CAN HIGHLY SUCCESSFUL LEADERS BE REPLACED SUCCESSFULLY? THE IMPORTANCE OF SUCCESSION PLANNING Can the replacement for Steve Jobs, the highly successful former CEO of Apple, Tim Cook, be equally successful? It will be very difficult to do so. In fact, the stock market does not seem to think so. When Steve Jobs announced his retirement and the new CEO, the price of Apple\'s stock declined. Likewise, can IBM\'s successful CEO, Sam Palmisano, be replaced successfully. Because IBM\'s CEOs have a tradition of retiring when they are 60, Palmisano is expected to retire in 2012. There are several potential successors but the most likely is Virginia Rometty, who heads IBM\'s sales unit. Investor groups pressured Apple\'s board to develop a formal succession plan for Steve Jobs because in 2011 he was on his third medical leave. This caused considerable angst among investors. The board did not want to name formal successors because the members wanted Jobs back and also believed that he was very important to Apple\'s success. Jobs turned 56 in 2011 but his age was not the concern; it was his illnesses that created worry. Despite his third leave of absence, Jobs proclaimed that he would participate in all major strategic decisions. Even the laborers\' union pushed Apple for a succession plan. The delay in communicating a succession plan coupled with Jobs eventual resignation as CEO did not inspire confidence among the various groups concerned about the loss of Jobs. Alternatively, IBM seems to be in much better position for a smooth transition of CEOs. There are at least three candidates for the CEO position when vacated by Palmisano. They are Rometty, mentioned earlier; Michael Daniels, head of the Global Services unit; and Rodney Adkins, senior vice president of hardware. All three have demonstrated their capabilities with strong performances in their respective units. In addition, Palmisano has established a strong plan of action through 2015. For example, the plan calls for generating 30 percent of IBM\'s total annual revenue from emerging markets by 2015. The plan also calls for $7 billion in annual cloud revenue and $16 billion in annual business analytics revenue within the same time period. As such, the next CEO only needs to continue efforts already launched. Interestingly, CEO turnover among the 2,500 largest public companies in the world declined in 2010. However, this is clouded by the fact that more emerging market firms (including many from China) have been added to the list and they have low turnover among their CEOs. Therefore, there is still considerable CEO turnover in North American and European firms. As such, they have a greater need for succession planning. Selecting successors for the CEO and other officer positions is the responsibility of the board of directors. Boards have come under increasing pressure to develop formal succession plans, especially for the CEO position. However, recent surveys suggest that only about 35 percent o.

1. CAN HIGHLY SUCCESSFUL LEADERS BE REPLACED SUCCESSFULLY? THE
IMPORTANCE OF SUCCESSION PLANNING
Can the replacement for Steve Jobs, the highly successful former CEO of Apple, Tim
Cook, be equally successful? It will be very difficult to do so. In fact, the stock market does not
seem to think so. When Steve Jobs announced his retirement and the new CEO, the price of
Apple's stock declined. Likewise, can IBM's successful CEO, Sam Palmisano, be replaced
successfully. Because IBM's CEOs have a tradition of retiring when they are 60, Palmisano is
expected to retire in 2012. There are several potential successors but the most likely is Virginia
Rometty, who heads IBM's sales unit.
Investor groups pressured Apple's board to develop a formal succession plan for Steve
Jobs because in 2011 he was on his third medical leave. This caused considerable angst among
investors. The board did not want to name formal successors because the members wanted Jobs
back and also believed that he was very important to Apple's success. Jobs turned 56 in 2011 but
his age was not the concern; it was his illnesses that created worry. Despite his third leave of
absence, Jobs proclaimed that he would participate in all major strategic decisions. Even the
laborers' union pushed Apple for a succession plan. The delay in communicating a succession
plan coupled with Jobs eventual resignation as CEO did not inspire confidence among the
various groups concerned about the loss of Jobs.
Alternatively, IBM seems to be in much better position for a smooth transition of CEOs.
There are at least three candidates for the CEO position when vacated by Palmisano. They are
Rometty, mentioned earlier; Michael Daniels, head of the Global Services unit; and Rodney
Adkins, senior vice president of hardware. All three have demonstrated their capabilities with
strong performances in their respective units. In addition, Palmisano has established a strong
plan of action through 2015. For example, the plan calls for generating 30 percent of IBM's total
annual revenue from emerging markets by 2015. The plan also calls for $7 billion in annual
cloud revenue and $16 billion in annual business analytics revenue within the same time period.
As such, the next CEO only needs to continue efforts already launched.
Interestingly, CEO turnover among the 2,500 largest public companies in the world
declined in 2010. However, this is clouded by the fact that more emerging market firms
(including many from China) have been added to the list and they have low turnover among their
CEOs. Therefore, there is still considerable CEO turnover in North American and European
firms. As such, they have a greater need for succession planning. Selecting successors for the
CEO and other officer positions is the responsibility of the board of directors. Boards have come
under increasing pressure to develop formal succession plans, especially for the CEO position.
However, recent surveys suggest that only about 35 percent of them are prepared for a departure

2. of their CEO. Most formal plans begin with the purposeful development of internal candidates.
The better plans also have preparations to replace the CEO in emergency situations (e.g., the
CEO dies unexpectedly). Many formal plans call for Jobs was taken in 2009 right after Jobs the
use of executive search firms, assuming that external searches returned from his are
implemented.
Baker Hughes has a formal succession plan. In accordance with His ailing health put the
plan, it announced in 2011 that its current CEO and chairman, investors on high Chad Deaton,
would undertake the new role of executive chairman and that Martin Craighead would become
president and chief executive officer. Likewise, Howard Stringer, CEO of Sony, has been
grooming four potential successors. In 2011, he promoted one of them, Kazuo Hirai, to be his top
manager reporting directly to him. Thus, it appears that Sony has also chosen its CEO successor.
Discuss the pros and cons of the managerial succession strategy outlined in the case.
What effects can internal and external CEO succession have on a firm's strategy? Has this
managerial succession strategy worked?
Share the most important concept you have learned in this course. Explain what impact will
business policy and strategy have on you as a professional?
Solution
The effects on CEO succession are important and it most be one of the top prioritites on any
company even if is a small one.
Like it was mentioned on the first lines, when Steve Jobs mentioned we was leaving his position
as CEO, every one was scare, specially the share holders because the company Steve created on
California it was the most important one in the world, apple understood that people really dont
know what they want so they create the need for the consumers to purchase their products , he
took everything personal, and how could not? he founded it on his garage when he started the
University and he was fired by the board of directors and then re hire years later because the
company was going straight to bankruptcy , he was the oly one who could save it.
I believe apple is a rare case and not all company have to have Steve Jobs as a CEO to be
successful but they do need to have a succession plan because humans do not live for ever.
The CEO must be the mentor of course and the people who are nomiated as a possible candidate
must meet strict requirements, you can not have a new employee going for this position, you
have to earn it with years and loyalty to the company, the extra work that sets this person from
other competitors is what will make him succedd as CEO.
On the case of Sony it is safe to say is going to work because the CEO has been trainign these
candidates, plus they have done a great job on their current areas.

3. Business policy and strategy are subjects very imporant on the daily life at work, the companies
who do not have them are doom to failed, as simple as that because they dont know where they
want to go and they sure do not know how either, this is strategy.