There are important lessons to be had from how Disney managed the failed CEO succession from Robert Iger to Thomas Staggs. They did a lot right like planning ahead and building Staggs’ strengths. They did not do a good job of managing the transition.
As reported yesterday, “Disney revealed that COO Thomas Staggs would be stepping down from his current position in May. Staggs, 55, was widely expected to lead Disney after CEO Bob Iger’s retirement in 2018.”
Plan Ahead
The best boards fold CEO succession planning into an overall future capability plan. They start with a vision of what the organization should be and build the strengths they need to get there. Disney did this well with the hiring of business strategist Frank Wells and creative powerhouse Michael Eisner as complementary leaders.
In Staggs’ case Disney did a good job of planning ahead, putting him into the COO role three years before Iger’s then new target retirement date.
Build Strengths
Gallup tells us strengths are built on innate talent, learned knowledge and practiced skills. Staggs’ joined Disney with planning and financial strengths which Disney leveraged as he moved up the financial ladder to CFO. Then, to give him new knowledge and skills they moved him to Chairman of Parks and Resorts where he continued to grow and excel.
Manage The Transition
This involves clarifying the role sort between CEO and COO, managing the hand off and supporting the new CEO.
There is one right way to sort responsibilities between a CEO and COO – whatever works best for the CEO. The dirty little secret about the C-suite is that most executives are unbalanced. Some are relatively stronger strategically, organizationally or operationally. Organizations don’t need balanced executives. They need balanced teams. Thus, the COO exists to complement the CEO while in that role whether or not he or she is going to take over from the CEO.
Because the right role split is going to depend on the CEO’s strengths and inclinations, each situation will involve a different division of responsibilities. Here’s a straw man starting point:
• CEO: Overall accountability for strategy, operations and the organization including vision, values and culture.
• COO: Overall responsibility for “current” operations of design/development, production, marketing/selling, delivery and support of products and services.
That’s not what Iger and Staggs did, and that’s fine. As Staggs told the Wall Street Journal when he started as COO:
It’s basically a dual-report system across all the businesses. Our approach has been somewhat fluid, making sure that separately or together we’re focusing on businesses and projects as need be and to be the most effective we can be.
As my partner John Lawler puts it, “Each CEO and COO pair must establish their own operating and communications rhythm.” Per my earlier article, accountability is the pivot as the pair works through approvals, accountabilities and responsibilities. The best working relationships seem to involve healthy doses of informal and formal, planned and unplanned communication.
Every other senior level working relationship flows from how the CEO and COO work together. Not only must the CEO and COO be clear on how they interact with each other, but they need to be clear on how they interact with each others’ direct reports and former direct reports who may not welcome a new intermediary. This is particularly important during times of transition.
As BioPac’s Alan Macy explained to me over coffee at HATCH in Panama he accelerated the handoff to his successor Frazer Findlay because Findlay was “chomping at the bit.” Macy had confidence in Findlay’s capabilities and fit and was ready to back that confidence up with commitment. Eight years later, Chairman Macy and CEO Findlay continues to do well together.
Disney did not manage this well. Commitment breeds confidence. Disney should know this. This company has one of the best ever examples of motivating employees. Yet, they never committed to Staggs’ becoming CEO. From the very beginning they “made it clear that his elevation to chief operating officer…was not a coronation.” Disney’s lingering questions about Staggs led to Staggs having lingering questions about Disney.
Learn from Disney. Plan ahead. Build strengths. Manage the transition. And have a contingency plan ready.
