Techpreneurship: Leadership Succession – We’re Not Immortal

Jeff Amerine

Techpreneurship, with Jeff Amerine

(Jeff Amerine is an IA advisor, entrepreneurship educator, and officer with the University of Arkansas Technology Licensing Office. Each Thursday, his Techpreneurship blog will appear in INOV8. Drop him a line in comments.)

Chances are, one of the last things most Techpreneurs think about is “who will replace me if I get hit by a truck, struck by lightning, eaten by a shark, abducted by aliens, or just freak out and decide to pursue enlightenment in Tibet?”  We’re all invincible superheroes, right?  We’ll never leave our venture behind…

Most early-stage Techpreneurs have no sense of their own mortality, and no real grasp of the damage they can do to their venture and all stakeholders by letting their “irreplaceability” become institutionalized.

At best, some early-stage leaders consider key person insurance, once they can afford it, as their only swipe at  maintaining business continuity in the event of their demise.  What if key leaders leave for other reasons?

Having irreplaceable staff at any level equals a failure of leadership, and creates a huge risk for shareholders and employees alike.  Here are some startling statistics from Harris Bank online (2009):

2 out of 3 businesses don’t survive the transition to the next generation….Most business owners don’t know they should start succession planning 10-15 years before they transition control.

Even given the clear recognition of the need for an integrated leadership development and succession program, an August 14, 2003, PR Newswire online article stated:

45 percent of companies with more than $500 million in sales have no real CEO succession program despite executives’ praise for succession planning. According to a report from Cutting Edge Information, companies that emphasize leadership development outperformed others by 15 times over the past 60 years.

I don’t have the statistics to prove it, but I am betting smaller, early-stage firms have done even less to plan for leadership succession.  So what can you do beyond key person insurance?  Here are some points to consider from some recent research I did on the topic:

• Design your organization from the start such that you have no single points of failure.  Have in mind and documented how you would replace every key person. Make this a living process that you revisit regularly.
• Institutionalize the idea that every leader in the organization must maintain continuity notes and must groom successors for their position.  “Working yourself out of job” is a key way to avoid the trap of “irreplaceability,” and it empowers team members.
• Analyze the future direction of the organization.  The new chief executive should not be a clone of the last.  New challenges will require a different set of skills.
• Be true to the vision, mission, and corporate values.  Make sure a fit exists between business strategy and leadership development strategy.
• Have a bias for selection of internal chief executive candidates if at all possible.  External candidates have a high failure rate and will be met with significant resistance.
• Assess talent and provide cross-functional opportunities at multiple levels to ensure future senior leaders have the breadth and depth of skills needed to assume increasingly responsible positions.
• Use information technology systems to manage talent and leadership development.
• Inclusion.  Ensure the board, senior executives, and key representatives of the workforce are involved and committed to chief executive succession.
• Communicate frequently with honesty and integrity.  The workforce at all levels can sniff out a fraud. Early, consistent, and candid communication about the leadership succession process, potential candidates, and selection time line can address many of the critical workforce issues that arise with change.
• Benchmark best practices in employee development, leadership talent identification, and leadership succession.  Only through a realization that people are the organization’s most valuable assets can continuous improvement be achieved.

I could blather on, citing all sorts of examples where leadership succession was done right and what happened when it wasn’t done at all.  Instead of more ranting, I’ll give you a few good references that provide excellent best practices:

http://www.insala.com/Articles/succession-planning/succession-planning-current-trends.asp

http://contingencyplanning.com/articles/2009/10/06/succession-planning-and-the-aging-workforce.aspx?admgarea=Community

http://www.forbes.com/2007/11/07/succession-ceos-governance-lead-cx_sm_1107planning.html

http://govleaders.org/gallup_bench_strength1.htm

Well, that’s enough.  If you’re still awake, Techpreneurs, start thinking about who will replace you…You owe it to your venture.

Let me know what you think..

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