HOW DO YOU KNOW WHEN YOU SHOULD STEP ASIDE ?
April 2, 2012 3 Comments
I have always believed that someone in a senior executive role, particularly a CEO, should not stay in the job for more than about 5-6 years, as I believe that everything that you will do after that is likely to be just a rerun, and you will also become too accustomed to what is, rather than what should be.
This realisation hit me personally when I was in the chair of President/CEO SAP Asia Pacific. I had built the Asia Pacific Region initially from Australia/NZ where I had started as MD in 1994 and then into ASEAN/India and finally Japan/Korea/China. By 2001 we had operations in 13 countries with 3500 employees and revenues of € 1B. It had been one hell of an exciting 8 year comet ride, basically from a standing start.
I had been fortunate to be able to gather a really solid management team, with strong young regional VPs, including a skilled, mentored and ready successor, a great CFO, well blooded and experienced services heads and good country MDs. Our management meetings in the early years were exciting, energetic, passionate, noisy, animated and interesting.
I noticed in about 2001 that these meetings were becoming less controversial, less fiery and less passionate. I guess that I could have written this off as just being the maturing of the organisation, which would have been an easy excuse with which to convince myself, but it just didn’t sit well with me.
I collared two of my closest advisors in my team to find out what had changed, and found out that since I had been appointed to the SAP Board in 1999, my management team had decided that with my now added global responsibilities, I should not be burdened with handling internal, general SAP Asia Pac issues. They had therefore instituted a separate Asia Pac regional management meeting, on the day before the one that I chaired, to nut out all the issues so that they did not have to bother me with them. This was where all the energy, passion and fire that should come from any management team was been exhibited and expended. By the time it all got to me, things had already been discussed, fought through, agreed, resolved and sanitised.
This definitely made my life easier, while making my management meetings somewhat bland, but it also made me think about the fact that after 8 years at the helm, I may have actually become unnecessary, and that it was time I gave my Asia Pacific management the chance to create their own successes and mistakes (just as I had been given), and build their own future, rather than having to live with mine.
Luckily, SAP had some interesting things for me to do in Europe, so I was able to hand over to my successor and ride off into an SAP European sunset where I stayed for another five years to my retirement, and where I have continued to live.
I was fortunate that I had this epiphany at the time because in hindsight the region was definitely ready for a change. Having built the region from infancy to adulthood I had come to think of it as belonging to me personally, rather than being something that I held in stewardship for, and by the good grace of, SAP-Ag. The region had also been built piece by piece over the eight years, so I was personally connected to the employees, but as growth continued at this frantic pace the region needed more structure and process as well as personal relationships and linkages. My successor, being Swiss, was more capable of achieving this than I would have been.
I have met quite a few CEOs who were not as fortunate to have received the warning shot early enough, and have stayed on longer than they should have to the eventual detriment of the organisation.
So when is enough, enough ?
There is no question that you should go before others want you to go, but long-serving executives are generally so because they have built a record of successful performance, and usually a team of fervent supporters and allies in the organisation, and these make it hard to believe that this success is not sustainable into the future. It is also hard to give up something where you feel ownership and responsibility, that is familiar, that is comfortable, where you are well connected and networked, and when the culture, having been built by you, is in line with your personal and business belief systems.
One ex-CEO, who I now sit with on a board, told me that he knew it was time to step aside when after 6 years in the job he started to see a re-cycling in the issues that his executive team, and his organisation, had to face and resolve. This made him understand that it was time for a new team to face these issues in new ways, and he put a plan in place to not only replace himself as CEO, but also a number of his older senior management team at the same time.
A good leader understands that his responsibility is not to himself but to the health and success of the organisation and its people and to hand over the reins, particularly at a time of great success, is not easy to do, but totally necessary. One critical strength of any leader is how well he can build his successor, and I believe that the time to step aside is even more a question of how over-ready your successor is to step up to your role than how under-ready you are to step aside. (See “Characteristics of a successful manager” posted July 18, 2011).
Dietmar Hopp one of the SAP founders and CEO for 10 years till he unexpectedly stepped aside in 1998 at the height of the company’s success, said it all “It is better to go too early than too late”.