To avoid repeating its prior chaotic CEO succession, Disney orchestrated a highly public and well-managed 'bake-off' between internal candidates. This telegraphed process, overseen by an external chairman famed for succession planning, stabilized the company and provides a model for other large corporations.
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When new leadership arrives, a long-serving executive's value lies in their deep institutional knowledge and cross-functional relationships. They can act as a crucial bridge, helping synthesize diverse perspectives to guide the new team's vision and ensure a smoother transition.
Public company boards often hire CEOs using fuzzy adjectives like 'leader.' A better method is to first define 3-5 key strategic goals, creating a 'scorecard of success,' and then find a candidate whose track record specifically matches those objectives.
When an executive leaves, the CEO should step in to run their department directly. This provides invaluable operational context for hiring a replacement and empowers the CEO to make necessary but difficult changes (org structure, personnel) that a new hire would hesitate to implement.
Effective leadership transitions must be planned years in advance. The successor should gradually assume managerial duties, making the final handover a natural, expected event for employees and LPs. Rushed plans fail, especially if the departing leader isn't truly ready to retire.
A CEO who stays too long creates an organization optimized to respond only to them, causing other skills and response mechanisms to weaken. Leadership changes are healthy because they force a company to develop a more balanced and resilient set of capabilities, breaking the imperial CEO model.
Rainwater's method was to find a great business with poor management, acquire a stake, and then use his influence to install a world-class leader. He did this with Disney by bringing in Michael Eisner, believing the 'fix was just really easy. All he had to do was change the CEO.'
Instead of abrupt changes, Sequoia employs a gradual, multi-year transition process for its leadership stewards. Past leaders like Michael Moritz and Doug Leone remained involved for years after handing over the reins, ensuring stability and continuity for the firm and its LPs.
To ensure a smooth leadership handover, John Zimmer transitioned from an operating role to a board seat before fully departing Lyft. This deliberate, two-year process provided stability and support for the company's new leadership team during its next chapter.
BBDO's Andrew Robertson became CEO at 29 not just for his talent, but because two older, conflicting leaders saw him as a neutral third party they could both agree on. This highlights how political dynamics can create unexpected opportunities for junior talent.
With 150 years of mostly internal CEO succession, Eli Lilly develops leaders who deeply understand the company's culture—its 'unspoken operating system.' This allows them to solve problems effectively without relying on formal committees.
