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Planning a smooth succession

Posted by: Diane Brady on November 15, 2007

Succession is notoriously botched. Now comes Joseph Bower with a new book (The CEO Within) about the importance of nurturing “Inside Outsiders” in succession planning. What kind of creature is that? As Bower puts it: “People from inside the company who somehow have maintained enough detachment from the local traditions, ideology and shibboleths that they have retained the objectivity of an outsider.”

Easier said than done, of course. It starts with recruiting. Bower suggests casting aside over-rated charisma in favor of qualities like originality, perserverence and integrity. Then you resist the temptation to let them simply rise in their function. They have to be moved around enough to get exposure and yet stay long enough to be held accountable (five years, at least).

What interests me are the various philosophies in managing a succession: handing over the baton (the current strategy at United Technologies Corp., which Bower describes as “rare, risky and difficult”) or the horse race (the method of choice at GE, which the author casts as “tough, divisive and chancy”). He doesn’t always have firm answers but it’s good food for thought.

Reader Comments

John A. Byrne

November 17, 2007 1:16 AM

Consider three of the most recent high-profile successions: Citicorp, Merrill Lynch, and Adobe. Only in one case--the latter--was there an well-prepared internal candidate ready to take on the job. The boards of Citi and Merrill completely failed to develop a roster of qualified insiders who could step into the role. Unfortunately, far too many boards seem unwilling to demand that their sitting CEOs nurture and cultivate a variety of execs to takeover.

Wally Bock

November 19, 2007 4:03 PM

Successions would certainly be more successful if it all started with recruitment, but it doesn't. More often it starts with the resignation of or need to fire the person in the top job. I we used a more apprentice-type model for developing leaders, where developmental assignments and feedback played a central role and where constant review of promising candidates was a priority for top managers.

Bower's characterization of the GE process as "tough, divisive and chancy" is interesting given that this one of the very few companies that has consistently produced successful CEOs and has done so for more than a century. It seems like the GE process, in fact, produces the very "inside outsider" that Bower calls for. Fred Borch had his most important systems undone by Reg Jones who got his turn at the hands of Jack Welch who got his from Jeff Immelt.

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