ProductiviTree: Cultivating Efficiency, Harvesting Joy

Why Most Succession Plans Fail (And How to Fix Yours) with Mark L. Vincent

• Santiago Tacoronte • Season 2 • Episode 45

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In this conversation, Mark L Vincent discusses the complexities of succession planning and leadership transitions. He emphasizes the importance of understanding different contexts of succession, the need for long-term thinking, and the common mistakes organizations make in their succession strategies. Mark introduces the concept of the three turns of executive leadership, highlighting the necessity of balancing qualitative and quantitative measures in succession planning. He also addresses the cultural shifts in the workforce and the hidden costs of neglecting succession planning, advocating for a holistic approach that integrates both systems and people.

Takeaways

  • Succession planning is a critical part of business continuity.
  • There are three main groups involved in succession: nonprofits, family businesses, and privately owned companies.
  • The three turns of executive leadership include leading oneself, leading an organization, and preparing for succession.
  • Long-term thinking is essential in a world focused on short-term results.
  • Qualitative measures are often overlooked in favor of quantitative metrics.
  • Succession planning should be an ongoing process, not just a reaction to retirement.
  • Cultural succession is as important as individual succession.
  • Hidden productivity costs arise from poor succession planning.
  • Both systems and people must be considered in succession planning.
  • Leaders should recognize when it's time to step aside for new talent.


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Mark L. Vincent has founded, led, and developed communities for 40 years, innovating and simplifying so that members can flourish. a small faith community at age 20 to currently advising multi-million dollar companies, Mark gradually expanded his study and experience in group facilitation and dynamics, helping more than 800 organizations flourish the world. His personal story of striving and loss through his first wife's 16 years of cancer adds wisdom to his cultivated skills of listening, helping and learning. While managing life and work during those cancer years and raising a family, Mark launched a number of organizations. These continued to develop profitable executive leadership development, planful succession, process consulting, an emotional intelligence technology in North America. Mark, welcome to Productivitree I am excited to be with you Santiago and look forward to this conversation. So are we. Mark, you work on a field that is quite uncommon, succession. What pulled you into this work? When did you realize that there was a need for someone to coach companies and leaders into succession and being succeeded by others? I don't think there was any moment where I woke up and said, oh, this is a need and I need to supply something for it. My background is group process. is complex decision-making, meeting facilitation, gathering, or we sometimes say convening systems to work things out. And as I got started in this in the late 1980s, as a very young man, I was already being asked, will you come help us? We're painted in a corner over here. We're stuck. We don't know what to do. What we've tried didn't work. And already about half of those tied to succession, tied to some kind of business continuity planning and handing things off to another generation within the family or to a buyer, or maybe we're going to have to close because we don't have anybody that wants to continue with this thing. We don't know what to do. And in that kind of work, I discovered that when we talk about complex decision making, There's nothing like continuity and succession for complexity. Money and the dynamics around money have a way of bringing out all of the dysfunction that exists in any system. And so when you add the money dynamics, sometimes they are family related money dynamics to succession and business continuity, you have the most complex the most interesting kinds of stories to work through. so early on it became a thing and I began to notice we need good skills for this. We need to be able to help people have these conversations at the right time. And over the years, the requests for me to help with that got, they became more frequent. And so there were other things like strategic planning, know, entrepreneurial startups and other things that I was trained to do. I did less and less of those and had colleagues who did more of those so I could devote more time to business continuity and succession. So it just kind of grew up around me and I think I was at the right place and right time when there began to be a little bit more attention paid to these kinds of things. And so I got to grow up with the possibilities of providing this service. Brilliant. You mentioned uh family businesses and also leadership or executive leadership. What are the categories or groups? How would you group your uh most common types of cases that you need to step in? uh There are three groups I think of right away. One would be, let's take nonprofits and NGOs that have had long time leadership and now are figuring out who is going to replace the founder, is going to replace the long time executive director, they might call them a CEO. Sometimes that also involves board uh continuity and succession because the board members and their major donors have served for a long