Culture Shapes Succession, Succession Shapes Legacy

When the French foreign minister asked Thomas Jefferson in 1785 if he had come to replace Ben Franklin, Jefferson responded, "No one can replace Dr. Franklin. I can only succeed him."

If you want your business to outlive you, the most effective way to prepare is to create a culture that consistently develops today the leaders you will need tomorrow. We can't know for sure that the person who succeeds us will carry the business forward in a manner we would be proud of, but we can set up our business for future success — and build its value — by treating succession as a ongoing process instead of a one-time event.

In a recent webinar, WiLD Leaders' founder and CEO, Dr. Rob McKenna, joined his chief commercial officer, Dr. Daniel Hallak, to lay out the most effective succession plan for any business or nonprofit: a culture that consistently develops and backfills your staff. This post is adapted from that webinar, which you can view in its entirety here.

The Surprising Challenge of Succession

Succession planning is a huge topic and there's a lot that goes into it — your financial plan for continuity, exit planning, overall business strategy, etc., etc., etc. Today, we're just going to focus on one aspect of succession planning: the leadership/person factor for developing successors.

"One of the things we love as psychologists focused on the workplace is that it's often the invisible things, the soft stuff, that are impacting all the visible things, or the hard stuff," said Daniel. "I've seen a number of times where somebody might hear a webinar like this or work with a group like OneAccord that does a great job of helping grow the value of your business. Maybe somebody along the way said you should have a succession plan. That would be good foresight, forethought. I have a will and a trust for my kids, I should do something similar for my business."

CEOs often expect the hardest part of succession planning to be structural, and they're surprised when the most difficult aspect actually ends up being the people component, i.e., how to get people ready or make sure the right leaders are in place to make a transition. The truth is, you can have all the right structures, but without the right people prepared and in place, your succession plan is in trouble. Leadership is crucial.

Daniel had a friend whose job involved valuing banks to determine whether they could get the accreditation they needed. To value each bank, his team assessed five things: capital adequacy, asset quality, management, earnings and liquidity. A bank could score low in a couple of these areas and still receive accreditation. If it scored low in management, however, that was a deal breaker. Low confidence in the bank's leadership meant no confidence in the bank.

"It’s something we found is the same for any other industry," said Daniel.

The Exit Spectrum

You're going to hear the house analogy. A lot.

Imagine you're sitting at home one day, perfectly happy. Then you read about the housing market and realize just how much your house is worth right now. Or maybe a friend asks one day, "Say, would you ever be interested in selling?" You are now. In fact, you suddenly can't wait to list your house. You call a realtor and ask, what's the absolute minimum you can do to put the place on the market and sell immediately? You slap some paint on that baby, fix that fence, clean the carpets and list it. (You also wonder why you didn't do those things before, so you could have enjoyed them while you were still living there.)

That's one end of the spectrum: the person who just wants out. Now.

Now imagine you love your house and have every intention of leaving it to your children or grandchildren. You want to preserve and pass on the same wonderful experience you've enjoyed. To maximize the value and legacy of this amazing piece of property, you take your time. Maybe you do some major remodeling, build an addition, redo the deck, the yard — whatever makes sense to fully enjoy the maximum potential of the place and pass on something really special.

This is the other end of the spectrum: the person who's actively preparing for a time when they'll leave their house, even though it's far down the road.

This is how leaders are with their businesses and nonprofits. Some are perfectly content running the place, and then something unexpected happens. It could be a phone call with an attractive offer, a sudden urge to spend more time with family, or an emergency. Death, disaster or divorce strike and the business needs to go. Other owners are looking decades down the road, preparing for that eventual day when they'll hand the keys to someone they've been grooming for years to take over and lead the company into the future.

Wherever you fall on this spectrum, whether you're months or decades from stepping down, thinking through succession will create many advantages for your business, your stress level and your life in general — not to mention your successor and employees — that you can enjoy until the day comes to bid the business farewell. Preparation will meet opportunity, or necessity, for a successful transition.

The Starting Point (It's Usually Panic)

Often business owners start thinking about how their business will survive them when they face the realization that they won't be around forever. Even Rob, who has been working on the succession plan for WiLD Leaders for some time, had a moment of panic a few years ago as he was boarding a plane and wondering what would happen if it went down.

"I sent a text to my wife — this is me in that panic moment about my own succession system," said Rob. "I said to my wife, 'Just so you understand, Daniel can run the business, all right? He’s fine, we’ve been preparing for that — and by the way, also just so you know that’s true, here are all the pieces of that developmental puzzle that we’ve been working on.'"

If you weren't able to go back to work tomorrow for whatever reason — accident, emergency, alien abduction — what would happen to your business? If the question induces panic, leverage that panic to start creating your succession plan. Start by thinking through why succession is important to you. Really dig to get beyond the fact that it's a good idea and highly recommended. Make it personal.

"I was working with a major hospital," said Rob. "I was there because they wanted to talk with me about helping them establish a succession planning system. I said, 'So why do you want one? Why do you want to build a system?' They're about to spend kazillions of dollars on this and the answer was ‘because our CEO saw it on the cover of Inc. Magazine and says we need one,’ which obviously isn’t the deeper answer. It's a start, but it caused me to ask further and further questions."

