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Looking at an Example of a Succession Plan

Dec 13, 2022 | Estate Planning Legal Blogs | Elder Law P.A

Some business owners may think that succession planning is still a long way off. They may believe they can always find a successor for their business if anything happens to them. While this may be true in some cases, not having a succession plan usually leads to tumult, or even disaster. You may not always find the right person immediately, and even if you find the right person, he or she may not have the same vision as you. Plus, there may be significant changes in the running and management of the company. There are many succession planning examples where having a plan has led to smooth continuity for the company, such as with IBM and Barneys New York. Yet, it is Apple’s example of a succession plan that stands tallest.

While succession planning is a time and labor-intensive endeavor, it can have immense benefits for the company. Crucially, it ensures that the company will not be left without a successor if the present elader leaves or dies suddenly. Here is a look at how Apple succeeded with its example of a succession plan.

On Aug 24, 2011, Apple founder Steve Jobs stated that he was resigning as Apple CEO. This ended up being just six weeks before his death. While many of the employees were startled to hear this, they all became worried about their future. But unbeknownst to all, Jobs had already chosen his successor: Tim Cook.

Tim Cook, although a controversial character, was just the right person for Apple. While Jobs was being medically treated for cancer, he had to leave work many times. It was Cook who served as the Acting CEO.

Throughout his illness, Jobs had been secretive about his health and the exact nature of his condition. But one thing he deeply cared about was the company he founded several decades ago and his employees. He wanted the right person to succeed him without causing much consternation.

Steve Jobs was first diagnosed with pancreatic cancer in the fall of 2003. Initially, he turned to alternative medicine, but the tumor continued to grow. In the summer of 2004, he underwent the Whipple procedure that removes pancreatic cancer. The surgery was reported to be successful, but he needed time to recover. As Apple’s CEO, Jobs recommended Tim Cook to run the company during that time.

Jobs only told the employees at Apple about the cancer shortly before the surgery. The persistent rumors about his health inside and outside the company had many employees wondering what would happen to their jobs and the company’s future. However, Jobs kept much of the serious details about his illness a private matter until June 2005. At that time, he was told his life expectancy was less than six months.

He was told by his physicians to get his personal and professional affairs in order; essentially, take care of things and say goodbyes. But despite the prediction that he would die within six months, Jobs gradually improved and would live another six years. He died in October 2011.

From 2005 onwards, Steve Jobs continued to work, but his performance was lethargic, and he clearly was ill. The high-energy Steve Jobs of the past was gone, but he clearly wanted to make sure that Apple would be in good hands after he died. Jobs never told anyone except his family that the cancer was slowly spreading and was by no means curable.

From 2007 to 2011, Jobs had to take many days off from work, and each time Tim Cook was the Acting CEO. Cooks was a solemn and quiet character, and he was not the first pick. However, he excelled at the job, and Jobs was impressed. Cook allowed everyone at Apple to continue focusing on delivering extraordinary products instead of worrying about the owner. But this time, it was not the employees who were disillusioned, but the Apple board of directors who believed that Jobs was hiding secrets about his health. In 2009, Jobs underwent a liver transplant. Tim Cook actually offered to be the liver donor for his transplant. But liver transplant is a complex procedure fraught with complications, and Jobs required more time off work in 2010.

In 2010, under the guidance of Tim Cook, Apple released its first iPad and iPhone 4, both of which became instant hits and grossed billions of dollars in sales globally. Jobs was very pleased with the news, but he was quickly going downhill. In January 2011, Jobs once again took a medical leave of absence and again placed Cook in charge. But this time, Jobs did not announce a return date, meaning that Tim Cook was the permanent replacement.

On Aug 24, 2011, Jobs delivered his final address to Apple, saying the time had come for him to leave. Jobs urged the board members to strongly implement his succession plan with Cook as the new CEO. Jobs stated, “I believe Apple’s brightest and most innovative days are ahead of it. And I look forward to watching and contributing to its success in a new role,” Jobs said. “I have made some of the best friends of my life at Apple, and I thank you all for the many years of being able to work alongside you.”

Despite giving his resignation that day, he remained at the office and even attended a board meeting later that day. Two months later, on October 5, 2011, Steve Jobs died. He was only 56 years old, but his legacy still lives on, stronger than ever.

APPLE UNIVERSITY

Many people may not be aware that Jobs was a very fastidious and organized person. He left nothing to chance. Before he resigned from Apple, Jobs had already prepared another succession plan in the form of Apple University. This institute was founded in 2008 with a curriculum focused on leadership. All the materials and contents were based on Jobs’ work experience and skills. The key aim of the university was to teach selected Apple employees how to think and make decisions like Steve Jobs. The online digital curriculum using Apple technology was also used to help Tim Cook prepare for his permanent position as CEO at Apple. During his time as a mid-level employee, Jobs ensured that Cook took on varied operational roles, including distribution, manufacturing, sales, and supply chain management, before he began working closely with Jobs to gain experience as a leader. In his resignation letter, Steve Jobs wrote, “As far as my successor goes, I strongly recommend that we execute our succession plan and name Tim Cook as CEO of Apple.”

And, in turn, Tim Cook has also endorsed succession planning examples for future Apple leaders, “I see my role as CEO to prepare as many people as I can to be CEO, and that’s what I’m doing. And then the board makes a decision at that point in time.” Apple realized the importance of having a succession plan soon after the death of Jobs.

Steve Jobs’ succession plan was never made public, and it was only on the day he resigned that people discovered that he had arranged for a successor. The company never had to make any adjustments in management or human resources and has continued to thrive. In his time as CEO, Cook has surpassed expectations. Despite all the turmoil in the electronics and computer industry, Apple continues to be a leader in innovative products, and all this is because Steve Jobs selected the right CEO to lead the company to continue his successes.

SUCCESSION PLANNING TEMPLATES

Basically, three stages are scrutinized as an example of a succession plan. The examples recognized are assessment, evaluation, and development. Make a list of potential candidates for critical management positions. Identify their skills, strengths, and weaknesses. List development activities that might help the candidate get up to speed so he/she could potentially be ready to take over a top management position.

Several ideas for templates are available and it is advisable to begin by contacting an attorney who is experienced in such matters. For starters, you can create a spreadsheet that lists categories, such as:

  • Soon-to-be vacant roles/positions
  • Worksheet to identify critical roles, utilizing a rating system to determine the order of importance
  • Name of each candidate with existing business profile (i.e., employee’s current/past roles within the organization)

CONCLUSION

There are other businesses that have orchestrated an example of a succession plan very well and those companies have benefited from that planning. These businesses were strategic and thoughtful and set their plans in motion ahead of time. They selected the candidates with the right amount of experience and then built up their skill sets and knowledge levels. Today, leaders in any business can apply the same lessons to their company. When done well, succession planning can help promote stability and growth, as well as encourage the promotion and retention of employees. Lesson: a good succession plan is critical for a business to move on when the incumbent leader dies or departs.

Does your business have a succession plan? It is very highly recommended that you speak with an attorney about developing a business succession plan. A lawyer can further help you understand the nuances of succession planning examples. At Elder Law, P.A. we are well-versed in business succession planning. Contact us today at (561) 933-4681 for a free consultation.

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