How do the 0.001% really live? The third season of HBO’s Succession is upon us and ready to pull back the curtain once again. It’s a simple premise: ailing patriarch Logan Roy is the founder/CEO of family-owned media empire, Waystar Royco. He is looking to turn over the keys to someone he trusts. His sharp-tongued children and corporate hangers-on jockey for position while Logan bides his time and withholds approval. The family members live the kind of lives that even the richest can only dream of. They want for nothing yet are crippled by affluenza. But is the show just a compelling black comedy or does it really mirror the corporate world?
“Uneasy lies the head that wears a crown” Henry IV, Part 2
Script advisers have ensured the shareholder proxy battles and M&A hostile takeover bids withstand scrutiny. Wealth consultants counsel on the understated wardrobe choices of the ultra-rich. As for the CEO succession process, my experiences in the corporate boardrooms of the US and Europe, suggest that the writers have it right in a number of ways:
1. Founder CEOs cling to power for too long. This is a sound premise. Founder CEOs find their identities inevitably become intertwined with their ‘baby’ of an organisation… but children inevitably grow up and the time comes when parents must let go. It’s no surprise that many founders are unable to see anyone else as a worthy successor and leave it too late. Removing their crown might be a logical move, but logic be damned.
2. The CEO succession process is typically a mess. You can have a well-structured board Nominating Committee and all the right intentions, but we are dealing with egos and power here. There will be blood.
3. Most boards can’t explicitly agree on what the future CEO really needs to get done. They settle for generic platitudes rather than measurable outcomes. Is Waystar Royco a decentralised media holding company or a digital pioneer? Until these business strategy questions are settled, the right captain for the ship is anyone’s guess.
4. Biases abound. Recent research by my colleagues at ghSMART shows that some of the things that make potential CEOs attractive to the board have little bearing on performance. They over-weight charismatic extraverts who have form over substance. Do their candidate equivalents of Kendall, Roman or Shiv most ‘look the part’?
5. And feuding is rife. In the show, the political theatre and acerbic wit drive the drama. In the real world of the carpeted executive floor, the manoeuvring and posturing is just as rife… though usually less obvious. One of my clients shared that their own CEO succession process was like “Game of Thrones, but in chinos.”
“All happy families are alike; each unhappy family is unhappy in its own way.” – Tolstoy
So, if Succession accurately portrays some of the flaws we often see, then how should the process work?
- Start early. The best boards are looking five years ahead to consider the emerging talent and ensure that potential successors are getting the right stretch roles and opportunities. The incumbent CEO and head of HR may take the lead, but the right board is quietly paying close attention.
- Make the implicit, explicit. Each board member has a different, often valid view of what the future CEO needs to deliver. Who is going to extract it from their brains and align them on a discreet set of, say, five key criteria?
- Focus on the data. Upwardly mobile candidates excel at being associated with success and distancing themselves from out-of-favour initiatives. But is it sizzle or steak? The nominating committee needs to triangulate on the truth with a dispassionate, objective assessment of each candidate’s strengths and gaps.
As hierarchical beings, we instinctively care about who is in charge and how they get chosen. Monarchs keep it simple through bloodline. The Roman Catholic Church closes the doors of the Vatican until they can agree on the next pope and send up the white smoke. Corporate boardrooms are, at best, a work in progress. The most well-run CEO successions barely register on the share price and are ignored or missed by the media.
But as I pick up the remote and turn on the TV, do I want to see a best-in-class lesson in boardroom governance? Absolutely not. Internecine warfare, offensive putdowns and a glimpse into the unhappiness of the 0.001%, please.