The Democratic Party’s defeat in the November elections can be attributed to several factors, but a glaring issue was the failure in succession planning. President Joe Biden’s refusal to step down after a single term, coupled with his appointment of a lackluster vice president, Kamala Harris, underscored this failure. Harris, having faltered in the 2020 primaries, was seen as a non-threatening pick, yet she lacked the charisma and effectiveness to galvanize support. When Biden ultimately endorsed Harris without giving room for a competitive “mini-primary,” the Democratic Party’s ability to regroup and present a strong candidate for the 2024 election was severely compromised.
This tale of botched succession planning is not unique to politics; it echoes throughout history and industries. From Russian autocrat Vladimir Putin’s uncertain exit strategy to the corporate world’s revolving doors at the top, the pitfalls of poor leadership transitions often come at a hefty cost.
Succession failures plague not only democracies but also businesses. Claudius Hildebrand and Robert Stark, in their book The Life Cycle of a CEO: The Myths and Truths of How Leaders Succeed, highlight data that paints a grim picture of leadership transitions. Even the world’s most prestigious companies have faced upheavals when changing CEOs:
- Hewlett-Packard’s CEO Shuffle: Leo Apotheker was ousted just 11 months into his tenure, leaving with a golden parachute worth $7.2 million in cash and $18 million in company stock.
- Disney’s “Three Years of Hell”: Bob Chapek’s brief and turbulent term at Disney ended with his removal, paving the way for the return of his predecessor, Bob Iger.
- Tyson Foods and GameStop: Frequent CEO changes at these firms, with Tyson cycling through four CEOs between 2016 and 2023 and GameStop five between 2018 and 2023, underscore systemic leadership crises.
These stories illustrate a broader problem. A 2019 survey of 222 C-suite executives revealed that 76% believed their companies lacked leaders ready to step into top roles, and 60% admitted having no formal succession plans. Stanford University’s David Larcker and Brian Tayan found that 22% of CEO appointments between 2017 and 2021 were interim roles—temporary placeholders indicative of deeper planning failures.
The financial impact of succession blunders is staggering. A study analyzing transitions at the world’s 2,500 largest public companies estimated that poor planning costs an average of $1.8 billion per company. This includes forced resignations and subsequent instability. Among S&P 500 companies, resignations under pressure increased from 7% in 2022 to 16% in 2023, reflecting a rising trend of tumultuous transitions.
While abrupt ousters highlight the consequences of poor planning, another type of failure looms larger: leaders who overstay their welcome.
Long-serving CEOs often face criticism for stalling progress by delaying their departures and failing to groom successors. Over time, they become deeply embedded in their roles, making it difficult to envision life outside the boardroom. This “CEO syndrome” is not merely about power or money; it’s about identity. For many, the job becomes their defining feature, and the thought of leaving is paralyzing.
Even well-intentioned leaders can fall into this trap. They may rationalize staying with arguments like completing “just one more project” or overseeing a final transformation. Less conscientious leaders may actively sabotage succession efforts, blocking potential replacements or undermining their authority.
A striking example of succession mismanagement comes from Disney, where the company’s struggle to replace Bob Iger revealed the complexities of leadership transitions:
- Thomas Staggs: Once groomed as Iger’s successor, Staggs was sidelined after the board, influenced by Iger, reconsidered his suitability.
- Bob Chapek’s Appointment: Iger abruptly stepped down in February 2020, leaving Chapek, an executive with little experience in Disney’s creative content division, to take over under the condition that Iger would retain creative control as executive chair. The arrangement sowed confusion and division.
Chapek’s Departure and Iger’s Return: After three tumultuous years, Chapek was ousted, and Iger returned as a “boomerang CEO” to stabilize the company. Despite this, Disney’s succession challenges remain unresolved, with Iger now planning to name his successor in 2026.
One proposed solution is imposing term limits on CEOs, such as a 10-year cap. However, critics argue this could stifle long-term vision. Adi Ignatius, editor of the Harvard Business Review, observed that the average tenure of leaders in its annual CEO 100 list was 15 years, reflecting their ability to deliver sustained performance.
Case studies like David Cote, who led Honeywell International for 15 years, support this argument. Cote transformed an “unfixable” company, driving a 245% increase in its share price. His success underscores that some leaders only reach their peak after a decade in charge, and arbitrary term limits could hinder transformative efforts.
A more sustainable solution lies in institutional reforms to ensure seamless transitions:
- Accountability: Boards must take their succession planning responsibilities seriously. This includes appointing a lead director to challenge the CEO and prioritize succession strategies.
- Talent Development: Companies should create a deep bench of qualified internal candidates, ready to assume leadership when needed.
- Life Cycle Thinking: Hildebrand and Stark advocate for CEOs to approach their careers as having distinct phases—beginning, middle, and end. This mindset can help leaders embrace the transition process rather than resist it.
While these ideas are promising, execution is often flawed. Despite Sarbanes-Oxley legislation mandating board responsibility for succession planning, many boards still fail to act diligently. For instance, Hewlett-Packard’s board appointed Leo Apotheker as CEO without even meeting him—a glaring lapse in due diligence.
Even companies celebrated for talent development, like Procter & Gamble and General Electric, have struggled. P&G had to recall AG Lafley after his successor stumbled, while GE’s decline post-Jack Welch revealed the fragility of overreliance on a single leader.
Boards are inherently disadvantaged in the succession game. They are often part-timers with limited knowledge of the company’s inner workings compared to the CEO. Moreover, outgoing CEOs frequently remain involved as “executive chairs” to “smooth transitions,” a practice that occurs in 41% of S&P 500 transitions. Instead of easing handovers, this arrangement can lead to meddling and confusion.
Effective succession planning requires addressing the psychological barriers leaders face when considering retirement. Boards must evaluate whether potential CEOs are well-rounded individuals or if they risk letting their roles consume their identities. Leaders with diverse interests and a balanced life outside work are more likely to step aside gracefully.
Flattering the vanity of outgoing leaders can also be effective. Boards should frame retirement as an opportunity to secure a lasting legacy. Would a leader rather be remembered as someone who overstayed their welcome or as a visionary who left at the top of their game? This approach can motivate leaders to prioritize smooth transitions.
President Joe Biden’s refusal to step down after one term offers a cautionary tale for CEOs. By insisting on re-election, Biden jeopardized his legacy and the Democratic Party’s future. Had he announced his intention to serve a single term, he could have been remembered as a president who passed significant legislation and stood firm against Russian aggression. Instead, his reluctance to plan for succession opened the door to Donald Trump’s return, leaving his presidency defined by missed opportunities.