time. How are we going to keep that going? So that's one group. Another group would be the family business, where you've got multiple generations of families, third or fourth generation. And one of the things that we know is it's something like, I'll give the rough number here, like 5 % of businesses that start are still in existence 25 years later, which means there aren't that many that actually go to a second generation. And of those, only about 5 % see it to a third generation. And of those, only about 5%. And it almost becomes like a zero go to a fourth generation. It's just there's so much fall off. So that's another group being able to do that well so that a family that is invested and wants to see this enterprise serve the world in a continuing way and provide income for them and maybe some other family members. That's a very particular recipe. And then a third group that I often work with is a business that's not family owned, but it is privately owned. maybe a partnership, maybe an S-Corp, it may be an ESOP owned by the employees. But they're looking at how do we identify successors and continue this because so many of us are invested. Our family wealth is tied up into it or our state is tied in. Where I don't get involved very often is uh publicly traded companies. That's a whole different kind of animal and you've got so much trading happening all the time. And board members are often there representing their interests or the interest of their fund that got them the board seat. It's a much more of a political process with multiple interests that aren't necessarily tied to the mission uh of the organization and being values based and stakeholder based. That's a different one. I don't usually get involved there, but those other three groupings, it's about an even population of all three. Marc, you have coined quite a lot of terms in your career. This one I heard that is called the three terms of executive leadership. Can you explain to what it is? Yeah, that's a favorite topic to talk about. And it's a very simple map. It was a way of condensing what is an executive career and what does it look like? How does it develop over time? How do you recognize that someone is moving through this? So a first turn, usually the first third of a person's career 20s and 30s, maybe you're learning to lead yourself, you're figuring yourself out, you're figuring out where your skills are, figuring out if you can lead, do people trust you? Do they want to work for you? Is there a I want to join up something that Santiago's leading or is it roll the eyes Santiago's leading I don't want I don't want to be on that team right so that that's where you're figuring it out and we need restarts and the ability to try different things but somewhere along the way people who are uh really strong learners and have an appetite for more they might be given an opportunity to showcase that by leading an organization, actually taking responsibility for the P &L, getting into the C-suite. The statistics tell us it's about 14 % of American workers would be invited to lead an organization. So 14 out of 100 people who enter the workforce are gonna have that opportunity. Well, now think for a minute, a lot of folks aren't gonna succeed at doing it, or they'll try it, find they don't particularly care for it, and they wanna return to heading up sales. or going back into research or doing something that they find gives them more joy. Gave it a try, didn't like it. So they're going to go back and do something else. Some people say, I really like leading an organization when it gets from three to six million. And then I'm going to go someplace else that's at three million or get that to six. Cause I just want to turn that. And there's some others that I'm going to buy and sell businesses. That's that moving into a second turn where they're leading the whole organization might be where they stop. They just rinse and repeat, or they keep leading the organization that they're at for a long period of time. But now in this second turn, where they're invited into that C-suite, they are responsible for the organization. They must lead it, and they must lead the people, even while they're still learning to lead themselves. So they're continuing to grow as a person, continuing to learn, but now the learning's different. You're not just learning your skill as a marketer or as a sales lead or as an engineer. You are learning to lead the breadth of an organization. You go from like a uh vertical rise to a horizontal spread and you have to bring leadership where you're not even the expert. You don't know the most, you don't have the most tenure, but you're responsible for how the whole set of systems work together. And you didn't come into that seat knowing it necessarily, so you're have to learn. You succeeded in turn one by learning. You succeed in turn two by learning. There are a select group of people who lead long and strong in an organization and keep growing. And they're going to have an opportunity to move into what we call a third turn, which means they're now looking at the future value and the business continuity and the succession, particularly after they're no longer in their seat. They are at a point where thinking five, seven, 10 years out, because that's how they've done it. That's how they've led so well for so long. They now can see, oh, in seven years, I'm not going to be the person. In five years, whatever. ah What we're going to need is someone with skills different than mine. Or I want to retire. I'm done. I'm tired. I'd like