A recent Harvard Business Review article on effective strategies for a smooth CEO transition retells an old joke:

The new CEO asks the departing CEO for advice. The outgoing says there are three envelopes in the desk, and the newbie should open them as crises hits.  Sure enough, the first crisis hits, and the new CEO opens the first note which reads:  ”Blame your predecessor.”  The next crisis hits and the second message read: “Reorganize.” A year after that, a third crisis hits and the CEO opens the final envelope, which plaintively instructs him to: “Prepare three envelopes.”

For all companies, CEO transitions are a risky time, ripe with difficulties and innumerable variables. Is the departing CEO gracefully taking retirement, or quickly getting the boot on the heels of a scandal?  By picking a certain candidate for the job, which others were spurned? What do the most important investors think? What is the level of expectation for the new guy or gal?

Protecting corporate reputation during this process is critical. Do it correctly and praise (along HBR case studies) is yours.  Do it wrong and the reverberations may cause problems for months…even years. Communicating a clear, consistent message to the media, to employees, to shareholders and investors is a simple but sound strategy.

The HBR article rightly points out that during this time, the departing CEO should let the next CEO own the public face of the company.  Executing on this can be far more difficult and no transition is without missteps.   Leaks from unnamed and disaffected sources make print. Reporters covering it like a horse race – who’s in the lead, who’s behind. Investors with shaken confidence looking for the door.

This is acutely so in the event a venerated leader exist the stage. Such was the case when Jack Welch turned over GE’s reins to Jeffery Immelt.  A leader like Welch, the media breathlessly speculated, was impossible to replace, and the unlucky soul tapped to replace him would face a steep climb.   More recent examples of this ‘irreplaceable leader’ phenomenon – Gates-Balmer at Microsoft, or Lee-Duke at Wal-Mart.

The thing about transitions is that if they are done correctly and communicated effectively, they can reinforce notions of operational excellence and superb leadership development. Stakeholders of all stripes abhor confusion – they want to know who is in charge.  Make the message about that.

msacks Executive Visibility Leadership, Transition