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Smart organizations foster relationships between high-potential executives and corporate directors to strengthen the leadership pipeline and minimize CEO succession risk.

Symbiotic Succession

Planning

Enhancing Soft Skills for Solid Results

hs-00047-14060357-Symbiotic Succession Planning-clean DRAFT 08.indd 1 27/06/2014 16:12

Symbiotic SucceSSion Planning:

Enhancing Soft Skills for Solid Results by John T. Thompson and Natalia Rodriguez

Smart organizations foster relationships between high-potential executives and corporate directors to strengthen the leadership pipeline and minimize CEO succession risk.

In biology, symbiosis involves a mutually beneficial

relationship between two independent organisms. Both

sides gain from the relationship, and create something

together that would not have been possible without

each other. An obvious example is the relationship

between flowers and honeybees: bees derive nectar

from flowers to make honey, and in the process assist

in the pollination that triggers plant reproduction.

Symbiosis is not confined to nature. In sports, for

instance, observers referred to the relationship between

the great boxer Muhammad Ali and the broadcaster

Howard Cosell as symbiotic. It’s hard to imagine two

more different characters, yet sports historians agree

that Ali and Cosell fed off one another and, in the

process, increased each other’s stature and success.

The business world is filled with networks in which

individuals benefit from one another. Ironically,

however, the two parties within every modern

corporation who would benefit most from symbiosis—

corporate directors and rising star executives—often

don’t take advantage of the opportunity. That’s a

shame, because doing so could help the company

strengthen its leadership pipeline, enhance leadership

skills and supercharge its succession planning.

In what we have dubbed “symbiotic succession

planning,” organizations pair corporate directors with

rising stars in formal mentoring relationship well before

an actual succession event. The pairing results in a

mutually advantageous relationship that leads to better

corporate performance. The directors better equip

themselves for their CEO succession duties by gaining

an intimate knowledge of internal high-potential talent,

and the high-potentials receive invaluable mentoring

and coaching from seasoned corporate leaders.

The rationale behind symbiotic succession planning

We recently spoke with a number of board members, chief

executive officers and private equity leaders who have

orchestrated some of the most successful CEO successions

in recent history—leaders from Apple, Google, Xerox,

Delta, Morgan Stanley, eBay, Frontier Communications

and others. We also probed board members who have

overseen succession disasters for lessons learned.

Not surprisingly, virtually every director we spoke to

claims CEO succession planning is the board’s number

one priority. Further, boards still preach the gospel that it

is almost always preferable to promote from within. Most

directors cited the risk of an uncertain “DNA injection”

from outside into the top level of a company—too much

is at stake if it turns out to be a cultural mismatch.

Beyond risk reduction, internal promotions reveal

much about the company’s health and sustainability.

According to Glenn Hutchins, co-founder of Silver

Lake Partners and director at NASDAQ OMX,

2 Symbiotic Succession Planning


‘ “The best organizations are those that promote CEOs from within. It shows that you are a company that attracts and develops its own talent. This is motivating because your best people see that they can aspire to the top levels of the organization.”

Less appreciated in boardrooms, however, is the notion

that even an internal superstar can be risky. In 2009

Procter & Gamble’s board—which included top CEOs

such as American Express’ Ken Chenault and eBay’s

Meg Whitman—had every reason to believe longtime

employee and top performer Bob McDonald would

be an excellent successor to A.G. Lafley. But P&G’s

performance under McDonald did not meet Wall Street

expectations and activist investors advocated for his

ouster. The result was a public battle that culminated

in McDonald’s departure. With impatient stakeholders’

influence on the rise, internally promoted CEOs who

cannot instill hope and create new opportunities while

preserving the corporate culture won’t last long.

CEO selection can be a gamble under the best of

circumstances, but the risk is exacerbated when board

members lack a deep understanding of their executives’

leadership potential. They make judgments based on past

performance, which isn’t always a strong predictor of

future success—particularly for the unique role of CEO.

Boards examine the “on-paper” profiles and results of

10, 20 or even 30 candidates in a jam-packed half-day

session at the annual board meeting. These discussions

are necessary, of course, but they’re not nearly enough.

Nor are the annual ceremonial dinners some boards

stage with rising star executives. Promoting from within

reduces risk only if board members get to know rising

stars more intimately and much earlier in their careers.

To contribute most fully to CEO succession planning

discussions, directors need to have ongoing, substantive,

one-on-one conversations with internal leaders.

What are Soft SkillS?Soft skills are the intangible proficiencies CEOs cannot do without. They derive from four underlying leadership qualities: self-awareness, empathy, authenticity and mental agility.

Self

-aw

aren

ess

Leadership effectiveness starts with self-awareness. Aspiring CEOs must be aware of their own strengths, weaknesses and blind spots to gain a better understanding of how others view them, how their actions and words affect organizational culture, how they can cope with the pressures of being CEO and how they can empower others to achieve their goals.