to wrap this up really, really well. I think you've got three years in me. We got to figure out where succession is going. And I want to slingshot my successor into the future. I don't want there to be a moment where the organization deteriorates for a while while the new leader gets their mind around the organization because we could lose everything that we've been building together. I want there to be meaningful work for the employees and their families. A leader like that, we would say, is entering into their third term where it's now not just, do I run the organization well and is it growing? But they're thinking future value, succession, legacy, and preparing for it. A phrase I like is it's plan full succession. How do you succeed at that? You've got to keep learning. You have never done that before. You get one crack at it. It's either going to work or it's not. It might fail. But the way to get through it is to be very much the student instead of pretending that you're the expert. Another of your famous phrases is for our grandchildren's grandchildren. Mm-hmm. It's favoring quick trends, quarterly results, its legacy becoming outdated. For a lot of people, it has become an unthinkable thing or a luxury or why do you even care about that? Because their minds, their neural pathways, for some people, is down to the daily flash report or even twice a day. You know, where do we stand? How many hits? What have we done? And it's all instantaneous. So I think that for a lot of people, it's not in their frame of thinking, but I don't think it makes it outdated. In other words, is it still important? It absolutely is still important. But we're not thinking about it culturally and the pressure over and over and over is short term. What do we do this week? When we do this month, there's a lot of business wisdom out there that would say, why do you need a strategic plan that goes beyond one year or three years or something because you don't know what's coming changes constant. I would suggest that change has always been constant, always, and planning long term and navigating with where you want to go has always been with us and is always important. It's how we manage them both. And we've been tilting towards short termism in a way that's unhealthy, unproductive, actually takes wealth away from the future, borrows against it, doesn't think about long term effects. And then we end up having to pay for those long-term effects later, because we didn't plan for it in the first place. What is the most common mistake you see companies, smart companies making when planning for succession? Well, I think I'm answering that differently than I might have earlier, just because I'm working with so many more clients over time and seeing what keeps showing up as an issue. And so lately I've been talking a lot about the difference between qualitative and quantitative measure. And so I would say it this way, the mistake that I see over and over and over again is that people are counting dollars and they're not counting qualities. So when we say did we grow, we look at numbers. Do we have more money? Do we have more profit? Do we earn more dollars? Is the share price better? We need to count those things. But what is it that we fight about? Where are our productivity leaks? Where do we end up in court suing each other? Why do employees make complaints with a state labor board or something along that line, which drags HR in and doesn't have us helping our employees grow, but has us fighting and trying to be on the defensive. It's about the qualities of things. It's when someone says, I'm not safe, or it's not enough, or we are not moving quickly enough. How do you measure those qualities? We do that different than we measure quantity. So the mistake we make is that when a qualitative argument starts to show up and we've got differences of opinion and expectation, maybe all the way down to how we define terms. We say, we'll figure that out later. That's not important. Let so and so decide. And so we keep creating this debt within our systems and among relationships where people are angry, they're sullen, they're private, they go underground, they don't follow a policy because they never had a chance to show you why they disagreed with it. And this becomes these enormous leaks that we end up spending a lot of time and money trying to hold together. And our failure to deal with the qualitative measures from the beginning, which can be harder to figure out, ah is a mistake that we make. And when we get into succession and process and procedure, now we're talking qualities far more than quantities. Have you seen a succession plan backfire and why? Oh, that's a good question. Yes. A quick answer is yes. The why part. I would again go back to qualitative measures. You know, it's not so much you said you would pay me $1 million and you only gave me 999,990. Let's figure out where the $10 went. You know, we want good accounting, but the fighting is about you didn't honor me. You didn't show respect. you uh sold yourself short or you overstated what your qualifications were, uh the inability to understand each other and speak what each other um cares about. So like Santiago, if you were the founder and I'm going to be your successor and you say to me, here's what I'd like you to do. And I say, I've already got that figured out. Go away. We're not talking about. What was the sale price? What's the investment price? What my salary is? What the compensation is? What we're talking about is our ability to treat each other with respect and