The risks for CEO and leadership succession are increasing as expectations of future leaders grow and organisations operate in increasingly dynamic conditions. Current approaches must evolve to reflect the new realities.
Top leadership succession planning has always been a critical issue, but many organisations are realising how much more complex and challenging it is now. The role is no longer what it used to be; it has become more demanding, and incumbents and successors both will need to adapt to a trickier set of challenges while simultaneously navigating a rapidly changing world.
The challenges of the 2020s mean present and future CEOs and top leaders will need to tackle broader and interconnected issues that their experience and traditional development paths cannot prepare them for.
Every organisation must answer a simple question. What kind of CEO do we need for the future?
The role has become a much more multifaceted challenge that will require a unique set of skills and qualities to lead an organisation into the future. Additionally, the 24/7, ultra-networked world we live in demands they must be “always on”, discerning what truly matters to their organisation. The increasingly rapid rise of technology and AI further accelerates this challenge.
The good news is that while the skill set required for each organisation will become more diverse, the mindset and intrinsic qualities that make a leader effective will remain relatively the same: agility, courage, empathy, and the ability to create an ecosystem of information and talent.
Rethinking succession planning is challenging for every organisation, and changing priorities amid current disruption will increase the complexity in the years ahead.
Where to start?
Create a shared (and agreed) idea of what needs to happen and how it will work. The incumbent leaders and their board of directors must agree on the skills, experience and personal characteristics the future leader will need to execute the current and future strategy. More importantly, they must know who owns the succession process, the plan, timelines, etc.
Look at your future organisation, not today’s. To get started with a successful CEO or leadership transition, companies and their boards must take a hard look at the current succession planning process, replace legacy practices and build the desired future culture. Do not start with a wish list or description of a preferred individual successor. Do not start with their past achievements. Start with the strategic problems you need to solve and build a plan to suit your organisation’s future.
Have an honest discussion about the past. Reflect and consider what worked in the past. What went wrong, and why? These answers will provide insights into how to move forward, what are the current priority decisions, and what external help may be required.
Reduce decision “noise” with data. Objective facts must be the centre of the succession planning process. This eliminates confusion, defines key criteria and expectations, clarifies strategy, operations and cultural alignment, specifies essential qualities, skills and experience, and ensures boardroom discussions use a business context, not personal or political opinions to drive decisions. Avoiding a subjective filter of comfort and familiarity is crucial.
Consider the handover of power. A critical aspect is the tendency to extend the tenure of incumbent and especially iconic leaders. This can lead to challenging and risky transitions. Successors of long-serving leaders often face shorter tenures and worse financial performance. Allowing the incumbent CEO to control the process can be risky.
Objectively assess if an already appointed successor is the right choice. A handpicked successor may not always be the best choice. The world is changing, and so must the successor. Organisations cannot let promises, sentimentality or current expectations get in the way.
Creating a potentially more successful succession process needs companies and boards to discuss in-depth, be accountable and own the process, not delegate or outsource it. The best-case scenario would usually be a two-year journey, which requires the full attention of those involved, not just a quarterly conversation or report review.
Some guiding principles to get it right are to look to the past, but only so far, take your time even in an emergency (better an interim leader than a permanent mistake), get help when needed, and ensure a good fit with your culture.
Arinya Talerngsri is Chief Capability Officer, Managing Director and Founder at SEAC — Southeast Asia’s Lifelong Learning Centre. She is fascinated by the challenge of transforming education for all to create better prospects for Thais and people everywhere. Reach her email at arinya t@seasiacenter.com or https://www.linkedin.com/in/arinya-talerngsri-53b81aa