When succession can go wrong

THE final test of greatness in a CEO is how well he chooses a successor and whether he can step aside and let his successor run the company…a powerful quote coming from management guru Prof. Peter Drucker.

There have been issues about successors fighting and bringing to court their own parents. Society has despised these successors as ungrateful persons – biting the hands of the person/s who have fed and raised them up to where they are now. While there may be some truth to this, let’s try to understand the succession dilemma.

The succession dilemma is a seemingly intractable set of circumstances that has entangled leaders for as long as there have been organizations. For the would-be leader, succession is a time of great excitement and promise, the culmination of a long and arduous climb to the top. For the incumbent leader, succession is a time to confront the passage of time, the end of a career, and even mortality itself. It is no wonder that relationships between successors and those they hope to replace are so fraught with emotion.

In a Harvard Business Review article written by Ciampa and Watkins, “the dynamics of the successor’s dilemma can begin long before he sets foot in the new office or right after he assumes office. The chief executive whom he is supposed to succeed and the board make it clear that great things are expected of the designated successor—and fast.

And so the new successor plunges in to learn about products, markets, and internal processes. In the midst of this intense learning period, the successor must try to build a relationship with the person he hopes to replace, a process that is riddled with pitfalls. Initially, he may have to avoid challenging the CEO even when he disagrees with him. That reticence is understandable, but it can plant the seeds of trouble.

Saving a successor son

Take the case of a son in his mid 30’s I was engaged to mentor and designated as successor in a large manufacturing company with an annual turnover of $200 million. He was expected to take over in five years when his father, the chairman, retires. The chairman who started the company 38 years ago, had helped shape the industry and founded the industry association. He wasn’t an arrogant person, but the chairman’s reputation for hard work plus his sartorial taste made him an intimidating figure.

The company was in good shape, but it needed to improve the efficiency of its business operations to keep costs down. The new successor quickly spotted ways to do so, but he didn’t know how to tell his father, the chairman, without sounding disrespectful. In fact, he kept his opinions to himself and publicly supported the chairman’s status quo approach to the business. Fortunately, during the course of our regular interactions I discovered the bind the successor son was in and gradually helped him resolve it. Without my monthly fly-in to listen and coach the successor son, a conflict would have escalated leading to the business being compromised or the son breaking down. Much more often, the successor’s silence can lead him to frustration and anger.

The founder’s dilemma

If the successor son is facing new and daunting challenges, so too is the founder, who typically passes through three distinct phases after a successor is designated. In the first phase, he feels pleased with having “done his duty” by installing a replacement.

But in the same light, when the successor starts shaking things up and initiates changes in the organizational ecosystem and, more often than not, touches or encroaches on the culture that the father painstakingly built, the founder enters the second phase—growing discomfort and gradual resistance. While he may be happy to have found a successor to whom he can entrust the company, he is confronted with the reality of handing over important decisions to someone who can certainly run the organization well enough but who has a different style and different priorities. The founder must face up to the fact that his successor will run the company differently—and that just feels wrong. Part 2 will follow.

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