CEO speaks: From founders to future leaders: Critical role of succession planning
Succession planning is not merely a corporate buzzword; it is the very cornerstone of long-term sustainability for any organisation. Whether in business, politics, or other fields, developing the next generation of leaders is a fundamental Key Result Area (KRA) that leaders must focus on to ensure the survival and growth of their organisations. Without a clear and well-executed succession plan, even the most successful entities shall falter. History has shown time and again that organisations with well-laid succession strategies not only survive but thrive, while those that neglect this fundamental need often face decline or collapse.
At its core, succession planning is about ensuring continuity, stability, and growth. Leaders who develop a strong bench of potential successors secure the future of their organisation. Yet, many are hesitant to groom the next generation too early. It’s human psychology—leaders fear that cultivating successors will undermine their own power, status, or leadership privileges. But this fear is misplaced. A well-prepared successor doesn’t diminish the current leader; rather, it ensures their legacy and the continued success of the organisation. It further enriches and consolidates their leadership.
Apple is a classic example of a company that successfully implemented succession planning. When Steve Jobs stepped down due to health reasons, Tim Cook took over the reins. Cook was not chosen overnight; Jobs had meticulously groomed him for the role. As a result, Apple not only maintained its innovative edge but also became the first trillion-dollar company under Cook’s leadership. The transition was seamless, and Apple continues to reach new heights—a direct outcome of Jobs’ foresight in ensuring strong leadership for the next generation.
Microsoft, on the other hand, struggled with the succession process. In August 2013, Steve Ballmer abruptly announced that he would step down as the CEO of Microsoft as soon as his replacement could be found. In the tumultuous months that followed, the board is rumoured to have shortlisted not less than 100 external candidates and focused intently on 20. It was only much later that Satya Nadella, a relatively unknown Microsoft insider, was chosen. It is very fortunate that it turned out to be a right choice. In his first nine months as CEO, Microsoft’s stock rose 30%, increasing its market value by $90 billion. Today, Microsoft is the second most valuable company after Apple. I fervently hope that lessons have been learned and Mr Nadella is planning ahead for when he decides to hand over the baton!
In India, one of the most notable examples of successful succession planning is Reliance Industries. After the passing of its founder Dhirubhai Ambani, the company initially went through a tumultuous period as the founder hadn’t left behind a formal succession plan. However, once Mukesh Ambani took over, Reliance was transformed into a global powerhouse, especially with its foray into telecom through Jio. This wasn’t just luck; Mukesh was groomed by his father for years, and his vision took the company to new heights, proving that effective leadership transition can ensure an organisation’s growth beyond its founder’s years and vision!
The problem of succession planning is particularly acute in family-run businesses, especially in India. Too often, family members are chosen to take the reins, even when they lack the necessary skills or vision. While it’s natural to want to keep leadership within the family, this approach can be detrimental if the selected successors aren’t equipped to deal with the complexities of modern business environments.
Both Khaitan and Modi Industries exemplify the failures of succession planning in family-owned businesses. The Khaitan Group, particularly with Eveready Industries and McLeod Russel, struggled due to internal family disputes and poor leadership transitions, leading to financial troubles and the eventual loss of control of Eveready to the Burman Group. Similarly, Modi Industries, once a major player in industries like sugar, steel, and chemicals, faced a sharp decline due to a lack of structured succession planning. The Modi family’s infighting and inability to appoint capable successors from within or outside the family led to fragmentation of the business and a significant loss of market presence. In both cases, the absence of clear leadership strategies undermined the companies’ longevity and growth.
So, how do we go about nurturing the next generation of leaders? It is difficult to prescribe a formula, but a broader strategy and pattern is evident. Proper succession planning requires identifying critical roles and assessing future leadership needs based on long-term goals. High-potential employees should be identified early and provided with opportunities for development through mentorship, training, and real-world leadership experiences. It’s important to foster a culture of knowledge transfer to ensure that skills and institutional knowledge are passed down seamlessly. Succession plans must also be regularly evaluated and adjusted to adapt to evolving business environments. Open and transparent communication with all stakeholders is essential to ensure a smooth transition, reduce uncertainty, and avoid potential power struggles. Like most strategic imperatives, the process can be difficult at times—but following through is imperative to ensure future survival!
Succession planning is the bedrock of sustainable success. In today’s fast-paced and competitive world, leaders must understand that leadership is a relay race, not a sprint. Passing the baton ensures that the organisation moves forward. Organisations, large or small, must ensure that leadership transitions are a planned and deliberate process, not a reactive one. The reluctance to groom successors is a disservice, not only to the organisation, but also to the leader’s legacy.
The author is the Group CEO of Techno India Group, a visionary and an educator. Beyond his corporate role, he is also a mentor who guides students towards resilience and self-discovery