Empa

thy

Empathy is the ability to put oneself in other people’s shoes and understand what they’re thinking and feeling. It helps aspiring CEOs to understand and connect with diverse constituents, communicate effectively regardless of audience or context, and motivate colleagues, subordinates and strategic partners. It even helps them anticipate the changing demands of customers as well as the needs of the company’s directors.

Aut

hent

icit

y

Authenticity starts with a clear understanding of the source of one’s motivation, strength, courage and passion—a leader’s “true north.” This helps aspiring CEOs develop executive presence and their own leadership style, connect with others, and stay true to themselves and their values.

Men

tal A

gilit

y

Mental agility is the ability to question one’s own assumptions, solicit and incorporate the good ideas of others, and view complex challenges from different angles. It enables aspiring CEOs to anticipate trends and think creatively about tough problems. The number one derailer of otherwise successful leaders is stubbornness—defaulting to the status quo because it worked in the past.

In symbiotic relationships, the director serves as the executive’s sounding board, teacher and guide. Some of the best mentors we have seen pepper their mentees with strategic questions to encourage them to think in novel but highly productive ways. This practice enables the executive to reframe seemingly intractable challenges in a way that leads to practical solutions. This kind of mentoring is particularly well-suited for developing soft skills.

Heidrick & Struggles 3


As for the high-potential internal candidates themselves,

they most possess the passion, experience and

intelligence necessary to succeed or they would

not have been promoted to senior positions in the

first place. But becoming a CEO presents different

challenges, and most candidates lack the “soft” skills

required. As former Agilent Technologies CEO and

current eBay director Ned Barnholt observes,

‘ “When you get to the point of interviewing candidates for the CEO role, they all have a pretty high baseline of technical and strategic competence. At that point, the key differentiators are the soft skills.”

We recently assessed and advised against a strong chief

operating officer who spent her career focused on internal

matters but never developed the empathy needed to

relate to shareholders, regulators, unions, media and

other external parties with whom a CEO must interact.

We have also seen excellent general managers who

were shocked, once promoted to CEO, by how closely

their actions, words, body language and even facial

expressions were scrutinized by the entire organization.

A star executive can fail as a CEO in a thousand ways,

many of them stemming from inadequate soft skills.

When a new CEO doesn’t work out, the reasons can

seem mysterious. But most of the time it happens

because boards do not fully understand their internal

candidates’ character nuances and leadership

potential, and the most promising executives have

not been coached to develop their soft skills.

Smart boards use symbiotic succession planning to reduce risk

Smart boards don’t have that problem when they use

symbiotic succession planning. In this highly interactive

process, board members and high-potential candidates

develop formal relationships that last a year or more.

The process filters out candidates who look good on

paper but are not right or not ready for the CEO role.

As Ned Barnholt told us, “It often takes a while for

someone’s ‘fatal flaw’ to reveal itself. Someone who

has very strong operational and strategic abilities may

not have equally strong leadership capabilities.”

One director we interviewed mentioned a prominent

Silicon Valley CEO who rose through the ranks as an

exceptional product developer but had never been

a general manager and lacked P&L experience—he

had only managed a small team of engineers. Behind

closed doors there were whispers that he lacked

people skills. These qualities were not necessarily

evident or problematic in his prior role as head

of product development, particularly because

he had introduced a string of hit products. They

became all too evident in the CEO role, however,

as the board, employees, shareholders and press

observed the company’s enterprise value decline.

Ideally, a symbiotic relationship starts with an objective

assessment of the executive’s strengths, blind spots and

developmental needs, and a plan for filling the gaps that

serves as a road map for both parties. The plan should

include new challenges—suggested by the director,

championed by the CEO and endorsed by the head of

HR—that stretch the candidate and unlock economic

value for the company. For example, the director might

suggest that the rising star try turning around a failing

business unit or orchestrating a new product launch.

This type of challenge can allow the company to explore

new markets and innovations, using rising stars to

drive the process. When successful, it can also be an

effective way to keep activist investors on the sidelines.

As Silver Lake’s Glenn Hutchins notes, “It is important

to stretch candidates outside of their comfort zones

in order to help them grow. As a board member, you

would rather see someone who isn’t ready for the

C-suite learn and prepare in a ‘lesser’ role than as CEO of

the entire company.” However, “stretching” candidates

does not mean throwing them into the deep end

with no life preserver. The director/mentor should

offer advice and coaching during the assignment.



Setting uP your oWn Program

Conduct leadership potential

assessment: Interview board

members to determine what leadership

capabilities are needed to execute company’s

strategy; simultaneously assess executives to determine

if (and when) they can deliver.

Get buy-inThe CEO introduces symbiotic

succession planning to the directors and gets their

support.

Begin matching processThoughtfully assign each

board member to a high-potential executive.

