Succession Planning for Millennial Leaders

This article was originally featured in Fast Company.

Without a well-considered succession plan, you are undermining your potential to enshrine a legacy.

When you are building a purpose-driven business—either to last across generations or ultimately to be sold—it’s never too early to consider succession planning. In fact, it’s the most important thing you can do to define and power the legacy that your business will create in the world.

Many business owners don’t think about succession planning until they approach a transition event like the transfer of ownership or even the sale of the business, but without a well-considered succession plan, you are undermining your potential to enshrine a legacy.

If you’re an entrepreneur, you probably already recognize that running a company is more difficult than one might think, so preparing people for leadership cannot happen overnight. You also don’t want to simply anoint a new leader. Instead, you’ll have the most success when a natural successor rises to the top, and earns trust and credibility over time.

As your company matures, you will want to consider that what has worked well in the past is not necessarily the attributes you need in your next leader. In Ichak Adizes’ book “Managing Corporate Lifecycles,” he offers a relevant perspective on how to think about what type of leader your company will need next by suggesting that the life cycle of a company calls for:

• Inspiring leadership in the early days of founding and initial growth in infancy
• Process-oriented and management-focused leadership to reach prime

The Home Depot in the mid-2000s is a well-known example of what can go wrong. The founders and board of the company had identified Bob Nardelli in the succession plan, and on paper, it looked like exactly the right path forward. The heyday of start-up and chart-topping growth had settled into a more consistent cycle of growth, and a manager from the GE management mold seemed like just the right fit.

Fast forward just a few years and it turned out that Nardelli’s style—primarily based on growing profits through cost-cutting—was a real culture killer, leading to unhappy employees and a declining stock price. The board of directors at The Home Depot brought in a different GE alum, Frank Blake, and he was able to take the company back to its roots and recapture the culture that was so critical to its success through his style of servant leadership.

The takeaway from this cautionary tale about succession planning, particularly when it comes to matters that are especially important to millennials, is that it has table stakes in the culture and purpose of an organization. Creating a bridge from the founding team that creates the culture and defines the purpose to a team who will carry, live, and breathe that culture even as it must change as the company scales, is paramount.

When you think about who’s next, think about what’s next for the company and optimize for that plan. No one will check every box, but culture carriers are a must.

Servant leadership, or the idea that a leader puts the company first, can be lonely. As you think about what’s next in your business, you can also address that feeling of isolation by getting advice and context from your peers through a peer mentoring group like Vistage or YPO (Young Presidents Organization). I’ve spent many years being supported by peers through both organizations, and it made a difference for me as I began my own succession to CEO over several years. This is an effective way of helping your successor develop the traits that are necessary to take the company to the next level.

If you’re a family business, succession planning can be a particularly thorny issue. Avoid the temptation to follow “tradition” and anoint your firstborn son as your successor. If any of your children are candidates for ascension, let them go and work somewhere else to develop and demonstrate their aptitude and ability. Separating the business of the family from the family business is an important principle and is critical to securing long-lasting generational wealth and enduring family legacy.

I’ll sum this up by dipping into my own experience as a founder who ascended to the role of CEO after several years of preparation. It is hard to escape “founder’s syndrome.” Letting go and trusting the next generation to do as well—or perhaps even better—than you did with your baby is challenging, especially for entrepreneurs who often innately struggle with delegation as part of their DNA. But to give power is to receive power to enshrine a legacy and purpose—something that is so important to millennials. Make it easy for the next leader to start strong by being clear to everyone that your successor is now in charge and that you are not going to micromanage their decisions. That is what my predecessor did for me, and I am very grateful for it.

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