Market view and Insights
According to a renowned business professor, we can learn a lot from the succession stories of ancient and literary heroes.
When Jeffrey Sonnenfeld, currently senior associate dean of the leadership program at the Yale School of Management, started studying leadership in the late 1970s, he noticed a phenomenon as a whole generation of great post-war leaders from government and the corporate world left their posts. There was no blueprint or standard for leaving. Instead, leaders led very different paths and sometimes, that path could be destructive.
"It was sort of like leaving the breakfast table and somebody knocking the table over. It has a spoiler effect when they leave," Sonnenfeld said. Traditionally, succession focuses on identifying the rising star. But Sonnenfeld says that's really only half of the discussion. "That spoiler effect was hugely important. It cascades down the firm. The more I started to study it, the more I realized that there's a lot to do with the study of heroes," he said.
That realization led him to write The Hero's Farewell: What Happens When CEOs Retire, which goes into detail about the factors that affect succession. A CEO's departure style plays an important role in how successful, or not, the transfer of power can be. Though it's been 30 years since The Hero's Farewell was first published, the lessons still resonate because conflicts around succession are as old as human history.
Mr. Sommerfeld, what makes succession so difficult?
Research finds that two drivers make top leaders a little bit different from the rest of us. One of them is a drive for immortality. Another one is an elevated drive for uniqueness and stature. Nobody ever called Alexander the third of Macedonia, Alexander the Great until he called himself that.
People often become hyphenated with the job. They get caught up in the epaulets and the sash across the chest. It's hard for them to imagine themselves without the title. You put those two drives together and you see that it's very hard for some leaders to step down as there's a giant abyss of insignificance that they have to cross.
How do different leadership styles affect succession?
There are some, I call them monarchs, that think there is only one person on earth who is truly indispensable, so they don't leave office gracefully. They're big builders, but they can undermine successors. They feel that they're a threat. Those are the people who like to be consummate creators, consonant builders, the serial entrepreneurs. They'd say "I've built this mountain. I'm happy to show others how to build a mountain, but don't take my mountain. Go out, get your own."
Then there's another group I call generals, who will leave office but then they change their mind and come back in. That absolutely sabotages successors. Many of the great heroes in the Second World War came back out of fully mothballed retirement - Patton, MacArthur, Montgomery, Churchill. In the corporate world, there's Howard Schultz of Starbucks, Phil Knight of Nike, Michael Dell. They've come back in and had a profound impact on their return.
Other leaders are more likely to move on gracefully. Another group, ambassadors, serve a very graceful tour of duty; then they serve at the behest of their successors in a collaborative partnership where they don't undermine the successor. They serve as a wise elder statesperson. The fourth groups are our governors. They serve a limited time in office, and then move on to do something else. Maybe they go from startups and turn around to public service.
What changes or trends in succession have you seen since you wrote The Hero's Farewell?
We're seeing a lot more people who have been moving into that governor's category. They are finding other things they want to do with their lives. So while they don't retire, they're finding other sectors to go into, or other businesses, whether it's going into worlds of private equity, or board service, leading economic development commissions and nonprofits.
Activist investors and a lot of good governance pressures often push for a focus on the outside as opposed to grooming somebody who has been seen as a loyal lieutenant to the incumbent. Frankly, there's nothing wrong with it. It works in many, many cases, and it still is probably the most dominant form of succession today.
But the governor's path is one that many activist investors push for - that's for the CEO or incumbent to leave and do something else, cut all ties, and bring in somebody new from the outside. But that is not necessarily the right answer for most companies.
Many people don't retire or don't want to retire these days. Is retirement even necessary?
There is a drop in productivity in every field. It's earlier in scientists than it is in engineers and managers. But basically, in mid-career, there is a plunge, but then there's a second wind.
In mechanical fields, people have often just gotten caught up in the dreariness, or they haven't been well managed and haven't had a good quality of life. They often can't wait to get out of there. But if people are excited about what they're doing, then they're not interested in retiring. And we're seeing a lot more people that are interested in enjoying what they're doing. So there isn't that desire to go to a world free of work. We've become so defined by our productive nature.
With GenX and Millennials taking over, is there a chance that this generation will be different?
We're looking at a generation of CEOs, the Baby Boomers, doing a much better job of finding ways to contribute. The previous generation - the group that was born in the 30s - was probably a much weaker generation in office. Most of that generation got into significant positions of power because of the population booms on either side of them. They came of age in the 1950s and got big jobs in the 1960s. They were way over their heads in most cases.
Now, as we take a look at millennials that were somewhat a weaker generation, with Gen X being a stronger generation right now stepping into senior roles. We're seeing a tension between millennials and Gen X, but I don't want to push the Baby Boomers off the stage just yet.
I think that what we've seen with whether or not it's Mitch McConnell or Nancy Pelosi, the former President Trump or President Biden today, Elizabeth Warren - regardless of how you feel about the politics of one leader or another - what we're seeing is we are suddenly are cherishing wisdom a lot more. Because of the way people live and eat and the rest, we are not ostracizing seniors the way we used to. In fact, we're seeing them in quite significant leadership roles across sectors.
Copyrights pictures: Statue Winston Churchill, © Edwin Remsberg / Alamy Stock; Elizabeth Warren © Keystone/Newscom, Sarah Silbiger
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