Over the past few months, we have watched as some very big name businesses have passed the reins of leadership to a successor. Only time will tell if it will work; but, there are lessons to be learned from observing Apple, RIM and Canadian Pacific attempt to preserve or improve market share by appointing a new CEO.
The Apple transition is a good news story. It was clear that Apple needed a succession plan to backstop the company in the face of Steve Jobs’ uncertain health. Tim Cook, who was hired in 1998, was groomed as an internal successor. His responsibilities increased progressively until he assumed leadership last year. The company had enough time and warning to make the changes necessary for a relatively smooth transition. So far, it seems to be working as Apple stock has continued to rise.
On the other hand, the RIM co-CEOs Lazaridis and Balsillie, both age 50, have apparently made the transition unwillingly, allowing their stock to devalue by 75% before giving in to pressure to appoint a new CEO. Thorsten Heins, a relative unknown prior to the announcement of his promotion has the challenging task of stopping the bleeding, and trying to bring the company back to its former value and beyond. It is a big hill to climb.
In both cases, the company had the time, money and, I expect, expert advice about how to implement a succession plan for the founders. But whether you transition willingly or “kicking and screaming”, the legacy you leave will be influenced by your ability to hire a successor early enough to make the transition as seamless as possible.
A third example of transitioning to a successor is unfolding at Canadian Pacific, where a major shareholder, Bill Ackman is trying to force out the current CEO Fred Green in order to replace him with former Canadian National CEO, Hunter Harrison. In this case Green is not pleasing his shareholders and may get axed to be replaced by an external candidate.
It would appear that Apple got it right. They planned for it, had time to test the candidate in real life before officially passing the baton, and they got the founder’s blessing.
For entrepreneurial companies built largely on the personality and success of the founder, transition can be difficult. Individuals need to swallow their pride and accept that someone else may do as well or better than they can at this stage. Of course, it can be expensive and time consuming to hire and groom a successor.
But what’s the alternative?