On the Bloomberg Businessweek website, George Davis and Justus O'Brien discuss the issue of succession planning, insisting that debates about internal vs external CEO succession miss the point.
They summarise the familiar arguments: "Outsiders, it is said, can shake things up, introduce new ideas, and galvanise the organisation… but they lack institutional memory.
"Insiders understand the company's business and its industry, already enjoy strong alliances throughout the company… but radical shifts in the terms of competition may render their experience moot. And if the succession is unplanned, they can have serious gaps in their development."
These arguments though, insist the authors, have it backwards. They say the real issue is not whether the new CEO is from inside or outside the company but what qualities and attributes the company needs and who can provide them.
"When considering CEO succession, the first place to look is neither inside nor outside but into the future," say Davis and O'Brien. "The goal of the board is to arrive at a deep understanding of the company's likely strategy and business challenges at the projected time of the CEO transition."
Offering an example, the authors say the choice could be determined by factors such as whether a company is pursuing growth organically or through acquisition, as different strategies and expertise would be required from a leader.
They also say that the needs of companies in heavily regulated industries will differ from those in unregulated environments, and strategies in sectors where innovation is paramount will differ sharply from those in sectors where asset management rules.
Davis and O'Brien sum up their argument by saying: "While the substance of experiences and performance, either inside or outside the company, is certainly relevant to meeting that job specification, where the next CEO comes from shouldn't be part of the specification itself."
Inside-Out Succession Planning, George Davis and Justus O'Brien, Bloomberg Businessweek, 04/05/10
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