Permanent Equity: Investing in Companies that Care What Happens Next

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Learning and the Unlearnable

One thing that has been heartening to learn here recently is that I am not alone in being befuddled by succession planning. I know that because I have received lots of responses as I’ve written on the topic sharing thoughts, learnings, and experiences (thank you!). What’s true across all of those responses is that while many of you have spent a lot of time thinking about succession planning, none of us have it nailed down (or as Andy said, “Most companies…believe they have something, which when disaster strikes turns out to be nothing”).

Hopefully we’ll all get there eventually!

A thought that triggered a particular response was the idea that one reason successful CEOs may not be good at succession planning is because they may struggle to communicate why what they do works well. Alex, for example, wrote back that while this “may be a bit too far down the rabbit hole” (Alex, there is no such thing), “there’s an entire field of study around…extracting tacit expertise from folks who have reach unconscious competence and aren’t able to express what they are doing.” And he included with that thought this link to “Copying Better: How to Acquire the Tacit Knowledge of Experts.”

Tacit knowledge, as explained in part 1 of that series, is “knowledge that cannot be captured through words alone.” It’s helpfully explained as when someone with expertise tells you to:

Do X. Except when you see Y, then do Z, because A. And if you see B, then do P. But if you see A and C but not B, then do Q, because reason D. And then there are weird situations where you do Z but then see thing C emerge, then you should switch to Q.

We’ve probably all found ourselves at one time or another on each side of that conversation, and what the piece ultimately concludes is that to transmit and receive this type of expertise requires long-term apprenticeship and frequent post-mortems. Applied to succession planning, call this the Willy Wonka Golden Ticket approach (hat tip, SarahBethGDub).

But an interesting question to ask is whether the goal of succession planning should be to prepare the next CEO to emulate the previous CEO at all? As I wrote last week (because I think it’s true), if someone who wasn’t Steve Jobs tried to run Apple just like Steve Jobs, even if that person behaved exactly as Steve Jobs would have, it would likely be a failure simply because that person wasn’t Steve Jobs. After all, having an idea, for better or worse, is different from having the credibility to present it.

Responding to that thought about Steve Jobs and Tim Cook, our CEO Brent said, “Yes. And I think it’s in line with the idea of ‘refounding’ an organization for it to be successful. Each organization needs a singular leader casting vision and not just a manager of what they think the former leader would do.”

Where does that leave us? Well, if you want to learn domain expertise in areas without clear pedagogy or universal truth, you need reps and feedback alongside someone who has been there and done that. But while being a successful CEO is certainly an area without clear pedagogy or universal truth, that still may not be enough to make you a successful successor. As for what will, hopefully we’ll all get there eventually.

Tim


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