A change in top leadership is a most precarious time for any organization, including major companies and countries. The risks are portrayed graphically in The Pillars of the Earth, a classic historical novel by Ken Follett, best known for the fictional thrillers he has written over the years. I highly commend it to Boards of Directors as a wake up call on the subject of CEO succession planning.
When a CEO leaves and a new CEO takes over, many things can change for either for the better or otherwise. The risks can be particularly high when an iconic figure steps down and the successor, often more of a professional manager, can’t perpetuate the internal brand, resulting in lower employee engagement, less innovation and diminished market leadership http://blogs.hbr.org/cs/2013/08/if_your_leader_departs_preserve_the_companys_story_first.html. This HBR blog piece stresses the importance of writing down and keeping faith in the story that the iconic leader told — preserving the cultural glue.
CEO succession planning is actually so important that the Board should capture more than just the story. It should capture what is driving success and where there are cultural or functional shortcomings. It should develop and annually revise a competency-based profile for a successor CEO and should track possible internal and external candidates. It should also institutionalize the story both within systems and processes and most importantly, by grooming leaders who can tell the story and write future chapters. A great example of preserving the story in action appears in a recent HBR blog, the third in a series on innovation. It describes the many impressive steps that 3M has taken to successfully institutionalize innovation.
Attempts at cloning the iconic figure are a mistake. Rather, institutionalize the strengths of the CEO while, at the same time, planning for the next generation of leadership which will need to look different. The world of work and the face of success are constantly changing. Take for example the success stories of today where team performance and new project-based ways of work by knowledge workers are the biggest differentiators http://stangercarlson.com/accelerated-development-of-leaders/. Old leadership could not have predicted these changes and probably would have struggled to adapt to them.