A.G. Lafley

Noel Tichy

<article-ideainbrief class="article-ideainbrief">
 <h4 class="ideainbrief-title">Idea in Brief</h4>
 <div class="ideainbrief-contents">
  <p>Planning for leadership succession is the most important job of a company’s board of directors.</p>
  <p>But boards and CEOs often neglect this key responsibility because other business matters seem more pressing.</p>
  <p>At P&amp;G, A.G. Lafley and his board began the process of selecting and developing succession candidates as soon as Lafley took office.</p>
  <p>Succession planning demands the same coherence, discipline, and thoroughness that governance, enterprise risk, and strategic oversight do.</p>
 </div>
</article-ideainbrief><p><em>Foreword:</em> On September 30, 2010, when Hewlett-Packard announced the appointment of Léo Apotheker, formerly of SAP, as its new CEO, it marked the third time in a little more than a decade that the board of the iconic tech firm had passed over its internal candidates and selected an outsider to lead the company. Less than two months before, Mark Hurd had unexpectedly resigned from his post as CEO, amid a media-fueled firestorm over allegations of unseemly behavior.</p>

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<p><span class="reprint">Reprint: R1110C</span></p>
<p>Choosing a new CEO is the most important job of a company&#8217;s board of directors. No other decision has such a profound impact on a firm&#8217;s strategy and performance. Yet the topic of succession often gets shoved aside by concerns that seem more pressing. No one pays attention until the CEO&#8217;s departure is imminent&#8212;and by then it&#8217;s too late to adequately vet and train a replacement.</p>
<p>A.G. Lafley, in contrast, began pushing the directors at P&#38;G to begin the search for his successor as soon as he took office as CEO. From then on, the first board meeting of the year was devoted to that issue. In this article, Lafley describes the rigorous processes P&#38;G established to ensure that it would always have a slate of strong internal CEO candidates. Among other things, P&#38;G set up many opportunities for direct, in-depth interaction between the board and candidates; established clear leadership criteria and continually measured people against them; and developed various scenarios the company might face and identified who could best steer the firm in each situation. Lafley himself took responsibility for seeing that the company developed as many potential CEOs as it could. He became P&#38;G&#8217;s head leadership coach, responsible for training its top 500 executives.</p>
<p>P&#38;G&#8217;s disciplined approach paid off by producing not only a first-rate successor but a contingent of senior executives who&#8217;ve led the company to tremendous growth.</p>

The Art and Science of Finding the Right CEO

Reprint: R1110C Choosing a new CEO is the most important job of a company’s board of directors. No other decision has such a profound impact on a firm’s strategy and performance. Yet the topic of succession often gets shoved aside by concerns that seem more pressing. No one pays attention until the CEO’s departure is imminent—and by then it’s too late to adequately vet and train a replacement. A.G. Lafley, in contrast, began pushing the directors at P&G to begin the search for his successor as soon as he took office as CEO. From then on, the first board meeting of the year was devoted to that issue. In this article, Lafley describes the rigorous processes P&G established to ensure that it would always have a slate of strong internal CEO candidates. Among other things, P&G set up many opportunities for direct, in-depth interaction between the board and candidates; established clear leadership criteria and continually measured people against them; and developed various scenarios the company might face and identified who could best steer the firm in each situation. Lafley himself took responsibility for seeing that the company developed as many potential CEOs as it could. He became P&G’s head leadership coach, responsible for training its top 500 executives. P&G’s disciplined approach paid off by producing not only a first-rate successor but a contingent of senior executives who’ve led the company to tremendous growth.

The Art and Science of Finding the Right CEO

Summary.

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