The succession malaise at Big Enterprise Vendors

The succession malaise at Big Enterprise Vendors

Summary: Succession planning is often ignored at big software vendors. The problems it brings are not inconsiderable.

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TOPICS: CXO, Cisco
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It must be a slow news day when Henry Bloget pulls an evisceration of John Chambers, CEO Cisco outta his ass with the fiery title: THE TRUTH ABOUT CISCO: John Chambers Has Failed. I think he could be right but for the wrong reasons. As I opined on Google Plus:

He misses the underlying point - networking has become a commodity and in commodity markets it is almost impossible to sustain growth the way Bloget expects to see it when compared to other tech. He does make a good point about the foray into consumer - that was definitely poorly thought out - as were their internal social strategies. On balance, the notion of bringing in a change of leadership might be a good thing - if Cisco has a succession plan in place.

Who cares you might say but I am a firm believer in ensuring I understand the likely longevity of a software vendor before advising a client. The last few years of furious paced rollup, especially at the hands of Oracle, means that names which were once regarded as innovative some years back are flagging today under the dearth of R&D resource. But the broader question of succession is pertinent.

Even if you agree with Bloget's assessment who is going to run the ship - or ships? In common with a number of software companies, there is no obvious succession plan at Cisco that makes sense.

Look at what happened at SAP when Henning Kagermann and Shai Agassi left. The company was left in the hands of the wrong chap at the wrong time in the wrong job. He fell on his sword within 10 months. SAP lost years of momentum as a result. It has taken co-CEOs Bill McDermott and Jim Snabe well over a year to start righting the ship and even now some of us have a clutch of tough questions we believe the company needs to answer.

Consider what's happened at Microsoft the last few years since Bill Gates left. It's only a few weeks since some people were baying for Steve Ballmer's head.

Then there is the ongoing angst at HP - that company's recent history is the stuff of a Shakespearean tragedy.

What would happen if Larry Ellison, CEO Oracle fell overboard one of his yachts, or choked on some tofu? As far anyone can tell, there is no succession plan though wiseacres reckon that's not a problem for Ellison as he plans to rule from beyond the grave. But seriously...

Jim Goodnight has done a phenomenal job building SAS Institute into one of the largest, if not THE largest privately held software companies still capable of attracting some of the finest PhD minds on the planet. Yet he shows no sign of hanging up his spurs and again, there is no obvious successor.

We need these huge companies to be successful and remain relevant yet the appalling lack of apparent continuity in the wake of an anticipated or sudden departure is worrying.

The vendors always argue they have so much bench strength that any transition may mean a hiccup but that's all it is. Nonsense. There is no history of that with one recent exception: Google. Co-founders Page and Brin had the foresight to realise they needed help and for 10 years, Eric Schmidt provided that in spades, allowing them to mature as managers while not losing their founding ethos. Some argue that in the transitional process, Google lost its way, becoming a tad too bureaucratic. Maybe so, but only a fool would deny Google's ability to pivot as it has with Google Plus. Oh yeah - and turning in a handsome Q2 result last week.

Any company that ignores succession planning is negligent. In that context, whether Chambers should go seems something of a moot point.

Topics: CXO, Cisco

Dennis Howlett

About Dennis Howlett

Dennis Howlett is a 40 year veteran in enterprise IT, working with companies large and small across many industries. He endeavors to inform buyers in a no-nonsense manner and spares no vendor that comes under his microscope.

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6 comments
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  • Succession planning

    Great post, as usual. But one thing has bothered me recently about all this hand-wringing over succession planning. For an organization as large as Cisco, or Microsoft, or Oracle, to have a fully qualified designated successor-in-waiting, *just-in-case* something happens to the big guy, seems to me to be a bit of a stretch.

    What happens in reality is organizations groom one, or even better, two or three possible successors, knowing that there will always be turnover in the senior ranks. Other times, a founder or CEO emeritus steps back into the top job while a search for the next CEO takes place--whether an internal or external candidate.

    Finally, how do you know Oracle doesn't have a succession plan for Ellison? I don't think companies public or private are required to disclose their succession plans, are they? So, the fact, for example, that we don't *know* who Larry's successor is at Oracle does not mean that Oracle doesn't have a succession plan in place. I'm sure it does. And that goes for all the senior leadership positions at Oracle, or at any other large organization for that matter.
    fscavo
    • RE: The succession malaise at Big Enterprise Vendors

      @fscavo - interesting thinking Frank but when I think of succession planning I think of 2 words: succession and planning. You can plan all you want but if the chosen/groomed successor is the wrong person - as is often the case - then you've failed. I've seen it many times across many industries. You need look no further than News Corp for the example du jour.

      On Oracle - everything I have heard suggests to me there is no plan, let alone likely candidates. Could Safra do it? Hurd is a no go. Then who? Chuck Phillips could have been another Ray Lane but he's out of the picture. Sure, they have some great lieutenants but that's all they are, not commander in chief types. As one wiseacre said to me: 'Larry chokes and Oracle's share price goes to zero.' I don't know any better than the next person but my sources are usually close enough to the action to read it right.
      dahowlett
      • RE: The succession malaise at Big Enterprise Vendors

        @dahowlett All good points. I think the problem with having the wrong person as the successor is that you don't know he or she is the wrong person until he or she steps into the big job. You only know it's the wrong person in hindsight. I mean, it's not like you can do a dry run or a pilot test. Oh, let's have him run the company for three months as a test to see if he's the right guy.

        I suppose you could correct for that by never having a "star" CEO--like Jobs, Chambers, or Ellison. Just have a middle of the road average performer. Then you would have no problem finding a suitable successor. Heck, the successor might even be better than the incumbent. I'm joking, but you can see my point. The problem is, the next "star" CEO is not going to be sitting around waiting for the current "star" CEO to retire or get hit by a bus. So, if you are lucky enough to have a star CEO at the helm, it probably means, by definition, that you are going to have a problem with succession. I think most companies would still prefer to have a star today.
        fscavo
  • RE: The succession malaise at Big Enterprise Vendors

    There have been too many successioni fiascos for companies not to disclose their succession plans. Shareholders of public companies, in particular, are required to provide independently audited financial statements. When an organization's success is built on its human capita, why should we accept "trust me" as the standard for succession planning disclosure. I wouldn't expect them to name names but a level of rigor that included positions covered and the nature of development plans would be a heck of a good start.
    John Szold
    CEO
    Planning for Succession Inc.
    Miami/Toronto
    johnszold
  • RE: The succession malaise at Big Enterprise Vendors

    Dennis,

    I can't help but think of SAP's plan to replace the estimable Kagermann: they doubled down with polar opposites -Leo Apotheker and Shai Agassi- and ended up with a lousy two plus years of Leo which has been followed by the hugely lackluster current duo. I must be getting old because I still miss Shai and I still, on occasion, tend to wonder where SAP would be had they chosen him rather than the Grump.
    Michael Doane
  • RE: The succession malaise at Big Enterprise Vendors

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