This article in the Wall Street Journal caught my eye: “Warren Buffett Further Reveals Succession Plan at Berkshire Hathaway” written by Nicole Friedman. The article discusses the two candidates identified by Warren Buffet as potential candidates to take over the top job at Berkshire Hathaway when he eventually retires. This article immediately made me think of Jack Welch’s First Rule that he describes in Winning. Welch describes the process of continuously evaluating your team members to identify development areas and areas where the team members are performing well. While Welch got a lot of flak for this principle of differentiation it is only through this process of differentiation that you could get to the point where someone like Warren Buffet can identify one or two people to take over.
If you know what the shortcomings and strengths are of your leadership bench then you can start their development to achieve immediate success in the future job. Furthermore, in Winning, Welch argues for the importance of quickly replacing a leader in the case where a leader has left the company. Things have improved in recent years, but in Namibia, there is almost a disease like state of doing precisely the opposite. As an example, a commentary in The Patriot newspaper, the headline reads: “Namibia’s love for acting CEOs” and in a 2015 article in the local daily newspaper, The Namibian, the journalist lists nine State Owned Enterprises (SOE) who did not have a permanently appointed leader. This state of affairs is especially concerning since researchers Patidar, Gupta, Azbik, and Weech-Maldonado found a positive link between having proper succession planning in place and the financial performance of an organisation. Having so many SOE’s without clear succession planning in place is hurting the financial state of those organizations. While there are high hopes for SOE reforms to “Save the Country“, I believe any new measures put in place would be short-lived without proper succession planning in place.
Jennifer Titzer-Evans describes a straightforward fix:
- Identify critical leadership roles through analysis
- Establish role competencies
- Develop methods for identifying [and developing] internal talent
It all seems so easy, but as my friend and colleague Gustav Gous likes to say: “Common sense does not always lead to common practice.”