6 Mistakes to Avoid in Succession Planning

A September article from CNBC detailed the current challenges and executive succession mess at the Walt Disney Co. Even as one of the world's most venerated, revered companies, they're having an exceptionally difficult time with their CEO succession.  

The company, which got a new CEO in 2020 and again in 2022, laid off 7,000 people across divisions in the spring, carried an average of $45 billion in debt and this fall witnessed its lowest share price since 2014. This followed a long string of movie flops and a loss of over half a billion dollars from their streaming service in just the second quarter of 2023.  

If Disney or any other major company with such money, resources, talent and brainpower can have a succession nightmare, it could happen to any of us in any industry. CEO Bob Iger held the position from 2005 to 2020 before handing the reins to Bob Chapek. Chapek was fired in 2022, and Iger, now 72, came back as CEO with a contract through 2026 

Iger's 15-year run was full of success. He was considered one of the world’s best-performing CEOs. So, what went wrong?  

Here are six mistakes Disney made—and how to avoid them within your construction company and succession planning.  

1| Succession is a process, not an event.  

It can't be abrupt but rather should be stretched out. Seven to 10 years is about the right period of time for the entire process from conception to execution to exit. Iger had trouble retiring. He was scheduled to retire in 2013, 2014 and 2017. When he finally did retire, it was very abrupt. He was virtually there one day and gone the next and then Chapek, Disney’s parks chairman, took charge. 

2| If you're the departing executive, have a plan for your next steps.  

It could be a different role in the company, a new role altogether, a role in the community or developing personal passions. But you've got to have something to retire to. Part of Iger’s retirement plan included Chapek being CEO, but Iger would remain on as executive chairman for 22 months. The message was: “I'm stepping down, but I'm not really stepping down.”  

3| Vet potential successors via their direct reports, your board of directors and your peers.  

The vetting process for Chapek was very relaxed; Iger essentially handpicked him. The board of directors was not involved, and they did not talk to Chapek's direct reports. This stinks of hubris and sets both the next leader and the company up for challenges, if not failure. Make use of psychographic profiles, in-depth interviews conducted by multiple people and discussions with those who work closely with the candidate to ensure the best fit. You can't be rigorous enough in evaluating the person who will lead your company one day, and it is key to have a variety of perspectives when making such an impactful decision.

4| Have the difficult conversations early in the planning process.  

Disney had what they call the “Disney nice” culture, where they avoided difficult conversations, which created problems further down the road. Chapek ignored Disney’s CFO at times when she reported they were in some tight financial spots, according to the CNBC article. That behavior might work on a project or for a division leader, but it doesn't work for the head executive. 

5| Ensure a shared vision between current and future leadership.  

Of course companies should strive for progress and innovation, but agreement on the core beliefs and goals of the company is crucial. If you don’t share a common vision with the other folks in leadership, succession will be fraught from the start. Iger and Chapek did not share a vision. Chapek wanted to focus efforts on the future of Disney’s streaming service, while Iger wanted Disney to remain primarily a movie production company, according to CNBC.  

6| Don't confuse operational success with leadership.  

It's one thing to manage projects. It's another thing entirely to manage people and organizations. Iger mistook Chapek's operational success for leadership, but the two are not mutually exclusive. Iger said he would not do that again.