Steve Blank published a great article last week about succession planning (“Why Visionary CEOs Never Have Visionary Successors”, Harvard Business Review) that made me review my own experience in this area.
Blank describes the traditional entrepreneurial succession model that cycles from the eccentric inventor/founder, to the buttoned-down manager who’s charged with optimizing company systems and performance. But today, we’re seeing a hybrid of the two, someone who achieves more than either of the two previous CEO types combined.
The cycle I normally see is the entrepreneur who, by dint of will and personality, starts a successful company, but it reaches the point where it can’t get much bigger because typically, the idea person/entrepreneur/visionary is not good at business systems.
The second generation has to do some repair work and put in systems, controls, and structure that will allow the company to survive the loss of the founder—and also scale the good things the founder created. But you can run on the founder’s momentum for only so long.
Most entrepreneurial businesses are a reflection of the passion and character of the person who started the business. Thus Apple was a reflection of Steve Jobs. The next person who runs the big enterprise—in this case Tim Cook—tends to be a manager/optimizer who has to compensate for the disorganization that usually comes with an entrepreneurial oddball like Steve Jobs.
Cook has done a good job in that he’s driven “revenues and profits to new heights” and helped Apple live up to its growth potential. However, this growth potential is in peril because they haven’t come up with anything new in a long time. If it wasn’t for the exploding Samsung phones, Apple might really be in trouble, because the iPhone 7 doesn’t have that much going for it.
The article draws a parallel between successions at Apple and Microsoft. Steve Ballmer, who succeeded Bill Gates, also did a great job generating profit, but unfortunately lacked vision. “Ballmer was a world-class executor . . . of an existing business model trying to manage in a world of increasing change and disruption.” He was succeeded in 2014 by Satya Nadella, who so far shows promise as this new kind of hybrid CEO—he’s both an optimizer and a visionary.
Another example is the Ford Motor Company. Henry Ford was an entrepreneur whose successors were mainly members of his family and weren’t particularly visionary. Over the years, the company had its ups and downs, but by the time Allen Mulally took over in 2006, Ford was in serious trouble. He resuscitated the company (” . . . when Chrysler and General Motors were filing for bankruptcy protection, Mulally helped Ford post its first annual profit since 2005.”) and was an innovator with electric and hybrid cars. Mulally combined fiscal leadership with bold insight and vision—the hybrid CEO.
This new kind of CEO is more well-rounded and more talented in a 360° way. Maybe it isn’t necessary to choose between a visionary and a manager/optimizer. Hopefully, Microsoft has that all-in-one hybrid in Nadella. Apple is certainly hoping Tim Cook will prove to be a little more visionary, though his track record isn’t very compelling so far.