The Mulally Effect: How to Achieve a Smooth CEO Succession

Mulally has been signaling for years that Ford veteran Fields would eventually succeed him. He has been steadily expanding Fields’ responsibilities loosening his own grip on the tiller after steering Ford to resounding success through the Great Recession and to a strong industry-leading position today.

There have been distractions—such as Mulally’s flirtation with the CEO spot at Microsoft. But the success process at Ford has reflected well on Mulally, Ford Chairman William C. Ford II, and the company’s dramatic turnaround—especially as the new CEO of crosstown rival General Motors, Mary Barra, struggles in her new role.

Keys to smooth CEO successions, according to a study by executive recruiter Korn/Ferry, include:

• Discussing and planning for the process on an ongoing basis;
• Deliberately staking out a role for the full board in the process;
• Being clear about the sitting CEO’s role in succession;
• Making sure corporate strategy is the ultimate driver; and
• Recognizing that internal candidates typically need three or more years of targeted development to step into the CEO role.

These are principles that Mulally and the board clearly applied at Ford.

For all the messy succession scenarios that have unfolded at big U.S. companies in the last couple of years—including the returns of A.G. Lafley to Procter & Gamble and Myron Ullman to JCPenney, and the bouncing of founder Andrew Mason at Groupon—Ford’s good fortune isn’t singular.

Alongside Ford’s announcement, Yum Brands announced that Greg Creed, head of Taco Bell, would succeed David Novak as CEO of the parent company. Like Ford’s Fields, Creed has a long-term history with the company and has risen through the ranks one promotion at a time.

Other smooth transitions took place at Kroger, Marriott International, AmerisourceBergen, Rubbermaid and MasterCard.

Looking ahead, billionaire Warren Buffett recently assured Berkshire Hathaway shareholders that the company’s board knows who his pick as the next CEO would be. While they don’t have the last word in the decision, CEOs that make their successor wishes clear to the board are more likely to have their choice heavily considered.

Additional reading:

Smooth CEO Successions: Lessons in Passing the Baton

From Mr. Miracle Mulally to polished protégé Fields: Ford’s changing of the guard

Kroger CEO Succession Seen as ‘Smooth’