The ET TU movement is on

5th November 2018 BUSINESS STANDARD

*The writer is a corporate advisor and Distinguished Professor of IIT Kharagpur. His new book, “CRASH: lessons from the rise and exit of business leaders” will be published by Penguin India in December, 2018. Email: rgopal@themindworks.me

5th November 2018 BUSINESS STANDARD

Relationship between a predecessor and a successor is delicate

R. Gopalakrishnan*

*The writer is a corporate advisor and Distinguished Professor of IIT Kharagpur. His new book, “CRASH: lessons from the rise and exit of business leaders” will be published by Penguin India in December, 2018. Email: rgopal@themindworks.me

3-11-18

Leadership succession and predecessor planning are two halves of the same fruit. It takes thought and introspection by the predecessor to be a good one. This article concerns the delicate relationship between predecessor and successor.

The days are receding when CEOs could enjoy an affectionate retirement function, have their wonderful qualities and accomplishments enumerated, and continue a formal or informal association with their beloved company. Fifty years ago, it looked as though the good life could just carry on, not any more.

Just as #MeToo has snowballed since October 2017 against sexual harassment, the #Et Tu movement is developing between predecessor and successor. Stakeholders desire that a successor should solve persistent issues. The predecessor’s track record could well be reopened and reevaluated! This causes great angst among employees and observers–the predecessor probably enjoys a halo, surely would have done several great things, retired with the perception of being God-like, and, now, the actions of several years ago are reviewed in hindsight! Think of what is happening to Jeff Immelt (GE) now or what happened to Richard Wagoner (GM) several years ago.

In #Et Tu, investors want the successor to examine the blunders made during the tenure of the predecessor CEO and make post facto judgments for action. They are not interested in placing blame or witch-hunting, they just want corrective action. Re-opening decisions does not suit the ‘bhakts’ of the predecessor! The result is frayed nerves that spoil the predecessor’s peace of mind. Regulators, investors, analysts and employees may criticize the past leader’s tenure, sometimes castigate past leadership or, in extreme cases involving public matters, even bring the past leader to court trial.

Why #Et Tu? Et tu, Brute is the Latin phrase, immortalized by William Shakespeare in his play, Julius Caesar, in which those words were uttered by Roman dictator, Julius Caesar to Brutus at the time of Julius Caesar’s assassination—you too, Brutus?

For example, a 70 year old telecommunications IAS officer was pulled out of retirement to answer for decisions taken during his tenure over a decade earlier. So too was an IAS officer who was a coal mining administrator. A former bank chairman’s decisions were reviewed after a decade because some loans that were given during his tenure went sour later. These being public subjects involving government officers, such incidents have a strong dollop of politics driving the actions. What about the private sector? There are instructive company examples.

  • First, a case from my old company, Unilever. Like Roger Federer and Novak Djokovic partnered in tennis doubles for Team Europe in 2018 and became the only European pair to lose the match, during the 1990s, Unilever had two competent and talented joint chairmen, heading the British and the Dutch subsidiaries. Individually, they were arguably the brightest chairmen ever. Yet this combination of two exceptional leaders produced sub-standard results for Unilever, causing a drastic restructuring of the way Unilever had been run for several decades. Things have worked out well for Unilever since then.
  • From the second half of 1990s till the early years of this millennium, the Indian subsidiary of Unilever went through a tough patch, causing public reports and commentaries about whether a mess had been left for successors to clean up. Here again, the company is now on a sound track.
  • The continuing global leadership turmoil at P&G causes commentaries on the decisions and actions of previous CEOs and the legacy they left for their successors.
  • At GE, commentators stretch back to the fabled Jack Welch years to judge the legacies of inheritance and management. Writing in the Financial Times, John Gapper expressed his view, “John Flannery was handed the job of catching the falling knives from Mr Immelt’s era……GE is so fragile after nearly four decades of asset shuffling under Mr Immelt and his predecessor Jack Welch…..”

Successors try to protect themselves from investor criticism without directly blaming their predecessors. The situation is delicate and the chances of getting it wrong are quite high. Much of the challenge is centered on the ambiguous relationship between an outgoing CEO and an incoming CEO.

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