Why are the successful so bad at succession? More specifically, why is it so hard for leaders to name successors who can continue an organization's growth and profitability? The classic answer, of course, is ego. If you believe what the psychiatrists tell us, most of us don't want our successors to succeed -- out of fear that they will eclipse our legacies. Consciously or unconsciously, we designate successors we know will fail. Yet most leaders I know aren't that devious, even subconsciously. And most of the owners of privately held manufacturing firms I've met genuinely want to find successors who will succeed -- if only so that owner can spend more time on the beach. My suspicion is that the real reason so many of us are so bad at succession is not misguided ego but misunderstood success. Acute in judging the character and abilities of others, we remain woefully blind to those qualities and skills in ourselves that create success. We overestimate (and overvalue) some strengths and weaknesses even as we underestimate (and undervalue) others. As a result, most of us have only the dimmest notions of why we have succeeded. This lack of understanding leads to all kinds of problems. Some of us hire successors who have outsized portions of whatever trait we think was most crucial to our success -- drive, sales ability -- without recognizing the need to balance that with four others. Others of us look for someone with skills we lacked -- organizational, financial -- forgetting that without other qualities, we never would have needed to hire for those skills in the first place. In either case, the succession fails -- not because of unconscious sabotage but because of our willful lack of self-knowledge. Why do we succeed as leaders? Four reasons: A Great Idea: Every great business starts with -- or eventually finds -- a great idea. You can be successful either by having the great idea yourself or by finding it. You need to be blunt with yourself about which talent -- creativity or recognition -- you have and in making sure you replace it. A Financial Intelligence: Bean-counting never built a business. But all successful companies have at least one leader with a gut feel -- a sort of free-flowing awareness -- for how the money should flow through the firm:
- Where and how much to invest;
- Why and when to cut back;
- How to price, discount and profit.