Cultivate relationshipsProvide each director with a customized developmental road map to help establish goals, chart a path and develop their

protégés’ soft skills.

Discuss with other board members

Using insights gained from their personal relationships with rising stars, directors discuss their protégés objectively with the entire board during o�site succession planning.

RotatePair each mentor with a

new protégé after 12 months to keep the process fresh and

enable rising star executives to learn from a variety of board members.

Heidrick & Struggles 5


caSe Study

Frontier Communications

More and more top companies are successfully

experimenting with their own versions of symbiotic

succession planning. A pioneer in this approach

is Frontier Communications, an 87-year-old

communications firm based in Stamford, Connecticut.

Frontier’s leader, Maggie Wilderotter, is the longest

tenured female CEO of any Fortune 500 company. She

also sits on the boards of Procter & Gamble and Xerox.

She is a big believer in having her company’s board

members coach and mentor its rising star executives.

She established what she calls a “buddy system” to

enhance the company’s succession planning process.

Launched in 2006, the program is still going strong.

“It’s highly effective and well-received,” she told us.

Ten to 15 high-potential executives are paired with

board members over a two-year period. They

are expected to meet at least three times a year

outside of the boardroom. They focus on creating

a practical plan that helps fine-tune their soft

leadership skills. After two years, they rotate.

‘ “The buddy system gives board members more accountability and knowledge about the company and its talent,” Wilderotter said. “It takes risk off the table because everyone is involved in the succession planning process, not just a small group of people on a nominating committee.”

Wilderotter admits that the idea is not for everyone,

noting that “it takes a secure CEO to implement a buddy

system like ours.” The CEO must relinquish some control,

but Wilderotter believes there is power in doing so: It

opens up creativity, accelerates leadership development

and promotes greater dialogue. “Plus, our entire board

is in this together. We share the same goals and we have

skin in the game. Our board members are critical thinkers

and outstanding mentors, and we’re delighted to have

the opportunity to help develop our future leaders.”

Directors, high-potentials and companies all win

When directors take executives under their wing, they

gain a deeper understanding of the executive’s potential.

Directors also hear firsthand from frontline leaders

about the business’s latent threats and opportunities.

Such competitive intelligence can be used to drive

innovation and ensure that competitors don’t mount a

surprise attack. With a more robust understanding of

internal talent and the company’s strategic challenges,

individual directors can have rich succession planning

discussions that strengthen the entire organization.

The high-potential executives receive practical advice

and expert coaching that helps them develop their

leadership skills. At a certain point, soft skills become

a key differentiator between merely good executives

and great ones who have the potential to serve as CEO.

Putting symbiotic succession planning into practice

is not easy, nor is it a short-term, ad hoc solution. It

requires commitment from the board, buy-in and

support from the CEO, and careful pairing of board

members with rising stars. It requires time, patience

and honesty from both directors and executives.

That said, the benefits from symbiotic relationships

are profound. Together, both parties produce results

neither could achieve on their own. Organizations

develop an enhanced succession planning process, a

more robust leadership pipeline, less risk and stronger

organizational performance. And executives get the

opportunity to further develop the soft skills they’ll

need to be considered a serious CEO candidate.



Heidrick & Struggles is the premier provider of

senior-level Executive Search, Culture Shaping and

Leadership Consulting services. For more than 60 years

we have focused on quality service and built strong

relationships with clients and individuals worldwide.

Today, Heidrick & Struggles leadership experts

operate from principal business centers globally.

www.heidrick.com

John T. ThompsonVice Chairman, CEO & Board Practice

[email protected]

John Thompson is a Vice Chairman with Heidrick & Struggles and is recognized as one of the most respected advisors to Boards and CEOs in the nation.

Natalia RodriguezAssociate

[email protected]

Natalia Rodriguez is an Associate with the CEO & Board Practice, where she assists technology companies with CEO and Director searches.

Copyright ©2014 Heidrick & Struggles International, Inc.

All rights reserved. Reproduction without permission is prohibited.

Trademarks and logos are copyrights of their respective owners.

00047

We would like to thank the following people for being

so generous with their time, stories and insights: Glenn

Hutchins, co-founder, Silver Lake and director, NASDAQ

OMX; Mike White, chair and CEO, DIRECTV; Roy Bostock,

former chair, Yahoo, current director, Delta, former

director, Morgan Stanley; Maggie Wilderotter, chair and

CEO, Frontier Communications, director, XEROX and

Procter & Gamble; Bill Campbell, chair and former CEO,

Intuit, director, Apple; Ned Barnholt, director, eBay, Adobe

and KLA Tenecor, former CEO, Agilent Technologies n



www.heidrick.com

[email protected]

[email protected]

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Symbiotic Succession - Premier Executive Search Firm/media/Publications and Reports/Symbiotic... · orchestrated some of the most successful CEO successions ... A star executive can