A change of leadership is arguably one of the most important and risky moments in the lifecycle of an organization – and it will inevitably cause disruption. We sometimes think of disruption as a negative change that must be avoided, reduced or endured. But with careful planning and appropriate intervention, boards or other stakeholders can use this disruption almost as a form of martial art to use the energy of the disruption to transform the organization. Harnessing this disruption means using it to drive the goals of a revitalized organization and helping the new leader build a platform for success.
In this two-part article, we share both the effective strategy and the tactics that we have seen in our work with clients. First: lets overview the strategy, process and symbol of a successful transition in leadership.
Acknowledge and plan for the disruption of the exit
Though not the right person to lead the organization in its next chapter, most CEOs have both enduring value and important constituents inside and outside the company. Unless there are compelling legal or ethical reasons for an abrupt departure, creating the time and the context for a dignified exit is important both for the company and the individual.
In most cases, creating with the departing CEO a meaningful “closing chapter” in the organization is a worthwhile investment. In those situations where timing permits, before the new CEO arrives, a window of time after the leadership change has been fully announced can create an important closure moment. The departing executive, the extended leadership team and the company as a whole need the symbolic acts associated with one door closing before another opens. At such a time, people often express important statements of “who we are” and of organizational culture – which can be critical to carry forward to the next era, under the new leader.
Ultimately, a dignified exit hinges on treating the departing executive with respect. This individual served the organization in an important role and deserves the appreciation that comes with that. Handling all communications – internally and externally – with discretion and thoughtfulness will go a long way to minimizing potential negative disruptions. Saying a graceful “thank you” to someone on the way out, takes nothing away from a warm “welcome” to the new leader.
Capitalize to maximize disruption value of the entry
An article by McKinsey & Company on managing CEO transitions recognized, “Transitions are always hectic, challenging times. The pace is intense. Everything demands attention”. And that was written in 1994 – before the omnipresent technical devices, 24/7 global demands and ever shorter-term turnaround expectations so common today. Accepting the reality of a limited time to achieve rapid results, a CEO change is a period of intense disruption for any organization. How both the CEO and the organization handle this disruption determines whether it is ultimately a positive force of power.
Particular areas of opportunity are in the transfer of knowledge from the old to the new, the alignment of the executive team, the assessment of talent and the communications – internally and externally – about strategy, mission, values and expectations.
A new CEO is always a signal event for the company. It doesn’t happen often and it focuses the attention of employees, customers and the community, all of whom expect to see changes. The new CEO has the opportunity to make this a reinvigorating event by using her arrival to challenge the leadership team and to energize the company and its brand.
Move from disruption to transformation
Just as the departure of the former leader signaled the closing of a chapter, a new leader brings a new beginning. This disruption is a high-leverage opportunity for positive change. The disruption caused by a new CEO should result in transformation.
Assuring a dignified exit and positive “emeritus” status for the outgoing CEO and harnessing the disruptive power of a new leader, a refocused strategy and a reenergized leadership team can create a bold new platform to transform the organization. It requires focused attention during a chaotic period but using the opportunity of disruption to engender true change in the organization is a goal worthy of the best leaders.
 “Managing CEO transitions”, McKinsey Quarterly, May, 1994
MARGARETTA Noonan is a member of our BizProphets Panel and is the founder of noonanWorks, a WBENC certified woman-owned business that helps companies “Reach Remarkable” through their human capital assets. Before becoming an entrepreneur, she had C-suite experience with Fortune 500 companies in all global functions of human resources. She has a proven track record of identifying troubling issues in complex organizations and implementing solutions.
EVAN Smith is a member of our BizProphets Panel and a Senior Partner with Schaffer Consulting; his affiliation with the firm began during his time as a client in the early 1990s. Trained as an industrial engineer who also took deep dives into social sciences and liberal arts, he has been helping leaders to deliver measurable results by fostering successful organizational and individual change for more than 20 years. His consulting clients have included major pharmaceutical, medical devices, financial services, chemical, automotive, technology, energy, and professional services companies, among others.