to do that in front of the culture that is carrying out the work. And as we fight or are tense with each other or are jockeying for position, we harm the ability for that company to carry out its mission. And this is where the backfiring starts. where the founder wants back in because they don't trust the successor. So I'm going to go and here's one quick illustration. GE Jack Welsh has a famous saying, I effed up talking about how he handled succession after his many, many years of growing GE. And if you read the story of GE, the tremendous loss of value, the inability for the successor, Emelt to do what Welsh had done, the different approaches that they took, the fighting that was in the public. It's all a matter of public record because it's a publicly traded company. That's where it backfires, where there is not a common march toward a mission that you've worked out together, including how the handoff is done. We tend to think about succession on the usual suspect cases. um Someone is retiring because it's close to retirement age. But when should companies or boards start thinking about succession? uh You've heard me say, think already that continuity and succession go together, or I've used them in the same sentence. I believe that continuity and succession are together. Succession is actually a part of continuity planning. So businesses that do continuity planning are quite often separating them out. so continuity, equipment replacement, keeping the buildings in repair, updating machinery, uh making sure that You know the lights are on tomorrow and all the bills are paid and you got good systems. Succession then is about the people replacement and the talent pool and how you grow things up and how you place people out. And I just suggested continuity includes succession planning, so we should be doing it all the time. How do we have our bench, which are our board that we're watching for that if someone's hurt hit by the bus, get sick quits on us in a surprising way. We have someone that we've been preparing to step in and either can fill an interim role or replace them. So we keep working at this as we develop the organization. That's the best time. A second best time is when you're doing significant planning for the future, like our next round of strategy. And uh you can begin to see that, oh, if I'm leading this organization, I don't really want to be running it in five years. Well, now I better get busy because if it is I'm going to retire this year and I've never thought about it, we're probably too late and the value leaks have already begun. dark. Gen Z, which is a topic we have touched multiple times in the podcast. It's a super interesting topic because of the visible cultural differences that we have in the different layers that are right now in the workforce, so to speak, boomers and eggs, millennials, and Gen Z. So the question is, How should companies prepare for a succession that is not only people's or a person's succession, but also a complete new cultural succession? Yes, that's wonderful to ask and to think about. Let's make it a little bit more complex for a moment to recognize that we also have differences in gender and in cultural uh places that people come from. they you may have a person who's 40 years old, let's say right in the middle of life. But their major thing isn't that they're the way that they identify isn't so much about their generational difference. It's the fact that they're Latino or that they're Asian. or that they are a suburban white guy and they're feeling alienated because, you know, I don't have any special cause kind of a thing. Those differences all make up this mix. So the question is, what are we doing now for the board, if there is one, advisors or if there is one, C-suite, when that really starts to get developed, and in our workforce that's already showing that complex uh quilting of what's represented in our culture. How are we doing that? So it's already a part of what we're working at as opposed to, now we've got to hand this off to another generation. Where is somebody that looks like they could take this and what does that thing want to do? We're just finding out now that that's what happens when we keep pushing things off that are long-term considerations. for the right now benefit of being able to get something done. We get something done and sacrifice the long-term value. I keep maintaining we need to get things done without losing sight of the long-term value. It's one of the ingredients of getting it done. If we're just taking care of the right now, we're not getting it done. We're getting it partially completed because we weren't paying attention to the long-term effects. The long-term effects or developing people, they are not going to be like us. They're not going to be like the founders. They are going to come to us, maybe not even well formed as a human being. They might not, they might come to a skilled, but not polite, or they might come to us polite and respectful and collegial, but not able to yet run the equipment or run the program, or they're not as experienced as they're going to need to be. So we're going to be a part of with, with long-term value in mind, part of developing them. and they developing us. And so we join together in a joint learning. If we don't have that, we will continue to slot people. you're this, you're that, or I'm this, I'm that, instead of seeing ourselves as complex and the culture that we're in as complex and that it is the mix that makes it beautiful and brings the value as opposed to see me, hear