CEO Succession

For many boards, CEO succession planning has remained either non-existent or a perfunctory matter of having in mind an internal heir to the top job. But a poor choice of chief executive can have far-reaching effects on a company’s ability to create value; effects that can take years to correct. Making sure that CEO succession does not prove the critical weakness in an otherwise resilient organization calls for an equally resilient succession planning process made up of three essential elements: role specifi­cation, rigorous candidate assessment, and mapping the external talent market.

THE CONCEPTS of “bouncing back” and absorbing shocks that originated in psychology and materials science now routinely form part of systems design in many fields. From environmental engineering to city planning to national security to energy transmission to information technology, designers seek to build systems that are strong and flexible in the face of uncertainty and risk, be it ecological disaster, energy blackouts, or terrorist attacks. In this sense a business enterprise too is nothing if not a system. So it is not surprising that the principle of resilience has made its way into the way we think about organizations.

Just as a material can be brittle, so can a system: A single faulty node can compromise the whole. To fend off such problems, designers create processes to mitigate the risks. This positive notion of resilience – emphasizing foresight rather than a kind of all-purpose readiness to absorb shocks – can be usefully applied to the process of CEO succession.

Read full article "Making the most important decision the best - Implanting resilience into CEO succession planning" in the edition of THE FOCUS on Resilience.