In April 2016, Disney’s stock price dropped 2% overnight when their COO, Tom Staggs announced his departure from the company. The issue? Tom was the apparent heir for CEO Bob Iger and his announcement signaled an unraveling of the entertainment giant’s succession plans.
Disney’s solution was to ask Iger to extend his contract, which he did – for the third time. Today, more than two years later, Iger is still at the helm with a departure date set for 2019.
What Is The Common Problem?
This is a common problem. Many companies have executives in critical roles who appear irreplaceable. Succession planning addresses some of the risks associated with key executive departures, but it often falls short – as was the case here.
What Should Have Been Done?
So, what if Disney had a different narrative for Wall Street? Instead of offering more time with Iger, what if they clearly defined his secrets to success and then showed how they had top talent identified in each of the areas in which he appeared irreplaceable?
Have You Done This Before?
We went through this very process with the senior VP (I’ll call him Aaron) at a global printer company. Aaron was a rock star and had been for decades. Everyone worried about his impending retirement, including the CEO who routinely tried to convince him to stay on just a little while longer.
Knowing that tactic would inevitably fail, we offered the CEO a plan that allowed his company to get Aaron’s “secret sauce” into the heads and hands of multiple successors.
Using structured knowledge transfer, we defined the different areas in which Aaron brought unique knowledge, skills and finesse. Then, we transferred them to his cadre of successors – replicating the work Aaron did and the roles he played across the company, rather than trying to replace him.
Did It Work?
When Aaron finally departed, the CEO chose two people to fill his position, but his knowledge and skills were now fully embedded across the leadership team, therefore mitigating the risk of losing a single successor.
Had Disney done something similar, they could have released a statement like this back in 2016:
“While the departure of Tom Staggs is regrettable, Disney manages succession planning in a holistic way so the departure of one executive does not have a material impact on our executive team’s capacity to lead the company. Over the last several years, we have identified Bob Iger’s unique approach to leading Disney that has resulted in our ongoing success. In each of Bob’s areas of expertise, we have groomed key lieutenants from around the company who are steeped in Bob’s approach to product development, strategy, planning, finding talent, and decision making. In each of these areas of expertise, Bob has worked tirelessly to prepare the company for his retirement. Disney will draw from this pool of key talent when the time comes for Bob to step down.”
Now, this statement would have been immediately followed by questions about who sits on this fantastic list of “key lieutenants,” which Disney should be able to provide. If not, Disney’s board and the street should be worried the loss of Tom Staggs would be a really a disaster.
Want to learn more? Check out our firm’s executive knowledge transfer process or shoot me an email at firstname.lastname@example.org.