me, I'm important, you're not respecting me. That's the stuff that drags us down and apart. Very interesting topic, Marc. What would you say to leaders that are trying to find a clone of themselves? I think one thing is to ask them why. Why are you trying to find that clone? So what end? What's the purpose? I find that some who are looking for a clone for themselves are doing it because they don't have any other answers to it. They feel like it would be easier. It would help to continue some things. I don't. think that there's anything wrong with saying, are those things that have been important to me, that are strong about me, that are good about what I've brought, that we need to see it, we need to continue. But if we're going to be honest, there are also deficits and contradictions. So how are we going to take care of those as well address those as well. So we're not just addressing an upside, we're also addressing downsides and being thorough in what we're doing. I would have the same question as to someone says, needs to be different than me. Why? It succeeded underneath you. You got this thing up and running. If you're still in business after five years and you're the founder, you succeeded at some things. What's the gold here that you need to have continued, even in a person that's not exactly like you? We already know about the very visible costs of not doing succession planning and more in a quantifiable monetary dollar way. But what are the hidden productivity costs when companies avoid succession planning? Hidden productivity cost is a great topic. I'm just taking a moment here to think this through from a couple of levels. So let's start with the board, if you have a board. uh If they step in and take over and run a succession, let's say you're hot, they've got a hired CEO rather than just an owner. And they're stepping in and running this like an executive search. They're going to begin to say, hey, we have an executive. And we've got someone and they've got experience and they'll take care of it like it's a project instead of planning for continuity and value. So if that happens and the person comes in and it's all tied to what their compensation is, they'll now start running the organization in order to get their cop. And if the mission ah is successful, well, that's good too. They don't want to harm the mission, but they're thinking. and maybe even gamifying things in order to get their bonus that they're promised. Well, that has hidden productivity costs because now you've got decisions being made that aren't necessarily tied directly to clearly defined strategy. Another one where it starts to happen is when it gets a little bit further down into the organization and people are waiting to know, are we continuing on? Do I trust you, my leader? Do I trust my team? Do I trust oh the organization to actually do what they say? Because I'm not getting a certainty about this. And I personally don't want to waste my time. I don't want to get committed to something, make something happen, and then be told, you can't. So I know that you said, let's do this. But do I trust you that we actually are going to do that? When you have any of those little hidden traps, because there is a continuity break, or there's some inconsistency in messaging. You have value leaking all of the time. One more. This happens in organizations consistently, every day. When we have a meeting, formally called or not, and the first sentence is, but I thought that, fill in the blank. You are now having a meeting for the second time. So I'm in this habit of when I get into a meeting and I was in one yesterday, five senior leaders, they're on a virtual call for three hours. I'm calculating what is the expense, the cost to have this meeting. If we have to have that meeting a second time because we weren't clear about what we meant, what we were going to do, who's gonna do it by what deadline, we have now doubled the cost to be able to take care of this administrative or strategic matter. And most of the time when we have to have that second meeting, it's tied to a qualitative matter far more than a quantitative matter, all kinds of leakage there. You are also a process consultant, so... uh Should we, so normally when you hear uh succession, you tend to think people and the leadership, the board. And you already clarified that it's also about continuity. So should succession planning be more about systems than individuals? I want them to be about both, very clearly about both and not just, okay, we have category one systems, category two people. There's an intersection between them. ah So the capacity of people is going to influence the capacity of the organization and the organizational capacity is going to influence whether people can put their talents to work or not. So it's about the build out of that intersection of people and systems that we want to address. So in my work and particularly in the cohorts that I lead, we talk about a couple of things that we want to see well resourced in order for continuity and succession to proceed. One is a future balance sheet. So if you're gonna have a strategic plan and say we wanna grow 20 % in five years, okay, fine. Where's the balance sheet that's gonna support that? Including talent retention and... uh recruitment and the equipment and the cap, the cap excess going to be needed. What is that going to look like? Because that needs to be built in otherwise you'll get there maybe if you're successful, but any successor any new leaders are going to be hamstrung because capital