Two companies run by their founders for the last 30 years recently had to replace their CEO’s. Both were forced to make these changes in response to a death and a dramatic decline in shareholder value. In comparing how each of these companies handled the succession planning at the very top of the business we can learn some valuable lessons.

RIM

Faced with rapidly declining share price, lower market share, aggressive competition and shareholder demands both Lazaridis and Balsillie stepped aside in January of 2012 and put their handpicked replacement Thorsten Heins in charge of turning around the fortunes of one of the biggest technology companies in Canada. (In 2007 RIM had a larger market cap than RBC.) This left many business analysts scratching their heads and trying to figure out just who was Thorsten Heins. Hired by RIM in 2007 from Siemens, Heins had three short senior operating positions in RIM’s handheld, product engineering and sales / business development divisions before being appointed as CEO.

Apple

Knowing that their founder had serious health problems, it was clear to everyone, even my son who is a shareholder, that Tim Cook would eventually take over the company when Steve Jobs stepped down from his role as CEO. So to no one’s surprize when Mr. Jobs passed away in 2011, Mr. Cook seamlessly transitioned into the role as CEO of Apple. Hired by Apple in 1998 Mr. Cook is credited with restructuring Apple’s approach to manufacturing and was promoted to the position of COO in 2007. He also was given the CEO position during Mr. Jobs’ medical leaves during the first decade of this century.

Key Learning’s

Mr. Cook had nine years with the company to make significant contributions to the business success before being promoted to COO in 2007. He also had a chance to step into the role as CEO for brief periods before taking on the role on a full time basis.  Mr. Cook’s transition to the top position was accepted both by Apple personnel and the industry analysts that watch the company, and had limited to no effect on the Top Leaders within the organization or the company’s share price.

Succession planning requires organizations to identify their top talent early in their careers and give those individuals the assignments and projects that, when delivered, will make them promotable when the opportunity arises. I bet you that the Board at Apple already is working on who will succeed Mr. Cook and RIM will begin the search for their next CEO if Thorsten cannot execute the turnaround that is required. Who do you think did the best job of planning to succeed in the future?

Mike Dick

This major innovation support program for small and medium (SME) businesses,  appears to be on a soon-to-be-gone watch.  In fact, the CRA agency which administers it has been cutting its pay-outs with vigour since 2010. While the new( in 2011) Director General, Susan Betts, has stated that it’s being tightened up, in fact the intent is clearly to reduce the cost of the program and especially target overly ambitious support submissions from which an industry of consultants has taken significant income in the past.  Clearly the notion that 20 -30 % of the payout sums would end up in the hands of the consultants who help companies access the program by preparing the lengthy submissions is a flaw in the use of these funds.

Yet some of the recent recommendations of the Jenkins Report dealing with revising the overall federal approach to innovation support should be of concern. For example, a centralized funding agency to direct the government spending for innovation, essentially picking winners and losers, or worse, being politically influenced is worrisome.

Another recommendation, to link government procurement with supporting innovation, while sounding wholesome, has the potential to have procurement of items in government spending based upon degrees of innovation claimed rather the value for each dollar spent.  Yet the notion of assisting high-growth, innovation firms access risk capital in later stages of early growth where there are gaps now, could be of real benefit.

It’s a difficult path to chose from for the federal government and the Minister for State for Science and Technology, Gary Goodyear has indicted that it will be chosen before 2012 is over.  Let’s trust there will still be some realistic program left for companies responsibly accessing SR & ED now, even if they aren’t the next RIM.

John Bielby