Perpetual Succession Details

Perpetual Succession is one of the fundamental principles that people should consider when starting an organization or a corporation, especially if they want their company to last. Without taking perpetual succession seriously, the company may end up falling apart after a potentially damaging incident. In layman's terms, perpetual succession is another meaning for the phrase, "the show must go on."

Perpetual succession is particularly necessary for business because of two factors. The first one, no one wants to start an organization today only to close it tomorrow. Founders and shareholders usually want their companies to exist for a long time. The second factor is that the highly unpredictable nature of the business is full of surprises and uncertainties.

Several internal and external determinants directly or indirectly influence the perpetuity of companies. These include, but are not limited to:

  • the death of a CEO
  • economic downturns
  • wars and disputes among countries
  • pandemic
  • government policies
  • internal rivalries or coups

The perpetual succession principle ensures that the organization continues to exist no matter what the situation may be—if they plan for it, of course.

Perpetual Succession Example

Let us assume the following situation. Mr. John Adams is a member of the Board of Directors of The Immortal Company. He was sentenced to 50 years for abuse of power. His sentencing resulted in a massive public outcry that damaged the company's reputation. Humiliated, almost everyone in the organization resigned from their jobs, from the receptionist to the company's CEO.

Though those who stayed truly felt that it was the company's end, the remaining Board of Directors had another plan. They planned for an emergency like this and were ready to save the company. This is perpetual succession in action. Unfortunately, the damage the CEO caused was irreconcilable. In this case, the Board decided it would be best to assimilate with another company while still retaining its name. They started discussions with other industry giants to start an acquisition process.

Another company did acquire The Immortal Company and agreed to keep its name. With a new face and a fresh start, they grew even more successful than they were before.

Significance of Perpetual Succession

Without the principle of perpetual succession, hundreds of thousands of companies would have disappeared from the market by now. Keeping the company or an organization afloat is way harder than starting a company, so every step towards success is a form of perpetual succession.

However, this principle focuses more on the company than the people or factors associated with the organization or company. This could lead to certain ethical issues or run-ins with unions over worker's rights. It is therefore important for businesses to balance the business's survival with the rights of the worker.

Businesses are highly complicated, inter-dependent, and volatile. The valuation of your company may blow up into billions this week, and you may file for bankruptcy the following week. This is why the adoption of the principle of perpetual succession—to prepare to keep on going, no matter what.