Succession Planning: Not Just for Older Leaders

Michael Dell 2

By Patricia Lenkov, Chair, Executive Search, N2growth

Dell Computer and the story of its potentially going private have occupied many a news column of late. In the most recent turn of events, Blackstone Group withdrew its bid for the company after making the determination that Dell’s future and the PC industry looks bleak. Throughout all this I cannot help but ask what seems to be a fundamental underlying question about this company, and that is, who should lead Dell going forward?

Yes, Michael Dell is an icon of the stature of Steve Jobs and Bill Gates. He is highly intelligent and incredibly successful with a net worth of $15.3 billion as of March 2013 (per Forbes Magazine.) But he has been leading Dell Computer (save for three years when Kevin Rollins was at the helm) for the past 29 years, since he started the company while at College at the age of 19. No matter whom the talent, anyone in the same position for several decades is bound to become temperate, or perhaps even myopic. It is essentially impossible not to and this is particularly true in the ever-changing and evolving technology industry.

According to The Conference Board, CEO tenure has decreased to an average of 8.4 years as of 2011 from 10 years in 2000. This should come as no surprise given the increasing independence of corporate boards and the pressure to take decisive action when the company is stagnating. There is also ample evidence that there is a lifecycle of effectiveness for any business leader (perhaps this holds true for leader in any field, even politicians!) In fact, in research reported in the Strategic Management Journal (February 2006), Henderson, Miller and Hambrick found “in the dynamic computer industry, CEOs were at their best when they started their jobs, and firm performance declined steadily across their tenures, presumably as their paradigms grew obsolete more quickly than they could learn.”

This presents an interesting dilemma. It is clear once again that planned CEO succession is necessary. Appropriate and carefully selected and strategic change at the top can do much to resuscitate an organization. It is also evident that even the best leaders have a “shelf-life.” However Michael Dell is in fact only 48 and he is also Dell’s largest shareholder. The usual best practices may be hard to apply.

But apply they must! In all of the news and speculation surrounding this story there is rarely a mention of who should lead Dell going forward and whether Michael Dell remains the best candidate for the job. We know the PC market is in a free fall and we know the financials of the company ad nauseum, but what about the brainpower, ingenuity and creativity that is needed to steer this behemoth in the right direction? Some guidance and information along these lines is becoming unavoidable.

Thoughts?