The Process

360 degree feedback. On current CEC and candidates presented to Board

CEO shares grooming plans with Board
Candidates get exposure to Board An internal candidate is typically preferable
to external. Internal candidate knows the business, people, culture (per George,
even Gerstner proclaimed that a board has failed if it goes outside. [methinks,
without Directors taking time to get to know up-and-coming leaders, they
might as well be outsiders consider resume-fabricator at RadioShack
Independent Directors executive sessions re Succession Allow plenty of
opportunity for discussion among Directors. Cheloha and ONeill suggest that in
the normal case, there is high risk of certain directors having predetermined views
on candidates, this is an even greater risk in case where an encumbent is the
founder and long-serving CEO. There may be resistance by some directors to
even think about it, as their own history with the company is so entwined with the
founder CEO
Close feedback loop with existing CEO

Vlak Three Approaches

Horse Race
Annointed
External Search
Which is preferable WRT Founder successions

Vlak Success Factors

1. defined process and roles
2. clear and agreed metrics and criteria
3. consider perspectives of different time horizons

Examples
Returning Founder (Apple, Dell, Yahoo)
Departed Founder (Sun, Microsoft)
Encumbent Founder (Oracle)
?? (Adobe)
Additional Considerations for the Board

Theres a trend towards higher turnover [per Cheloha and ONeill; see also stats
in Vlak], indicating that it could be hard to find a successor as committed (at least
in terms of time) to the enterprise
Vacuum left with retirement of baby-boomers
In terms of significance of getting succession right, consider how many
companies are acquired after bad succession

Further Reading

http://knowledge.insead.edu/abstract.cfm?ct=17423

http://founderresearch.blogspot.com/2005/09/founder-ceo-succession.html [looks very

good]

www.people.hbs.edu/nwasserman/Founder-CEO_Succession-OrgScience.pdf [Wassermans
HBS PhD paper]

http://www.heidrick.com/NR/rdonlyres/162BDFFE-CD60-48B7-B69C-
A98BDC7FD40C/0/HS_CEOSuccession.pdf [general paper on Boards responsibilities
in succession]