Preparing for the Worst: Tech CEOs' Successors
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Every company plans for an orderly transfer of power, but there are times when that transfer has to be done on a more urgent schedule.
Whether it's Apple CEO Steve Jobs' health scare, Oracle CEO Larry Ellison's tendency for an adrenaline rush or Broadcom CEO Henry Nicholas being busted for allegedly selling drugs, the fear always seem to loom that a time might come when a chief executive leaves the company minus the good-bye party and an orderly transfer of power.
As a result, it seems logical that companies ought to have a well thought-out line of succession to minimize disruption if unexpectedly facing the loss of a leader.
What we've found, however, is that firms have varying degrees of preparedness, while others' lines of successions might be unexpected.
When we first looked at the tech industry's CEO line of succession in 2006, we saw companies in various states of preparedness. Since then, a few of those companies have changed leadership to great effect.
It is a matter of responsibility for every public company to have a line of succession planned in case of emergency. For the IT field, it's particularly important because this is a rapidly changing market and always will be. A company can ill-afford to go six months or a year without a CEO. That's an entire product generation or two. A company in a slower-moving industry might get away with it but no tech company could wait that long.
The IT industry plays by a slightly different set of rules, noted Charles King, principal analyst of Pund-IT.
"I can't think of any other industry, except maybe film and music, where there are what you might call cults of personality around many of the executives," he said.
It's happened before, he noted, always in hot, growth industries. In the 1920s, when oil was big, John D. Rockefeller enjoyed the profile Steve Ballmer of Microsoft and John Chambers of Cisco enjoy today. These days, oil executives are more likely to be vilified. When steel was a booming industry, Andrew Carnegie was the rock star. Today, steel is boring.
So for now, the first generation of tech leaders enjoy near-movie-star levels of celebrity as well as tremendous importance to their business.
"But it does raise the question of what happens when someone checks out or leaves," King said. "For a company that really depends on its CEO for its mojo, the question is really serious."
The company with the most question marks swirling around it these days is Apple (NASDAQ: AAPL). There will always be concerns about Steve Jobs's health, even if he lives another 30 years, due to his coming down with what could have been a deadly form of cancer. His recent gaunt appearance at the World Wide Developer Conference has only increased worries.
No less than 11 executives came up, including COO Tim Cook and Jonathan Ive, the senior vice president of industrial design and head of Apple's design team that gives all of its products such a stylish look.
While those two are considered the leading contenders, the truth is, no one knows, since determining who might succeed Jobs is made all the more difficult because the company operates in such secrecy.
Jonathan Ive and Tim Cook
But others thought there are people in place.
"It's becoming clear that although Steve is still the visionary, that vision is part of an executive team vision," Tim Bajarin of Creative Strategies said.
"They don't have short-term visions," Bajarin said, pointing to the fact that the iPhone was first kicked around in Apple back in 2002.
"They have visions the team puts together and test things that are more in 10-year cycles, not one year," he said. "In that context, it seems clear to me that more and more of the team is involved in crafting the roadmap."
Page 2: IBM, Intel and AMD