—just look at how pundits panicked about the thought of Tim Cook leading Apple.
The problem with this focus on the past is that it is a distraction from what really matters—the condition of the road ahead. The past keys to CEO success may not be the future keys. The challenges the company will face may not be similar. The strategies that provide advantage may not be similar. The best way to get succession right is by understanding what lies ahead and is growing larger as one looks through the windshield, not that which is growing smaller in the rear view mirror.
Not enough boards spend sufficient time envisioning what the future holds and, as a result, what the key competencies are for the next leader. This is critical because that understanding of the future needs to shape how internal candidates are assessed and developed. It also determines where and whom a board looks to for viable external candidates. And it is a tiring process because the key question is always ‘”what is around the next curve?”—that is, the necessary capabilities for the next leader are likely an evolving set. This is no doubt particularly true in the current economic malaise seizing the globe.
A second critical characteristic of successful succession planning is distinguishing between the event and the process. Boards have long viewed succession as an event—and to a great degree it is. But that event cannot be pulled off either gracefully or effectively if the process of understanding shifting company needs, identifying and growing internal candidates, and continually scanning the external market for candidates has not been continually running in the background.
To get it right—to have a succession plan that by its own nature doesn’t doom its execution—boards must understand the relatively small role the past has in determining what the next leader looks like. That energy is better spent on understanding what will be demanded by the road ahead.
Stephen Miles is a vice chairman of Heidrick & Struggles. He runs Leadership Advisory Services within the Leadership Consulting Practice and oversees the firm’s worldwide executive assessment and succession planning activities. He is also a key member of Heidrick & Struggles’ Chief Executive Officer & Board of Directors Practice.