Peter Crow
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On succession planning: Yes, but three years out?

18/10/2014

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Acer Computer, once a strong and proud manufacturer and exporter of personal computer products, has been doing it tough lately. Record losses in the last few years, as the company has struggled to adjust its strategy to the shift from desktop computers to mobile devices, have seen the company chew through three chairmen in fairly quick succession. There have been arguments between the CEO and the board over strategy as well. What has gone wrong? Apart from missing the market shift to mobile devices, I wonder whether the company has run out of ideas and has become stale. The last three chairmen have been company stalwarts for example, steeped in the culture and history of the business. Realistically, how much fresh thinking would you expect to emerge in such environments?

Now the founder has stepped in. A outsider CEO has been appointed, for the first time, to lead the company—and to become the chairman in three years' time. This first part of this is good; it should see the introduction of some new strategic options, but only if the founder (who has come out of retirement to occupy the chair) allows it to be so. However, the second part—of anointing a leader three years before the fact, in an industry sector characterised by rapid change and tectonic shifts, is a huge call. I would have thought it made much more sense to recruit the new CEO and then recruit a new (and probably but not necessarily independent) chairman in twelve months' time. This would give the incoming CEO time to get underway, begin to deliver on the confidence the founder has placed in him, without the additional burden of preparing to add the chairman role at the beginning of year three. What say the new CEO is no good? What say a different skills and expertise mix is required to lead the board effectively in the future? The founder has, in effect, closed off the possibility of introducing new thinking around the board table—even though this seems to have been one of his aims. 

Complex businesses need highly capable leaders: two good heads are almost universally better than one. Keeping one's options open, to react and respond to changing market forces is smart. Painting one self into a corner is not. Notwithstanding this, the founder can exert influence as he wishes. My view—that the longer-term future of the business, and of the value to shareholders in particular, may have been better served with a succession plan that revolved around two separate appointments—probably doesn't count for much. 

What do you think?
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Peter Crow PhD CMInstD

Company director | Board advisor
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