DS Cohen & Associates
To today’s executive leadership – CEOs, CHROs, and CFOs – succession planning has often been romanticized as a seamless passing of the baton. The reality, however, is far from this idealized dream. It is a symphony of organized chaos; it is frequently more about pragmatic replacement than the heroic transfer of leadership many imagine. Within organizations governed by leadership biases and performance metrics that may not accurately reflect an individual’s true capabilities, the distinction between perception and reality becomes blurred. Succession planning, therefore, exposes the complexities of human behaviour and magnifies the subtle nuances and contradictions inherent in organizational life.
For those in the C-suite, this process serves as a powerful reminder: effective leadership transitions require more than a plan. They demand a clear-eyed understanding of people, culture, and the unpredictable nature of change.
The Evolutionary Timeline of Succession Planning
The journey of succession planning mirrors the evolution of organizational life itself: moving from improvisation to strategic precision. From jazz to classical, if you will. History is replete with tales of succession from biblical times, reminding us that the process has always been susceptible to intrigue, ambition, and unpredictability.
From the 1950s through the 1970s, succession in most companies was little more than “replacement planning.” When a seat was vacated, the search focused on finding someone who resembled the outgoing leader, like a game of musical chairs where the music only paused for those who fit the familiar mould. In the ’50s, this worked because the economy was booming. They could have hired a monkey as CEO, and they would have succeeded. However, as the economy shifted downwards in the 70s, innovation was soon seen as a requirement for success. The same old playbook just wouldn’t work anymore.
By the 1980s and 1990s, organizations began to identify and nurture “high potentials.” However, these efforts remained largely role-specific and reactive, rarely connecting to future business strategy. It wasn’t until the early 2000s that succession planning became integrated into comprehensive talent management. Today, executive teams operate in a landscape shaped by data-driven insights, where succession planning is less about replacing individuals and more about cultivating leadership capable of steering the organization through future uncertainty. For contemporary leaders, it’s not just about filling an empty seat; it’s about ensuring the next generation is ready for what’s next.
Replacement Planning: A Masked Reality
The progress of succession planning today, for most organizations, is often still synonymous with replacement planning. The roots of this misalignment are deep, embedded in the very tools and organizational cultures that perpetuate it. The cherished performance review, an annual ritual, feeds into succession planning. However, these reviews often serve as a breeding ground for unchecked imagination or stem from manipulated information to justify a bonus or retain an employee. The prose of performance reviews is well-written fiction, creating a world where everyone is both a superstar and the next great leader. It’s all fluff, and everyone knows it.
In this landscape, the rise of AI promises to introduce a degree of objectivity that is often lacking in human-driven practices. Yet, the success of AI-driven tools hinges on the honesty of these very performance assessments. AI can only be as unbiased as the script it is given. (The next article will focus on the integration of AI and Succession Planning.)
As a result, companies often resort to more reactive replacement strategies, particularly during crises or periods of underperformance, rather than using proactive, systematic succession planning.
According to a 2019 study published by Business+Strategy, “The majority of succession planning still appears to rely on an ad hoc or event-driven approach to succession rather than maintaining an active pipeline of ready-now leaders.”
Even when organizations claim to have succession planning processes in place, these are often in name only, with limited strategic alignment, insufficient preparation of future leaders, and a focus on short-term replacements rather than the long-term needs of the business.
Proactive Succession Planning: Learning from the Exemplars
Many of the most successful organizations demonstrate that effective succession planning is about filling vacancies and strategic foresight, intentional leadership development, and resilient business continuity. Apple’s transition from Steve Jobs to Tim Cook is a gold standard. Cook was systematically prepared over the years, inheriting the role and Jobs’s vision and operational pipeline. This seamless transition reassured investors, stabilized the workforce, and allowed Apple’s innovation engine to continue uninterrupted.
Microsoft likewise offers a case study in deliberate succession. The move from Bill Gates to Steve Ballmer, and subsequently to Satya Nadella, was carefully orchestrated. Nadella’s years of internal experience and cross-functional leadership prepared him to redefine Microsoft’s culture and strategic focus, substantially increasing the company’s valuation and market relevance.
Even under crisis, strong succession planning pays dividends. In 2004, McDonald’s faced the sudden loss of CEO Jim Cantalupo. The company’s preparedness allowed Charlie Bell to step in immediately. After Bell’s untimely illness, Jim Skinner was promoted. This rapid, organized response stabilized operations and reinforced stakeholder confidence.
