Succession Planning (at Twitter, and Elsewhere)

“Succession planning” in the world of business basically refers to the process of planning for the day when a change of CEO is required.

Here’s a fascinating piece on succession at tech wunderkind Twitter, by Claire Cain Miller, for the NY Times: Why Twitter’s C.E.O. Demoted Himself

Twitter has become one of the rare but fabled Web companies with a growth rate that resembles the shape of a hockey stick. It has 175 million registered users, up from 503,000 three years ago and 58 million just last year. It is adding about 370,000 new users a day.

Yet for all its astonishing growth, Twitter has succeeded in spite of itself — the enviable product of a great idea and lightning-in-a-bottle viral success rather than a disciplined approach to how it’s managed.

Last month, [co-founder Evan Williams] unexpectedly announced that he had decided to step down as chief executive and give the job to Dick Costolo, who had been Twitter’s chief operating officer…

The issue of CEO succession is an interesting one. At young, fast-growing companies like Twitter, it can be an acute problem. Start-up companies in I.T. and biotech are often guided through their first few years by CEOs who are technical geniuses — computer geeks or research scientists — who eventually realize that they don’t have the management skills to shepherd the company beyond its infancy. Giving up control is notoriously difficult for these smart, ambitious people. But doing so is often crucial if the powerful ideas that got the company off the ground are really going to take it somewhere.

Here at the Clarkson Centre, when we do our annual governance rankings, succession planning is one of the relevant measures. Having a formal plan in place for how a CEO is to be replaced is considered important. And hiring the CEO from within the company’s own ranks is considered a plus — it’s a sign that the company is thinking ahead, and grooming potential CEOs well in advance of their being needed.

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Filed under best practices, CEO, corporate governance in the news, succession

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