Leaving a Legacy: Embedding Success—and Succession—In Your Organization
How difficult is it for a company to remain on the Fortune 500 list? Jim Collins, of Built to Last fame, wrote in 2008 that since the list’s inception, nearly 2,000 companies have appeared on it—and only 71 companies from the original 1955 list were still running strong. The Kauffman Foundation, in a recent report, noted that after seeing relatively low turnover in the 1960s and 70s, Fortune 500 turnover accelerated to new highs in the 80s and 90s. And Peter Senge of MIT’s Sloan School of Management writes that the average lifespan of a Fortune 500 company is only about 30 years. With such an uneven record, any successful CEO preparing to depart from his or her company should rightly be concerned about the legacy he or she is leaving behind—but that legacy is about far more than the CEO.
May 2 2013 by Randy Ottinger
Many times the fate of companies rests on the capabilities of its CEO: as the CEO goes, so goes the company. And CEOs, as they prepare to leave, do their best to guard against this. They develop a well-thought out succession plan, they work to find the right successor whose capabilities best match the company’s needs, and they otherwise do all the “right things” to leave a strong senior leadership team in their wake.
Unfortunately, this is only table stakes, and it is certainly not sufficient to keep a company ahead of eager competitors year after year. Just ask Starbucks CEO Howard Schultz, who grew a seemingly model company from startup to global powerhouse, but then almost lost it. Feeling the company was on solid footing, he stepped out of the CEO role in 2000. Slowly, the foundation of Starbucks began to erode. The culture that resulted in the “third place” to hang out other than work or home began to lose its luster. Making a great cup of coffee “every time” became “most of the time”.
Howard Schultz, seeing that all was not right, returned to Starbucks in 2008 and over a period of time restored the culture and brand of Starbucks. The company is now firing on all cylinders and the stock price is near an all-time high. But what if Mr. Schultz had not returned? More importantly, how can any CEO feel that when they step out, their company will remain vibrant for years to come and will thrive through multiple changes in leadership?
The answer lies not in the management systems, or simply in the individual at the head of the organization, but in the very DNA of the company. No company exists in a static environment, and teams across the board face challenges and hurdles with any CEO transition. More importantly, maintaining the consistency of your brand, product and value proposition lies not in the consistency of day-to-day management, but in your employees’ ability to adapt quickly to changing circumstances and customer demand. In other words, the key to leaving a leadership legacy is not merely planning for your succession, but embedding innovation in your organization and giving your employees and senior leaders the tools they need to keep things moving long after you’re gone.
One company that has succeeded at this extraordinarily is 3M, which is one of the few that has maintained a presence on the Fortune 500 since the ranking was first established in 1955. Despite a number of CEO transitions over the years, the company has managed to maintain its brand promise while still retaining the entrepreneurial spirit that spurred its founding in the early 20th century. Despite many changes in leadership, the company has consistently produced groundbreaking products, from the soles of Neil Armstrong’s moon boots to data storage solutions. How did they do it? Since the 1940s, the company has empowered employees to spend up to 15 percent of their time pursuing their own creative initiatives (indeed, it was during this “15 percent time” that Art Fry hatched his idea for Post-Its). Over the years, 3M has instituted a number of policies that give employees permission to innovate and operate outside the traditional hierarchy. Its organizational culture is built upon the foundation of creativity.