Amazon CEO Jeff Bezos' recent announcement of his successor Andy Jassy can teach business leaders five lessons on succession planning, Peter Cohan, a start-up investor and strategy consultant, wrote in a Feb. 18 column published in Inc.
Mr. Cohan said Mr. Bezos' handoff to Mr. Jassy has been well-received and that a successful CEO transition can be achieved by following five principles.
1. Decide what strengths your successor will need to keep your company growing.
Mr. Cohan said the ideal successor is not necessarily someone who replicates the original CEO's actions. Instead, the ideal successor may be a "fast follower," or "someone who can perceive an exciting growth opportunity, formulate a strategy to capture that growth, assign talented people to execute the strategy, and hold them accountable for results," he said.
2. Begin grooming your successors at least five years before you want to leave.
Mr. Bezos put two top Amazon executives and potential successors in leadership positions in 2016. He let them compete for five years before announcing Mr. Jassy would take over as CEO.
3. Set clear criteria for evaluating competitors.
- Mr. Cohan shared five criteria leaders can use to evaluate potential successors:
- A record of outstanding decisions
- The ability to manage employees and encourage their success
- A record of increasing sources of revenue and profit
- Behaves according to the values that make the company successful
- Ability to manage legal and regulatory matters
4. Continuously delegate more responsibility to ease the transition.
Over the years, Mr. Bezos has slowly delegated more operational responsibilities to top executives as he focused on other Amazon endeavours, Mr. Cohan said.
5. Announce the successor on a day your company reports strong financial performance.
"It would be even better if investors boosted your stock that day and accepted the announcement of your successor with a shrug," Mr. Cohan said. In Amazon's case, that is exactly what happened.