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Making Succession Succeed

When determining who the next CEO of your company should be, it is well to listen to the sage advice …

When determining who the next CEO of your company should be, it is well to listen to the sage advice of the great hockey player, Wayne Gretzky: “Pass the puck, not to where the player is, but to where he is going to be.”

If a company has been enjoying a financially joyful period, there is a tendency of many boards-and almost all CEOs-to clone the incumbent CEO. After all, he was the guy who made the right acquisition, turned the company around, took us global, downsized us effectively-whatever it was that created the present and admirable price/earnings ratio enjoyed by the company. To keep the ship sailing along the same course should naturally require the same kind of skipper. So says conventional wisdom.

In these days of discontinuity and rapid change, such reckoning could be dead wrong. Let’s look at a few “for instances.”

If your CEO has been a whiz at making acquisitions, and you have several new businesses in the fold, maybe what you need as the new CEO is an operations specialist who can settle things down, get coordinated policies and procedures put into place, and develop a little synergy. Maybe he will even cast a jaundiced eye at some of the new additions and reconsider their continuing value.

If your CEO was a turnaround artist who handled the cash crunch crisis and the downsizing in a tough, efficient way, maybe what you need now in the next CEO is a builder who can find new products and new markets and get the company growing again.

If your CEO took you global and you now find yourself with a number of international enterprises that don’t quite communicate or coordinate, maybe you need as the new CEO someone with solid, hands-on experience in converting such a mish-mash into a smooth working global organization.

If your CEO was an old-fashioned, hell-for-leather driver who got the job done without frills and devices, maybe you need a CEO who has gone through the experience of installing an up-to-date information technology system that makes things work faster and costs less. And perhaps he will empower the younger executives to take on more authority and participate more often in decision making.

These considerations are all in addition to assessing the standard traits that a CEO should have, such as leadership, cultural fit, technical competence, industry savvy, board compatibility, past record of accomplishments, etc. What we are talking about in these considerations are managerial style, implementation of the vision, and modus operandi.

I get the feeling that, increasingly, companies are finding that their internal management development programs have trained people for yesterday’s jobs more than for tomorrow’s. As such, they are increasingly forced into considering the recruitment of a new CEO from outside the company.

This might not be too bad an idea. It makes the board think about the future job description and ponder the type f individual they really ant and need to do he job at hand-and o think about what he job at hand really is going to be all about. A few chats with a good recruiter can often broaden the scope of succession thinking. Because all of this takes time, it is just possible that a few more boards will get around to their vital management succession chore a little sooner than they otherwise might have.

We are seeing entirely too many cases where the management succession task has been bungled. AT&T and Waste Management come to mind. Why not do it right the first time? Why not think ahead? Does your company honestly know what kind of experience and talents your next CEO should have? Has your board really thought about these things and discussed them seriously? Do you know if you have anybody who fits the new thinking in the company now? If you are answering in the negative to these presumptuous questions, perhaps you should get your Management Succession Committee cranked up.

Formerly the CEO of F. Schaefer (19721977), Robert W Lear is chairman of CE’s advisory board. He also teaches at Columbia Business School, where he is an executive-in-residence. He is an independent general partner of Equitable Capital Partners and holds directorships with Scudder Institutional Funds; Korea Fund; and Welsh, Carson, Anderson, Stowe Venture Capital Co.; and is a partner of Lear, Yavitz & Associates.

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