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SUCCESSION ISSUES

By PTA News Bureau

Andrew Cave, who has interacted with hundreds of chief executives of global companies, has chronicled the life and times of CEOs. His best-selling book The Secrets of CEOs, co-authored with Steve Tappin, provides an insight into the minds of executives managing huge corporations. Leading a company is not a bed of roses but a tough and nerve-wracking challenge. The book unveils leadership secrets that drive CEOs of over 150 companies.Management-book---Cover-only300

Drawing from his experience observing CEOs, Cave comments about the controversy over 46-year-old, India-born Satya Nadella’s succession replacing Steve Ballmer as the third CEO of US$290bn Microsoft. There are plenty of lessons that global firms can learn on succession issues that are critical to the future of any company.

Commenting on Nadella’s appointment, Cave said that Microsoft had only organised a succession once before in its 39-year history and broke just about every rule in the book. “On announcing the departure of 33-year company veteran Steve Ballmer last August, Microsoft did not announce a successor and gave too long a timetable for the handover, signalling that it would happen within a year,” he reminded.

“Confusion about who was running the company was accompanied by mixed messages over the group’s direction. Two weeks after the Ballmer announcement, Microsoft splashed out US$7.2bn on Nokia in the second largest acquisition in its history.”

That seemingly pointed to a future based on mobile technology, only for Ballmer to use the company’s investor conference soon afterwards to signal that the group remained committed to ensuring that the personal computer remains the device of choice.

“The lengthy process meant that the succession of what’s still one of the largest companies in the world was allowed to become a public free-for-all that saw commentators pitch insiders such as former Nokia CEO Stephen Elop against business guru outsiders, including Ford’s Alan Mulally.”

Elop didn’t get the job, Mulally apparently didn’t want it and the public were led to believe that Microsoft had the right man all the time, sitting there as executive vice-president of its cloud and enterprise group. Five months is not in itself too lengthy for a succession exercise, but, given that Nadella had been at the company for 21 years, could the process not have begun last March?

Succession mess

Microsoft had its troubles but it was far from a company in crisis. It should, therefore, be able to groom a cadre of potential successors and had a process in place to elevate the chosen one of them when the job became vacant, Cave argued. “This means proper succession planning, identifying the internal stars, fast-tracking them and benchmarking against external candidates.”

(Full Text in PTA April-May issue)

With a veteran CEO like Ballmer in charge for such a long time, the chances were that a successor would be needed sooner, rather than later. Microsoft should, therefore, have had a succession process that was at an advanced stage at the time that Ballmer’s departure became clear.

 

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