EVEN when a succession plan is a smooth process, its actual implementation can be disruptive. Maybe the newly designated CEO is tasked to shake up the organization. Was he hired to be a disruptor aiming to rattle the status quo?
A newly installed leader can choose to make his mark by throwing out most of the policies and procedures, as well as some executives, that he sees as no longer in the game. Can a new team be far behind? (Start with a new slate.)
The exhortations to upend the status quo and let the imagination go bungee jumping are standard fare for strategy sessions when a new leader is on board. Those with the least emotional investment (and service) in the company and what it stands for get the biggest chunk of talk time to dismiss anything that seems to be deeply rooted, even the current office address.
New recruits who only just got their e-mail address and calling cards (do they still need these?) promote the dismantling of a system in which they have no stake. They stand to benefit the most when old boxes collapse as new and bigger boxes replace them. (Guess who the new tenants of the latter will be.)
The box in the phrase calling for disruption is a mindset for the way things are. So, “thinking out of the box” hints of an obligatory rampage of throwing the furniture around so no one can sit down. It’s not the time to rest your weary head.
Out-of-the-box thinking can embrace the loony and eccentric. One can imagine the consultant in a seminar, jotting down the silliest ideas in bullet points and arrows connecting phrases — eliminate in-house manufacturing and outsource everything (yes, yes, you’re on the right track); close down all the branches and go fully digital (yeah, I’m panting already); throw away the manuals and seize every opportunity for a sale, never mind the old target market (you’re on a roll); eliminate two levels of management to flatten the structure – wait a minute, let’s set that aside for now.
The appeal of novelty lies in its promise. Crazy ideas have no track record — how do we know it won’t work if we don’t try it? So what if it costs millions? Untried things are easily defended against attack – you’re not open to change. The flip side is not mentioned at all — can we afford this ridiculous strategy? (Who pays for the broken dishes?)
One lesson learned in the 2008 financial meltdown was the folly of even just a few companies thinking out of the box. They cooked up the novel financial instrument called Collateralized Debt Obligations (CDOs) to securitize loans and raise funds without having to collect from the original borrower. These newfangled instruments were unregulated and became ever more complex. Even the rating agencies gave them a pass. The underlying value of the collateral (housing loans to sub-prime borrowers) became arbitrary, and eventually found no more buyers. The holders of the worthless CDOs finally needed to be rescued by the government.
There is some wisdom in reining in unchecked disruption. One is to limit change to a small section and see how it works. There is the exhortation to “fail fast and fail cheaply.” Experiments with new approaches can be tried in one branch. The deliverables must be clear and subject to measurement. The most important metric is defining success in terms of numbers. This will automatically define failure too and limit its damage.
It’s becoming a corporate trend to recruit new CEOs from outside the organization, sometimes coming from a totally different industry. The thinking seems to be that someone with no stake in the status quo is bound to be more objective. But does he know what he’s doing?
What happened to the traditional promotion of leadership from within? Is an insider with many years of service in the company incapable of objectivity? Does the search committee just throw away all the experience and learning on the job?
When the company is in a downward spiral and losing market value, it is indeed tempting to change the leadership and put a disruptor in place.
The results are not always positive. Too many companies have faded away and closed after a disruptor threw away the mission statement — along with any rational thinking.
Tony Samson is chairman and CEO of TOUCH xda
