The Art of CEO Succession

(page 2 of 2)

Their predecessors learned the hard way: President Henry du Pont's death in 1889 left the company without a strong hand on the helm since the family patriarch had designated no obvious successor. In the aftermath, DuPont was nearly sold to a competitor before three du Pont cousins bought the business for $12 million in 1902.

Although family members continued to run DuPont well into the 20th century, there was a clear recognition that the company's long-term survival depended on its ability to groom competent, professional managers. The $32 billion-a-year outfit has since become what's known as an academy company, alongside General Electric (GE), Procter & Gamble (PG), IBM (IBM), and ExxonMobil (XOM). Such giants rarely have to look outside their own borders to find their next chief, and their emphasis on giving executives broad experience across functions and geographies has made them prime targets for CEO headhunters.

Holliday himself had a lot of help in getting to the top job. He came to the company on a summer internship and says he was mentored all through his career, even after he got the CEO job. Former DuPont chief Irving Shapiro, who ran the company during the 1970s, critiqued Holliday's performance after shareholder meetings, and outside executive coach Bill Morin taught him to be more up front with his staff.

Holliday says he began talking about succession "immediately" on becoming CEO. In addition to the usual "truck list"—a roster of people who could run the show if he were hit by the proverbial 18-wheeler—he tried to imagine who would be best suited to lead DuPont in the 21st century. In his mind, Kullman was an obvious possibility. Although the mother of three's gender and marketing background made her an unusual CEO candidate for DuPont, Holliday felt the aggressive and sometimes sharp-tongued Kullman had a keen ability to see around corners. While many colleagues—including Kullman's husband, who also works at DuPont—counseled her against taking over the nascent safety-products unit, Holliday says Kullman "was able to grasp the image of what it could be." For instance, she came up with new uses for Kevlar synthetic fibers, a brand made famous in bulletproof vests. Among the more popular innovations: $7,000 tornado-proof storm rooms.

When the time came for Holliday to leave, he knew who was ready to replace him. Along with helping Kullman join the General Motors (GM) board in 2004 to broaden her management perspective, he encouraged her to work with a coach to modify her impatient nature. "If I made a statement before, I was just one of the group. Now, it's law," says Kullman. "I have to make sure I am getting everyone's input."

That's especially crucial in a fast-changing environment. Many boards are wondering whether their current CEOs can get them through this crisis. "Overnight, companies that were stable are now in a turnaround situation," says David Bliss, CEO of consultancy Oliver Wyman Delta. "A lot of boards are saying, 'Do we have in our current leader what's required for the future?' " Gerry Roche, senior chairman of search firm Heidrick & Struggles, notes that recessions typically prompt boards to have a "quicker trigger" when it comes to jettisoning leaders. And, the veteran headhunter adds, they're more likely to favor outsiders in filling those vacancies.

The decisions Kullman makes today may translate into a very different DuPont in the future. With almost one-quarter of sales tied to the auto industry, she'll need to look elsewhere for growth. Kullman knows that her biggest decision, though, is not which businesses to invest in, but which people.

Boyle is deputy Corporations editor for BusinessWeek.

Business Exchange

Track and share business topics across the Web.