The day you're ready to move on is a terrible time to learn what you should have done months or years ago to prepare for transition. So whatever the trigger is that gets you thinking about succession — a pending retirement, that moment of panic, even a magazine article — you can use it to really dig into what you want to accomplish with your succession plan, however near or far your exit may be.

Asking the Right Questions

One of the big questions you'll run into as you think through who should be in line to replace you (and the other members of your leadership team) is whether to develop someone already in the business or hire from the outside. Is it better to start training a handful of somebodies who are already in your company? Or is it better to hire from the outside, maybe even bring in some interim leadership?

The answer depends on your situation. Your timeline will play a big role, so will the people who are currently in your business. Keep asking questions. Do you have somebody in the business already who's equipped to step up? What are you selecting and developing for? How does the process of succession planning connect to the bigger picture, the larger questions and processes pertaining to your organization? As you answer the deeper questions about your succession plan, you will find that you address a lot of the pieces of the plan, including whether to promote from within or hire from without.

In an ideal world, we would start thinking about our succession plan the moment our business is born. We don't live in an ideal world, though, so even if we didn't found our business with a fully formed succession plan, now is the best moment to begin making that plan.

"If you're starting to be intentional about developing people now, I don’t think it’s too late," said Rob. "You just step in whenever you're ready to get started."

Taking the Long View

A strong succession plan isn't a one-time event. In fact, the strongest succession plan is more than a process. It's a part of the culture that animates all of your processes, answers many questions before they even come up and empowers your hiring decisions.

"What would it look like to actually think about succession as something that’s always happening, so that every time we hire someone we’re thinking about how they're entering the pipeline of ongoing leadership within our organization?" said Rob.

For one thing, succession would become more holistic and less oriented to a single role. Let's say the owner leaves and one of the executive team steps up to take over their responsibilities. Who takes the now-vacant executive role?

"There's a domino effect, right?" said Daniel. "And it's systemic. I think we so easily get caught up in the one-person successor, as if no other leader in the organization matters."

A single succession will create new gaps in the business that your succession plan must account for. The people you hire along the way will impact the execution of this plan.

"What is succession for the rest of the business, not just a role?" said Daniel. "I think that’s where the time horizon comes in for me, because then I start to think about who might take [Rob's] place and what other gaps that might leave. How do we fill them based on the domino effect, and what roles are we strategically thinking of? It starts making me think about a culture of succession, not just a succession moment."

A succession moment is what happens when your CEO is panicking as he boards a plane. Contrast this with thinking of succession systemically, as a culture where succession and development are integrated. As we begin to think about this, about developing a culture that constantly builds the leaders we'll eventually need, how is that going to impact our selection process? What questions should we be asking? How should we be investing in the people we're committed to developing? The right person isn't a silver bullet, after all. Whether we promote tomorrow's leaders from within or hire from the outside, we always have to develop them in some sense.

"Even if I hire somebody externally, I can’t expect they’re just going to come in on a white horse and save my business and I can sail away into the sunset," said Daniel. "I still need to integrate them, I still need to develop them, I still need to have them connected to the streams of what's happening in my organization. It’s not just about finding that magical person to take over the role."

Selecting the Best People: More than Skill, More than Competence

When we're interviewing leaders to bring into our business (and keep in mind, every leader we bring in is a potential successor at some level), it's not just about competence. Someone shouldn't be interviewing with you unless they have the fundamental skills and competencies for the context.

"Assume that competence is a given," said Rob. "Is this person developmentally ready?"

Selecting for developmental readiness is key. If you're a senior leader and you're bringing in someone to take your place, that’s a huge decision. We can't risk recruiting someone who simply can't become the leader your business needs them to become. Hiring someone with the competence but without the character will come with a high cost.

"We see this happening all the time, where we make a selection decision based on the typical things around skill and competence, and miss the character and willingness to change and to learn," said Rob. "That will take two years to undo."

How much do we need to change our fundamental framing when we think about selection or development? What are we really looking for?

Even if your exit is decades away, hiring is still a high-risk decision if you consider the person you're hiring may be leading the company when you're gone.

"I'm going to be looking for developmental readiness, not just talent," said Rob. "I'm going to be looking for that, because then I can trust this leader I bring in is going to be someone who is going to learn and grow and have that agility that's necessary to learn the business in ways that they're not fully going to understand."

Whether you're hiring someone from outside to succeed you in the near future or preparing someone in the organization to eventually succeed you, you're going to be developing them and they need to be ready to grow. And eventually, you'll decide whether to actually hand them the keys or not.

"If I'm thinking of hiring someone from outside vs. grooming somebody inside, part of it is a time question, because if you forced my hand and I know that I have time, I might focus on developing someone internally," said Daniel. A culture of succession still involves selection, development and putting the right people in the right roles. "The word that comes to my mind is sustainable. I'm thinking of sustainable processes."

Succession Isn't About You

If you're raising up the person who will one day fill your shoes, will you be able to step back when it's time for them to take over? What will that timeline look like? How you answer will help determine who exactly you're looking for, either someone who has the capacity to lead when you leave the business behind or someone with enough personal fortitude to lead while you're still around.

