By W.B. King
While not a frequent or comfortable topic of discussion, succession planning is critical to the longevity of all organizations. And a recent study from the History Factory underscores why “institutional memory” matters.
According to the executive search firm Challenger, Gray & Christmas, in 2019 over 1,500 CEOs left their posts in the U.S. While that number dipped during the pandemic, by early 2021 those metrics were again on the rise. And these latest senior level transitions include some household names, such as Berkshire Hathaway’s Warren Buffet and Amazon’s Jeff Bezos.
The History Factory’s report, “The Succession Trap: How the C-Suite Thinks about Leadership Transitions and Why it’s Wrong,” surveyed 160 C-suite executives, including 50 CEOs, board chairs and company founders. For more than 40 years, the Chantilly, Va.-based History Factory has created memorable corporate/brand narratives, exhibits, publications and anniversary marketing campaigns.
Fifty-seven percent of survey respondents said their companies don’t have documented plans in place for executive transitions. This statistic sat oddly alongside the finding that nearly 90% of those polled agreed that “in today’s unpredictable environment, succession planning is more important than ever.”
Analyzing and juxtaposing the trajectories of Silicon Valley juggernauts, Hewlett-Packard (HP) and Apple, the report, in part, provided an overview of these organizations’ storied histories, but placed focus on the mid-2000’s timeline. During this period the report noted that both companies underwent “critical leadership transitions,” adding that despite HP’s “epic” legacy, only Apple emerged with its “innovative DNA” intact.
“It had everything to do with the ability (or inability) to effectively transfer institutional knowledge — that is, the combination of experiences, processes, data, expertise, values, and information possessed by the whole company — not just the legacy of the person in the corner office,” the report stated.
While the majority of the respondents agree succession planning in the digital age is more important than ever, only 43% have a solid plan in the works. The report also noted that there are understandable reasons for these trepidations, including: an increasingly disruptive, digital and fast-paced business landscape; transitions are often viewed through an individual, not organizational, lens; longer predecessor tenure; and a lack of strong external communications.
Most Tech Executives Get It
Survey respondents in the tech industry have a better outlook on the importance of succession planning. The report found that these respondents “face more skepticism than other multinationals during times of transition…chalk it up to a quickly moving industry and a lot of young companies.”
Additional findings include that 84% of tech industry respondents “strongly agree” that succession planning is more important because of the quickly evolving business landscape, which was 21 percentage points higher than the aggregate of the total number of respondents.
“Successful leadership planning is defined differently by the tech sector with 67% of tech respondents compared with 52% overall believe a longer tenure for an outgoing leader complicates a transition for a successor,” the survey noted.
While the report found that more companies need to put a succession plan in place, the overall response indicated that many, but not all, senior level leaders understand “what’s at stake, what history means, and how history can significantly impact their organizations’ livelihoods.”
History Factory’s President Jason Dressel offered the following takeaway: “The good news is that executives are clear-eyed about how the rapid pace of change makes effective succession planning more important — and that passing along institutional knowledge is crucial.”
He continued. “But for too many companies, that understanding isn’t translating to concrete plans, and legacy is too often viewed as an individual, and not an organizational, priority.”
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