Failing to plan, on the other hand, incurs costs. Research by PwC’s Strategy shows that companies without robust succession strategies are more likely to face operational problems, leadership vacuums, and declining shareholder value following an unplanned CEO departure. Reactive succession relies on replacement planning approaches, which disrupt continuity, damage morale, and erode investor and board trust.
The lesson is clear: Proactive, strategic succession planning is not simply a best practice; it is a necessity for organizational stability, resilience, and ongoing performance.
The Cultural Shift: Transparency
A significant cultural shift is underway: leading organizations increasingly recognize that transparency and inclusivity are essential pillars of effective succession planning. Companies like McDonald’s and Coca-Cola have made strides by openly communicating about their leadership development and pipeline strategies. By doing so, they signal to employees that career growth is attainable and that talent is nurtured at every level, not just behind closed doors. Research from Deloitte and Gartner supports this, showing that when employees understand their potential career pathways, it not only increases engagement and retention but also strengthens the employer brand in a competitive talent market.
Yet, with greater transparency comes new challenges. Openly discussing succession plans and potential leaders can, if not managed thoughtfully, fuel feelings of entitlement, disappointment, or even heightened internal competition. The key is to ensure communication strategies promote a culture of aspiration and development rather than rivalry or exclusion. This means framing succession planning as an ongoing development journey with multiple routes to leadership instead of a zero-sum contest for a single role. Microsoft, for example, has found success by emphasizing broad-based leadership competencies and development opportunities rather than focusing attention solely on a few “anointed” successors.
Ultimately, authentic transparency balanced with inclusivity allows organizations to harness the benefits of openness (greater trust, clarity, and motivation) while carefully navigating the complexities of ambition and internal politics. For executive leaders, the imperative is to communicate not just who is being developed, but how and why, embedding succession planning as a culture of growth rather than a game of favourites.
The lesson is clear: Transparency in succession planning strengthens organizations, but only when paired with clear communication, fairness, and a developmental mindset. To answer the age-old question of whether to gauge if an employee is in the high-potential pool.
The Business Case for Succession
The rationale for robust succession planning is not merely theoretical; it is supported by compelling evidence from decades of executive research. Studies consistently demonstrate that organizations promoting from within achieve superior long-term outcomes compared to those hiring leaders from outside.
Internally promoted employees tend to stay in their roles significantly longer. Data from Strategy+Business reveals that the average tenure for internal CEOs is typically six to seven years, compared to four to five years for those brought in from outside. This extended continuity allows for more consistent execution of strategy and vision, reducing the disruption and uncertainty that often accompany frequent leadership changes.
Beyond longevity, internal promotions yield tangible business benefits. On average, employees who have risen through the ranks are more successful and deliver stronger results than their external counterparts. These leaders leverage deep institutional knowledge, established relationships, and a nuanced understanding of the company’s culture and strategic priorities, enabling them to make more informed decisions from day one.
Succession will only succeed if those placed in the high-potential pool exemplify living the behaviours that define the company values. This approach strengthens organizational culture, enhances operational continuity, and delivers measurable results at the highest levels of leadership. Selecting a person solely based on their accomplishments and exceeding results will undermine the sincerity of leadership’s commitment to the values and culture.
Ultimately, the evidence is clear. Succession planning that prioritizes internal leadership development is not just a best practice but a business imperative.
Conclusion
As organizations confront unprecedented complexity and rapid change, succession planning emerges not merely as an administrative exercise but as a vital strategic priority. The research and case studies are irrefutable: companies that invest in proactive, transparent, and inclusive succession practices outperform those that rely on in-the-moment, reactive, replacement-focused approaches. Leaders developed internally, nurtured through deliberate preparation and data-driven development, bring continuity, resilience, and cultural alignment to the executive suite.
However, the path to effective succession is nuanced. Transparency and inclusivity in the succession process are essential, fueling engagement and trust, but they must be managed thoughtfully to avoid internal politics and disillusionment.
Ultimately, the most successful organizations view succession planning as a means of sustaining their culture rather than a checklist, as a long-term process of talent development, strategic clarity, and ethical leadership. The bar for excellence continually rises as we navigate the terrain of succession planning. Organizations must embrace both the science of analytics and the art of human insight. By combining technology with robust, honest evaluation processes, companies can build leadership pipelines that can endure the challenges of modern business.
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David Cohen is completing his second book on how to hire for fit to values/culture. His first book is called The Talent Edge. He has conducted workshops globally on Structured Behavioural Interviewing. For more information on the workshop, please contact DAVID.