Either way, succession requires a dose of sacrificial leadership. It's tempting to take a view of succession that centers on ourselves, but in its purest form succession means preparing people for a time when we're gone. We may appoint successors to take over when we step down but remain active in the business somehow, whether on the board or in a smaller everyday role, but ultimately succession is about long-term sustainability. That means preparing the business for a time when we are long gone.

"What does it mean to think sacrificially and selflessly about preparing a system to be better when we don’t matter anymore?" said Rob.  "My dad always talked to me about this, about how quickly you're forgotten as a leader, that you need to lead in your time and then get out of the way. You're going to create difficult times for people if you don’t do that."

Looking at things in terms of long-term sustainability requires us to start imagining how we would do our job differently if today was our last day in the organization. It doesn't matter if you're in the mail room or you're an executive; if you decided to do your job so someone else could pick it up tomorrow, what would change?

To build a culture of succession, we need to begin with that conversation and think about how to build a system where we're investing in extending leadership capacity, maturity and wisdom. We may not be personally investing in and developing every single person in our organization — that would actually be irresponsible — but we are building a system where we’re investing in giving people a pathway to build that leadership capacity, maturity and wisdom right out of the gate.

"The real street-level example of that is Megan on our team," said Rob. Megan is the events and communication lead at WiLD Leaders, where this system of development is part of the culture. "It’s a part of everything that we do. It’s built into the cultural framework of how we do our business." 

Because Megan regularly did her job as though she wasn't going to be there the next day, she was able to go on maternity leave knowing the business would continue on smoothly in her absence — even when she ended up needing to leave two months earlier than expected.

"It was crazy how seamless that was because of her thinking about her own successor, even if it was just for a season," said Rob. "I cannot believe how seamless that process was."

This culture of development helps create sustainable, long-term health in an organization and a leader, which helps solves succession issues before they begin, not to mention a myriad of other issues.

Sometimes succession isn't the issue, but a symptom of the deeper issue of sustainable health.

Animating the Roots

Someone once said that if you want to grow a tree, you don't water the leaves, you water the roots. Approaching succession planning as a solitary issue, separate from the big picture, is like watering leaves. To water the roots is to introduce an intentional, strategic, systematic investment in building leader capacity through selection and development every single day. This means we need to ask what we should be thinking about from the perspective of our eventual replacement. What is it that would be most helpful to our successor?

Rob meets leaders all the time who have never seen someone invest in them, systematically and sacrificially, to develop them as a person, as a leader across the different domains of their life. It isn’t until people start to establish the culture we've been talking about that these norms start to change.

At this point, a number of obstacles come into focus.

You're not done yet.

Even though having a successor helps reduce the fears leaders face, it's hard to think about being replaced. As leaders who are still leading our organizations, we still have things we want to accomplish. We're not finished.

Succession isn't a one-person thing.

The individual you've identified as your successor could potentially go off script. If your whole plan is based on a single person, it's one attrition away from collapsing.

Developing a successor requires alignment.

Then there's the issue of not asking your successor what they want. Many leaders develop at somebody instead of really investing in the person. They offer their potential successor development and opportunities, both good practices, but they never ask this successor what they really want and why. So the leader develops a potential successor who doesn't want to same things. They're not aligned.

"You might have the right person, but you might not actually be aligned," said Daniel. "It’s the intentionality of what do I want and why, and what do they want and why? And are those going to line up so we can continue this process?"

Who succeeds the successor?

As for your successor, they have to be thinking about their own succession plan. If you retired tomorrow, sure, they could take over your responsibilities, but who's going to do the job they've been doing? They can't sustainably do both jobs at once. You successor needs a successor.

Are you having ongoing conversations?

Leaders aren't stagnant. Our successors need to be updated as we move forward in our business.

A few months ago, Daniel asked Rob to update their vision statement, because he wanted to know where the business is going in Rob's mind. This is typical, because they are intentional about regularly discussing the organization's growth and development. These conversations are a piece of the process they intentionally built into the structure of the business as part of their culture and, as a result, their succession plan.

"Succession planning is kind of the water we’re drinking, but it takes interesting conversations to get here," said Rob.

Three Steps to Get Started

Everybody leaves at some point, even the founder. Everybody transitions, whether it's by design or a surprise. A good exit strategy, a good succession plan, will not only help perpetuate your company, it will guard against the unexpected. Prepare now and you won't be caught off guard.

So after all this, what do you need to do? Three steps to get you started:

1. Know what you want.
   Are you trying to get the cashout? Do you want to have a lasting, sustainable organization?
2. Put a system in place.
   You have a process for going to market, for selling and delivering a product, for doing your books and finances. Have a process for health, an actual sustainable, repeatable system for building your culture, developing leaders and creating ongoing systems that generate health.
3. Get out of the way.
   Know what it means to let the next generation of leadership flourish.

"It makes me think about our friends who are in the reforestation business," said Daniel. "They would always remind you and I that the best time to plant a tree is 20 or 30 years ago, and the next best time is today — so get started."

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