News and Views
November 30, 2023
Posted in: WATSON Views
We’ve seen so many complex succession stories in the news recently about boards that are seemingly unprepared for emergency succession; stories from organizations like Traynor Ridge Capital, Rogers, Indigo, and more unfolding in ways that their boards did not expect. Even the twists and turns at OpenAI are partially about emergency succession. So how can boards avoid their succession stories becoming front-page news? For many, there are relatively quick and targeted actions that can reduce this area of risk.
It’s easy to criticize from the outside, but when WATSON is brought in to help with a succession challenge, we usually find deeply committed and skilled boards trying to navigate difficult things and working hard at them. And yet, gaps still happen; gaps that can put the survival of the business at extreme risk.
So, what could be done differently? The unthinkable sometimes happens; how can we prepare for a range of potential scenarios with many unknowns? We can’t know how the future will unfold, but we can still prepare.
Here are some reflections for consideration:
- Succession plans need to be more than names. The more a board is ready with a playbook, the more it will be able to act quickly and with confidence should the unexpected occur.
The playbook should include “the keys to the vault”. In other words, it is essential to consider whether the leader in question (CEO or other key executive) has unique powers or authorities. (e.g. signing authorities, licences, etc.), passwords and codes, or other forms of critical knowledge, access or power. It is essential that the board knows what those are, and how business continuity will work.
- Further, the playbook should include key contacts and communication plans, with an emphasis on business continuity and maintaining calm, order and control through a time of instability and shock.
- More broadly, boards need to have multi-faceted conversations about a wide range of risks and prepare themselves for the unexpected through tabletop or scenario exercises. The more a board practices responding to a crisis, the more muscle it has when the time comes – whatever the crisis turns out to be. Those conversations also help deepen directors’ understanding of the business model and ecosystem. They are the antidote to the complacency that can sometimes sneak in when a business appears to be in good hands.
Beyond the playbook, succession is about so much more than having a list of names or even a written plan. If you want a happy ending for your organization’s next succession story, the board must pair future thinking with supportive and enabling behaviours today.
Does your board need help putting together an emergency succession playbook? Email firstname.lastname@example.org to start the conversation.