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Succession planning ensures the business sustains the change in its economy’s leadership and political, economic, cultural, and legal environment. The world is changing faster than ever, and the leadership needs to adapt. Gone are the days when the baton was passed to a family member. The weight of an established business cannot be handed over to a blood relation without verifying his/her ability to fill up the big shoes. Succession planning is a mammoth task to pass on the baton to the next leader within or outside the organization.

When Dhirubhai Ambani established the Reliance empire he didn’t foresee his sons fighting over their share of business. When he passed away differences grew between the two sons Mukesh Ambani and Anil Ambani. Their mother Kokilaben intervened and, with some senior officials’ help, divided the business empire to bring peace to the family. The rest is history as you all are aware how both brothers fared in their respective leadership roles.

There have been many instances in history where family feuds and misunderstandings have led to the downfall of business organizations. Cyrus Mistry (a family member of Ratan Tata) was appointed the chairperson of the Tata Group after Ratan Tata’s retirement. However, in October 2016, he was asked to resign as the Board had lost confidence in him. It was voted in the Board meeting to remove Mistry from the position. After that followed a legal tussle and the baton passed to Natarajan Chandrasekaran, the former Chairman of TCS. In another example, the legendary fashion brand Gucci was founded by Guccio Gucci. It was expanded internationally by his elder son Aldo who had 50% ownership along with his brother Rodolfo. Trouble started popping when the third generation took the reigns in their hands. Aldo’s son Paolo wanted to launch his own fashion line. Rodolfo’s son Maurizio inherited his father’s 50% stake and teamed with his cousin to run the business. Soon the cousins turned enemies and Maurizio was ousted from the company due to huge personal debts and tax frauds. Paolo’s fashion line was a tremendous failure. In the end, no one from Gucci’s bloodline could lead the business.

Succession Planning = Continuity with Change

Organizations are setting up committees to identify potential successors. There is no hard and fast rule to shortlist a CEO/MD. The list usually comprises successful CEOs, people from the family tree, senior management leaders, and executives. In India, the concept is fast gaining popularity where the next line of leaders are groomed from an early stage in the company structure. Potential candidates are shortlisted beforehand in the face of demise, resignation, or unforeseen corporate situations.