Dynasties & Dynamics of Succession

Dynasties & Dynamics of Succession

Kamal Karanth 28/11/2017 11

Is the baton handed over to ensure success in the future or just to maintain status quo? The long-term legacies of people, businesses, political parties, sports teams and media houses have been defined by who succeeds next. But this process of succession has different complexities. Viewed from the outside, it appears that often emotion dictates decisions than any logic.

Let’s look at how succession is playing out in Zimbabwe, in the Congress Party, AIDMK, Infosys, Tatas, Wipro, Godrej, Bajaj, Reliance or the Kapoor & Bacchhan clan in Bollywood. Succession has had different impacts on each one of them. In some cases, the challenge began much before the succession and in others the unwanted happened after the succession. In a few it worked so seamlessly that nobody even realised that there was a change in guard.

The Science of Succession

Unlike political parties and family run businesses, there is some science to succession planning in organisation settings. Even then, not all get it right. But the process provides some comfort to most stakeholders. The philosophy of reputed organisations is to create a fair, neutral and transparent succession process. This process starts with the identification of key competencies required for the role.

Organisations consider the changing future and decide on the parameters that need evaluation. They look for demonstrated capability on a set of parameters, and then run psychometric profiling assessments on leaders. Furthermore, employers subject aspirants to multiple discussions with senior leaders and board as applicable. They also compare internal candidates versus external candidates on all parameters before making the final call.

But in many family-run organisations succession is relatively fixed. I mean the owner or promoter typically brings his family into play sooner or later. Many of them are blatant about it and bring their children directly onto the board. Some make their kith and kin grow through the ranks. Either way most professionals working in these firms know that the succession is fixed. They either curse their fate and stick around for the spoils or leave for greener pastures.

Three Types of Successors

I would categorise unsuccessful succession in three baskets. In the first category is the “reluctant heir” who is neither confident nor interested in taking over. S/he is only interested in the material benefits that the family is entitled to. These successors take guard to protect their family assets rather than display capability and take serious interest in the business. We all know what happens to businesses when there is no intent.

The second category is even more dangerous. “Incompetent heirs” are rushed into the job by insecure or over loving parents. Everyone knows it’s a recipe for failure. But, who will bell the cat? Nobody can predict the future for sure, only time will tell. But for employees who work hard to get the organisation to great heights it hurts to see the decline. This is where the organisation’s ability to retain or recruit top talent takes a body blow.

The third category is when loyalists are placed on the throne. Every organisation has superstars and loyalists. Yet promoters and CEOs often tend to hand over the baton to loyalists rather than the star performers. This allows them to reward the loyalist and also to control the organisation which they are reluctant to let go. Though the organisation would claim that a professional has been roped in to lead, most people within the company would know it’s a sham.

Corporate India has also seen many examples where professional CEOs have warmed the chair for the scion.


Whether it is the reluctant heir apparent, the incompetent family member or the loyalist professional the organization’s billions of rupees of market capitalization is eroded. This has seen unprecedented reactions from the board and investors.

In fact, corporate world’s failed succession stories have prompted many a promoter or former CEO to return to the fold. We have seen this at home and globally in companies such as Starbucks, Dell, J.C Penny, Apple, etc. The major reason in these cases can be attributed to poor choice of successors.

It is widely believed that succession planning is a critical process to retain top talent or to de-risk the organisation’s future. But many examples that we see around us illustrate how dynasty based, loyalty linked successions are still very common.

For corporates, poor succession can cost billions of dollars and fair amount of brand erosion.

But, when it happens with political parties in power it could cost the nation a few generations of development.

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  • Stephen Grant

    Succession planning in big companies is a bit like innovation. Very few companies are satisfied with their performances that's why they keep changing their CEOs, bringing change and excitement. However, there is always a period of instability when it comes to succession. When you have a new CEO finally coming in, every employee is wondering so what's now? There is a loss of momentum and pace which create a lot of uncertainty leading to performance deficiencies. In short, it's very difficult to appoint the right person at the top of the food chain even if it is a family company.

  • John Cupis

    The first thing companies should do to make an efficient succession planning is to allow the board to take care of this task. In the past, it was the CEO who appointed his successor, which wasn't a smart thing because of the conflict of interests between his duties and what's best for business. Now things have changed by treating the succession as a process instead of an event, allowing the smooth running of organisations.

  • Pat Walker

    Boards should think of choosing between 10 CEO candidates way ahead of time instead of a single person to make the right decision because during the transition period the options would have already been narrowed considerably and talent pool could be thin. Also choosing from outside the company is a dangerous move.

  • Glenn Pryce

    It's about boards working with the CEO to systematically get familiar with the top leaders of the company. That way it would be much easier to know who is next in line.

  • Charlie Molko

    It's the capability of looking forward that will determine who is the better CEO, by having a look at the perfect track record this person has over his/her career

  • Nick Berry

    Thought provoking read !!

  • Frank Delon

    Selecting the most loyal person is a convenient option because a loyal CEO will never quit nor give up during hardships

  • Vicky Davis

    When it comes to SUCCESSION in family companies, there is always a power struggle between family members. SO IT'S A TOUGH DECISION.

  • Dave Long

    Appointing the right CEO requires a lot of effort, patience, timing and sacrifices. It takes time to choose amongst the most talented persons inside a company. We should also take into account the reactions of the markets and investors. They shouldn't be overlooked, they can also have a say !!!

  • Andreas Prias

    I agree that it's difficult to hire the most competent CEO. Organisational culture and power struggles play a huge role in the dynamics of succession

  • Gary Churchill

    Amazing Post !!

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Kamal Karanth

Management Expert

Kamal is the Co-Founder of Xpheno, a specialist talent solutions company that offers direct hire, IT staff augmentation and engineering professional services. Xpheno brings people and companies together, to contribute to the creation of high-performing specialist workforce. Kamal holds a Bachelor degree in Microbiology from Bangalore University. 

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