Apple's spectacular holiday season earnings may have assuaged to some extent investors' worries over the company's future in the wake of indefinite medical leave taken by Steve Jobs, but it is surely not going to end the rising speculation and questions surrounding succession plans within the company. More so, perhaps, in view of the recently reported proposal by the Central Laborers' Pension Fund (holding 11,484 Apple shares) which has called for a detailed and written disclosure of Apple's succession plan, and which Apple has advised its shareholders to vote against in the upcoming annual shareholders' meeting in February.
Succession Planning has been at the center of discourse on organizational continuity and success ever since the publication of a book called Executive Continuity by Walter Mahler. While experts within the business community almost unanimously agree on the critical importance of systematically developing a pipeline of talent to take charge at the helm when the time comes expectedly or unexpectedly (as in case of sudden departure, illness or death of a leader), the reality is that with a few exceptions, most corporate entities - even the most iconic in some cases - do not have well defined and transparent policies in place to identify potential successors to the current leadership.
While questions over Apple's leadership in the long run is on top of recall for most today, we take a look at the looming uncertainties around succession in three other leading corporate organizations.
Oracle Corporation: Founded in 1977, the American multinational technology major specializing in hardware systems and enterprise software products, has had just one CEO in its history - co-founder Lawrence Larry J. Ellison. Thanks in part to his almost obsessive control over the operations of the company and also, of course, the heights to which he has taken it, Oracle without Larry Ellison is almost unimaginable. As tech-journalist Karen Southwick writes in her book, Everyone else must fail: The Unvarnished Truth About Oracle and Larry Ellison, no other large company is as dominated by a single individual. Naturally questions have surfaced over what will happen when Ellison retires, sooner or later.
Often criticized as an egotist and control-freak, the CEO himself is known to be not-too-enthusiastic about such questions. A 2006 article in Forbes magazine quotes Ellison as saying It is silly to think you can groom someone. Jack Welch didn't have a successor. If you want to put me in his league, by all means, guilty as charged (The Jack Welch example is not quite applicable, though).
While blogosphere has been rife with speculations and surmises (from Marc Benioff returning to Oracle to ousted HP Chief Mark Hurd being considered for the post), the Company itself has been remarkably tight-lipped about how it is, or will be, approaching the selection and grooming of an apt successor to Ellison. Perhaps it is so as the leader himself shows little readiness to step down.
Microsoft: This offers a strange study in contrasts. Microsoft was cited as one of the most successful case studies when it came to corporate succession planning judged by the long and phased transition of leadership from Bill Gates to Steve Ballmer. As early as January 2000, founder-CEO Bill Gates relinquished the post to Steve Ballmer, stepping down himself to focus on long-term strategy. However, he remained chairman and assumed the new title of chief software architect.
Six years later in June 2006, Microsoft announced that Gates would transition out of his day-to-day role to focus on the Bill & Melinda Gates Foundation and finally exit the company in 2008. Over that period, several other executives shot to limelight, the most prominent being Ray Ozzie. Ozzie, then chief technology officer, was named chief software architect in June 2006 and would be working side-by-side with Gates till the latter's last day in office.
With a history as outlined, it is surprising that Microsoft today has little to share by way of who may succeed Ballmer. The performance of the company has been lukewarm under Ballmer, leaving Wall Street deeply discouraged and raising questions over whether it is time for a change at the top. However, there have been no evident indications of succession planning and the uncertainty has actually been aggravated by a series of high profile departures from the top echelons of management over the past year, among them that of Ozzie in October 2010.
AMD: Just a few days back, in a rather sudden and unanticipated move, the Board of Advanced Micro Devices Inc. (AMD) forced out Chief Executive Dirk Meyer, citing rather vague reasons over the desired acceleration in pace of growth. While Chief Financial Officer, 47-year old Thomas Seifert has been named as Interim CEO, the contender himself has reportedly asked not to be considered for the permanent role. Thus the search for a CEO will continue with Seifert handling the responsibilities in both positions in the meantime.
Dirk Meyer had taken over the role of CEO in 2008 from Hector Ruiz, before which he was COO of the company for two years. Analysts have been fuming over Meyer's ouster even before a successor was named and especially when the company seems to be on the growth trajectory. Some even view this as a frantic and clueless move by the Board to find some miraculous edge in its perpetual competition with Intel, where it has chronically been the underdog. Whatever the reason for the ouster may have been, it is clear that the Company is in need of a better succession management policy.
It also highlights the question of whether corporate boards have a larger responsibility towards ensuring smoother leadership transitions and better succession planning for the long run. The lack of clarity in this regard inherent in AMD's governance policy has been highlighted in an article in Fortune magazine: it points out that while the guidelines place the responsibility for succession planning on the CEO, it also requires the board to determine if the plan is satisfactory. Moreover, it recommends that the board shall choose the CEO and other executive officers annually, but never outlines a clear and coherent succession process.