Avoid the bad transition trap
You can't spell "succession" without "success" but failure is common and frustration nearly universal among newly-installed CEOs
Several major CEO transitions took place or have been announced so far in 2026:
Tim Cook is stepping down as the CEO of Apple; John Ternus will start in September.
Greg Abel succeeded Warren Buffet as CEO of Berkshire Hathaway.
Josh D’Amaro took the reins from Bob Iger at Disney.
Meanwhile, Shantanu Narayen, CEO of Adobe, will step down once a new CEO is found and Heidi O’Neill will start at lululemon later this year. We don’t know if Narayen will stay on in some capacity and O’Neill is already getting flack for not stepping into the role more quickly after her predecessor departed earlier this year. Cook, Buffet, and Iger will all stay on their companies’ respective boards. (Unlike the other two, Iger is not moving to executive chairman which I have to assume is due to how badly he screwed up his first attempt at a transition, which did include the EC seat for him. Pure speculation on my part, but definitely a notable difference.)
Because these companies are public and famous, the news grabbed headlines but there are many, many more that won’t make the press. Cook’s announcement in particular prompted Harvard Business Review to publish a collection of articles called “The HBR Guide to CEO Transitions”with much of their recent material on this subject, of which there is a lot because these transitions, according to 2021 research published in HBR, cost a lot when they go wrong:
“In our recent research we’ve attempted to quantify those costs. According to our analysis, the amount of market value wiped out by badly managed CEO and C-suite transitions in the S&P 1500 is close to $1 trillion a year. We estimate that better succession planning could help the large-cap U.S. equity market add a full point to the 4% to 5% annual gains that Wall Street projects for it. In other words, company valuations and investor returns would be 20% to 25% higher.”
In my own conversations with dozens of CEOs over the last few months, the topic of how the succession was handled came up often. Usually, not glowingly, especially when the outgoing CEO was a founder or particularly long-serving individual. Personally, I had a healthy, generous, and selfless transition thanks to my predecessor and the company’s founder, Bart. While he kept a board observer seat, he did not demand a director role, though he very well could have given the size of the investment he maintained in the company. He showed his full endorsement of me by handing me the reins unreservedly.
On the other end of the spectrum, a colleague of mine once interviewed to succeed the founder of a tech-enabled services company. I served as a reference for him and spoke at length to the founder about the importance of setting up explicit guardrails and rules of the road for the outgoing CEO and his soon-to-be successor, based on my own positive transition experience. Within weeks of my peer starting as CEO, the founder - who continued to draw a CEO salary as an executive chair - was interfering in personnel and operational decisions, all while the business was dramatically underperforming the forecast that had been shared with the new CEO during the interview process. The successor CEO was set up to fail in every possible way.
There are a few versions of the transition:
The outgoing CEO is fully engaged in and supportive of the succession process, whether grooming internal candidates or contributing to the external search. This is usually the best case scenario, assuming they stay supportive after the fact. According to his own telling, this is how Best Buy CEO Hubert Joly’s transition to the new CEO Corie Barry went, as he documents in his “10 Keys To CEO Transition” framework.
The outgoing CEO is willing to exit, either by their own choosing or at the board’s encouragement, but retains a seat on the board or as executive chair. While this can work, it’s a coin flip. According to SpencerStuart data, 54%of companies where the former CEO or founder was the executive chair underperformed during that chair’s tenure, but the other 46% overperformed, by an average of 14%. This transition has to be done intentionally and well.
The outgoing CEO retains control of the company in some form or fashion - perhaps by owning a large percentage of the business or a majority stake of voting shares, etc. The ex-CEO has an active board role that is not transitional by design. Even outside of formal board seats, they often have an influential voice in the company and with investors. If this power is used for good, it can be an asset to the company. If not…well, ousted Disney CEO Bob Chapek should start a support group.
The outgoing CEO isn’t involved in the business anymore at all and the successor CEO is coming in to replace an interim or by-committee structure that kept the lights on between leaders. In a lot of ways, this is cleaner. On the other hand, there are bound to be far more skeletons in closets, even for internal successors.
A successful transition starts long before a potential successor is in the mix, so if you’re the successor in that situation, it should not really be your responsibility to create the rules of engagement. Once you start, however, you’re stuck with whatever arrangement exists and so you have to make sure ahead of time that it will work for you. On the other hand, if you’re the outgoing CEO reading this, you owe it to your successor to collaborate with the board to create a clear set of guidelines for the transition, guidelines that a successor can review and weigh in on.
Successors, in the more likely event that this type of document does not exist, you need to request one and offer to help structure it. And look, if the transition framework prioritizes the outgoing CEO’s preferences or demands, what is going to happen when you are in the role and need to make decisions that person disagrees with? Nothing good!
David Gau and Carter Cast have a terrific overview of best practices for this in their 2025 HBR article “When The CEO Becomes The Board Chair,” the core precepts of which apply even if the outgoing CEO isn’t becoming executive chairman. (They also suggest that boards “appoint the outgoing CEO as a senior advisor instead of chair. This approach eliminates dual-leader ambiguity, empowers the incoming CEO, and allows the former leader to contribute meaningfully.”) Whatever template you use, put that shit in in writing.
This is exactly the kind of situation that warrants transparent, vulnerable, direct conversation and planning - and usually doesn’t get it. Outgoing CEOs, be Hubert Joly not Bob Iger 1.0.
Incoming CEOs, help me help you: make sure you’re crystal clear on this with the outgoing CEO and the board or it’ll be miserable for everyone.