needs weren't also grown along the way or the people bench was not grown along the way. So you end up larger, bigger. and weaker at the foundation. So that's got to be paid attention to as well. One other one is to look at what we call the map. And in the map, you're deciding what is it that as we grow and as we handle things and as I'm responsible for a system, who has it after me? Are they learning to do it? Do they own it? Are they able to lead it? Because if they're not, then I'm still carrying it. And if I step out, that's going to fall by the wayside or it's going to diminish in some fashion. So we really want to map out what are these things that I am leading and what's the map for others to begin to lead so that when I narrow up, step into a new role or whatever else, there's someone else ready to take it up, take it on. leaders, um many of them have long tenures. In these tenures, the situations are, and what leaders need to face is quite different. There might be different economic, macroeconomics factors, war, different politics and all these things. How can leaders know when is one time to lead differently? And maybe give way to others because this is not your forte or you're not delivering at your max in the current situation. Yeah. Well, this might sound a little bit like Don Quixote, know, an idealist tilting at windmills, but it's about the mission. So an organization exists to accomplish something. And if I am saying, yeah, yeah, but I'm not ready to be done yet. Here's the mission. Yes. But I've got two more years to work. I am already taking my eyes off of the reason I'm in my seat. That's the time I should be stepping down and stepping away and trusting that there will be something there for me to do. Not necessarily at this company, maybe I'll go into retirement, maybe there's a volunteer thing I want to do. I have to be developing a life to go to because there's a moment where I am not the CEO of X. or the CEO of Y or the CEO of Z. I am not going to be that person at some point in my life. And I can't just be identified with my role. If I make that mistake, I'll stop caring about the mission. And the substitute mission will be continuing to be the king or the queen of the hill that I have and my corner office and my big chair, because that's what I love. That's what I know. So we have to be able to uh recognize that the mission is why the company exists and I'm here to serve that mission. I'm here to be a steward of that mission. And at a point that I cannot be its chief steward at the best of my ability or someone else is emerging to be that person in light of where this mission is going, um then that's the best time. But you can hear, I'm just talking about it from an idealist's point of view. In my own career, it's pretty much what I did. It's like, here's what we're doing. Here's what we're after. I am going to trust that there is more work for me to do, a freedom to be able to continue to grow as a person. uh here's a leader that's emerging, that's more skilled, is more ready, has a longer tenure than I will have because they're younger than I am. It's time for me get out of their way. And if I don't get out of their way, we're gonna lose that talent. They're gonna go serve a competitor or they're gonna go serve. another company and we won't have this moment with them again. But for me to do that, I have to trust that there's still something for me to do, something for me to accomplish, something that I'm going to enjoy that's not necessarily tied to the seat at the top of the organization. Marc, I have five short questions for you that I'd love you to answer in 30 seconds or less. Number one, legacy or innovation? Which one drives better succession? I think legacy without losing sight of innovation. Number two, what is one phrase a retiring leader should never say? Listen to me. Number 3. The biggest red flag as successor isn't ready. when they say they are ready. 4. One quality every next generation leader must develop. lifelong learning. And five, what's your go-to question to assess a successor's emotional readiness? I always want to know if they're leaning into their learning or just pretending to. That's a tough one to discern. But if they're pretending they're performing and that wears thin and it's going to show up as a big flaw later. Mark, let's wrap this up. What is one myth, if you have the power to dispel myth and convince people, what is one myth about succession that you wish more leaders would let go of? uh Far and away the most the fact that I should know how to do this. The belief that I'm a leader, I'm accomplished. I should know how to do this. um I just know and we don't. We don't. We succeed all lifelong by figuring things out by surrounding ourselves with teams by learning together. And when we start to pretend I should know this, then we get isolated. We start protecting. We start hiding. ah We start to make it about ourselves and a number of things start to go downhill from there. Listeners know more about you, your work, hire you and learn more from you. Well, I sure enjoy the opportunity to do executive advising with folks and the best way to find out more about how I do that and what I'm doing is marklvincent.com. All right. Marc, thank you so much for illuminating us with your wisdom. It was really interesting to hear about a topic that we don't hear a lot. And I do think now after talking to you that is super important and it's something that we need to look into more often. Thank you so much and thank you for being with us today. My pleasure.