Succession plannng isn’t a risk to manage. It is a strategy for the future.

Seventy percent of business successions fail. That’s according to research from the Family Business Institute, Harvard, and the U.S. Census Bureau. Not only that, but over fifty percent of new CEOs will quit or be let go within their first 18 months.

Sobering stats.

But not inevitable stats.

Getting it right isn’t difficult. But it does require preparation.

But first, what do I mean by failure?

A failed succession is any leadership transition that disrupts momentum, erodes value, or damages trust. Failed successions are marked by one or more of the following:

• Decline in performance.
• An unplanned closure or sale under duress.
• Loss of control of the business (for family-owned enterprises).
• Significant misalignment or conflict between the board/owners and the executive to the point that the board says, “This was a mistake.”
• The successor quits or is terminated prematurely.

If it’s so common, why isn’t it more visible?

It is visible. It just isn’t recognized.

Most companies keep ‘family secrets’ secret. Even when a succession fails, it often gets rewritten with euphemisms.

Also, cause and effect can be foggy. The full story takes time to play out and rarely becomes public. Most people don’t connect the dots. By then, they’ve moved on.

But signs have often been left.

Why is failure so common?

The high rate of succession failure isn’t an accident. It’s a lack of preparation. And they especially don’t prepare for unplanned or emergency situations. It’s like living in hurricane or earthquake country. The question is never, “Will this happen?” It’s, “Are we ready?”

The close second reason is that many organizations think succession planning just means picking the right next leader. That’s like saying a successful heart transplant is simply a matter of finding the right heart.

In reality, it’s a massive systems change.

Most organizations share four faulty beliefs about succession:

1. We can get to it later.
2. Succession is only about replacing the top leader.
3. The outgoing leader should choose their successor. (Read more.)
4. Succession is a singular event.

Succession, done well, is a strategic initiative. It’s about ensuring the right leadership, team, culture, and structure are in place to achieve your vision—even through leadership transition.

Even good leadership transitions affect strategy, staff, culture, performance, and morale. They often cause turbulence and uncertainty. And most teams aren’t ready for it.

Three Interrelated Types of Succession

There actually isn’t one kind of succession. There are three:

• Emergency Succession: The most likely—and least prepared for. Over 50% of successions are at short notice. Commonly due to illness, death, conflict, CEO termination, or a “better” opportunity.

I recommend that you put this in place immediately.

• Planned Executive Succession: This is what most people have in mind when they think of succession. A planned, smooth, anticipated leadership transition at a specific date.

I recommend that this be put in place within 2–3 years of an anticipated transition. Some organizations, like family-owned ones, might begin much earlier. In most cases, I recommend waiting until a defined transition timeframe is known. Otherwise, this risks becoming only an academic exercise.

• Staff Succession: Almost always overlooked and unanticipated. Leadership change (planned or unplanned) creates a ripple effect of change through the org chart. This should be expected. If not prepared for, this is incredibly disruptive.

I recommend beginning this immediately. Staff succession is a subset of staff planning. Staff planning informs strategic planning.

I’ve developed the Succession360™ Framework to address all three layers—emergency, executive, and staff. It’s not a theory. It’s a tested system I use with leadership teams to reduce chaos and ensure strategic momentum. If you would like access to free resources and templates for each of the plans above, download the Succession360™ Toolkit.

This isn’t just a contingency plan. When done right, succession planning strengthens the organization now.

Good Succession Planning Is a Leadership Discipline

Great leaders expect turnover. They plan for it, mentor toward it, and structure around it.

Years ago, I served on a board that loved its CEO. We’d just raised her salary after a comp audit. Then a larger competitor offered her about 30% more for a much lower stress position. And she took it. I don’t blame her.

But we didn’t see it coming. We felt loyal to her and made unthinking assumptions that she’d be with us forever.

As a result, we didn’t have a plan, and it cost us.

Things eventually worked out. But it wasn’t smooth. The unplanned transition created a significant amount of work and time for both the board and staff. And when the new leader was identified, the inevitable staff turnover and organizational changes occurred.

This was not a failed succession. But it was a disruptive one. Which, if we used the principles I’m introducing, would have been far less so.

The Payoff

Organizations that treat succession as a strategic discipline outperform those that treat it as an event. That is a fact you can take to the bank.

In fact, your bank, insurers, bonding agents, key clients, and even key staff are all happier when they know you are thinking strategically about this. Really, anyone who depends on your company being there over the long term.

They are happier in ways that make the company easier to run and show up on your bottom line.

This is because prepared organizations:

• Maintain stable operations and revenues
• Are more likely to retain key talent
• Increase their business valuations
• Reduce or remove transition turbulence
• Reduce risks, especially in regulated industries

Succession isn’t only about replacing an executive. It’s about preparing your entire organization to thrive through change.

To conclude

If you’re on the board or ownership team: Succession planning is good governance. It’s a key element of your fiduciary responsibility.

If you’re the outgoing leader: Succession planning isn’t the end of leadership. It’s the proof that you led well. A transition of a loved leader is often described as ‘bittersweet.’ Ensure that yours is sweeter and less bitter.

If 70% of successions fail, the best leaders aim to be in the 30% who make it work. The Succession360™ framework exists to help you do just that. Call me if you want guidance—or start by downloading the free toolkit and take the first step.

Take good care,

Christian