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Getting succession planning right at Steelcase

This post is an excerpt from “Succession: Mastering the Make-Or-Break Process of Leadership Transition,” by Noel Tichy, in agreement with Portfolio, an imprint of Penguin Random House. Copyright (c) Noel Tichy, 2014.

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In March 2014, James Hackett, who had served as CEO of office furniture manufacturer Steelcase for twenty years, turned over the leadership of the leading company in his industry to his successor, James Keane. Over the prior two decades, Hackett had spearheaded a fundamental transformation of his organization to make it much more than just an office furniture maker, but a full-fledged, highly innovative workplace design company that created total work environments, integrating furniture with high-tech applications, work space design and learning environments.

The company’s award-winning leadership development center, transformed from an old warehouse on the corporate campus, is a model for high-touch and high-tech learning environments that Jim Hackett consciously used as a critical component of his overarching strategy to construct a new creative culture at Steelcase. The leadership center also provides a setting for helping customers create visions of the work spaces they want to create in their own organizations. Influenced by his engineering and product innovation background and experience, Hackett appropriately enough describes the succession process he crafted in the context of the culture of innovations he has championed at the company for more than two decades:

I did this job for twenty years so by the time I walked out I will have made a lot of mistakes that I can improve on. So my successor gets to start the tape at a point where they can see the history of things that didn’t work and where things did and didn’t work. So they don’t have to make the same mistakes. That really is a huge advantage for a new CEO.

Early on, Hackett realized that simultaneous transformation and leadership development were the true keys to the kingdom when it came to managing a CEO succession process. I first came to know Hackett as a result of my work with Jack Welch at GE, when he and his team asked for my help building their leadership center. I advised Hackett and his team on the design not just of the center but of the action learning programs.

Throughout our association, collaborating on an overall leadership development and succession planning process at the company, Hackett was consistent and clear as to his intention to engineer a more robust succession planning process centered around the rigorous review of top talent in terms of pure performance and values alike. Building the leadership pipeline was the highest of priorities for Hackett, which he regarded as central to his legacy as a CEO. In keeping with that intention, he spent the greater part of five years coaching and grooming his successor, James Keane, to seamlessly transition into his new role when the time came for Hackett to step aside.

Hackett was particularly intent on framing the CEO succession process at Steelcase as a “T-shaped” structure, a term that he intended to describe his aspiration to develop future leaders as people who are “both broad and deep.”

We had to build an inventory of a lot of people with capabilities and a lot of experiences and then it becomes apparent who ought to be in the running for succession.

In addition to assessing their talent, the process looked at how resilient they are and how well they can make adjustments. Hackett spent years working the succession process. He described the development of a pool of potential CEO candidates as follows:

 Because they run a business, which is a complex system, you can see how they’ve actually made choices and managed it through conflict and handled unexpected events, which is really what you’re trying to get your hands on. You’re trying to see, how do they manage conflict? How do they manage unexpected events? How do they think in a systems way? And then you give a lot of range, and you don’t make the boundaries too tight for the type of personality because you’ll tend to pick personalities like yourselves, and that’s a big mistake.

Hackett was constantly looking to the future and recognized that he did not want a clone of himself but a leader for tomorrow’s work. In his coaching and assessing he was looking for candor, resilience, and the self-confidence to face into problems and recognize one’s limitations. He talked about how he observed his leaders working with their teams on problems at Steelcase, and described how he evaluated leaders in the following terms:

 It’s the level of frustration that they exhibit when you tell them that they’re missing it. Some people are highly resilient to that and say, “You just helped me with something I didn’t see.” And then you now watch how they’re better informed by it and if their strategy just got better. In some cases, the opposite is true and the person just gets highly frustrated.

In a collaborative process, Hackett and his board ultimately agreed they had the leader for the future in James Keane, who took over in March 2014. Building on the legacy of Hackett’s work, Keane will get to build his own leadership pipeline.