The WAY to WOW Shows
2 Paradigms for Choosing Successors
January 30, 2024
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[0:00] from the military I'm your host Kevin bemel and we're here every Tuesday morning well Tuesday Morning West Coast time 10:00 a.m. uh 1 pm eastern time and we talk about business um sorry uh military history military Doctrine um the leadership of of uh great military uh people all by way of distilling from that lessons that we can use in our business and professional lives so today I'm going going to look at at a at a topic um that was was part of my career

[0:37] so um as as a Chaplain in in the United States Navy I had the um benefit I guess or I I not don't exactly what to call it but I had the opportunity I guess to uh work in a lot of different communities so um my first Tour of Duty was with the Marine Corps my second one was with Naval Aviation and then I went into the reserves and went back on active duty uh in in submarines and then went off of act off of active duty back to the reserves and then went on back to active

[1:14] duty again with with Naval Aviation and and during my career um I did a shipboard deployment so I was part of of what's known as the black shoe Navy those are the um the ship drivers uh the the um uh you know the the the sort of what we think of is the Navy the the people who operate ships and um um also spent a little bit of time around uh CBS that's the naval construction Battalion um and and as well so it it gave me an opportunity to sort of compare and

[1:49] contrast how these different communities operate and one of the uh things that I found most striking is in comp comparing uh the submarine Community to the aviation community so in both cases the fundamental unit size a squadron and a and a submarine are are about the same size now I should mention I was with I was involved with what are called fast attack boats these are small submarines that do um sort

[2:24] of tactical and operational missions Gathering intelligence that sort of thing okay there's another type of uh submarines they're much larger than the fast attack boats in fact they're roughly the size of a destroyer but they're underwater um we we call them in the submarine Community they're called the Boomers they're um nuclear armed uh submarines and generally speaking they're they're a strategic asset they'll they'll go out on an 89 day cruise and stay underwater essentially the whole time so so that the enemy

[3:00] doesn't know where these you know nuclear missiles are um so I mean I I got to be on a on a boomer one time that that pulled into port at at at Point Lomo where I was stationed but my time was primarily with um the fast attack boats and they have a fairly small um crew um a little over a 100 100 120 uh well they were all men at the time um and and Aviation 2 is a relatively small unit couple of hundred people at the most um they're they're very tight-knit units they have uh

[3:37] generally speaking very high ofree a core and there is a lot of communication and uh sharing of information at all levels so uh whereas in an infantry unit rarely would a you know a a you know private first class infantrymen be you know talking to the uh the colonel or the lieutenant colonel who's in charge of the Battalion um on a submarine it was It's Not Unusual for

[4:13] you know a a a seaman who is pretty much the that's the lowest um enlisted level that you'll find on a submarine um to talk to the captain of the boat who's a a commander that's a the equivalent of a lieutenant colonel and the same thing is true in an aviation Squadron so you can have a plane Captain which is oftentimes the first job that uh a sailor will have going into a squadron plane captain could be you know eight literally 18 years old um and that plane Captain can talk to the squadron commander who again

[4:49] is a a a commander an' 05 um and and there so there's a lot of that interaction nonetheless the way the leadership and when I say the leadership what I mean is the top leadership in in those two communities is very different and so I want to explore that with you today by way of looking at two what I call paradigms or two models for how you can deal with choosing successors in your business so uh you know as always I put together a

[5:24] little um PowerPoint presentation and there we go to Paradigm paradigms paradigms I'm not sure for choosing successors so um so here we go um for those of you who are frequent Watchers of the show you know this already all of our all the way to wow shows are based on the three pillars of attainment um on this show we deal primarily with the finances Realm of the Pursuits pillar um and but often times we'll um at least touch on Rel

[5:59] relationships and and certainly the friends and colleagues realm is is is going to be relevant here all right so first I want to look at generally speaking when we when we're looking for a successor in our business what do we have to consider okay and and I I I identified basically four primary issues so the needs of the business um and um we we need to have an outline of of the role I what is the person going to be doing we need to

[6:35] identify and evaluate candidates and then we need whoever is chosen we need to develop and transition we need to develop that person and transition the person into the role so I don't want to spend a whole lot of time on this I think these are are are pretty much self-evident but you know certain businesses need different types of leaders so um if you are in a uh a consumer um business uh whether it's uh clothing or whether it's um you know food so that business um probably needs

[7:14] a different type of of leader than say a highly technical business like an aircraft manufacturer or a um uh a pharmaceutical company Okay so someone on the in those technical businesses or more more technically oriented businesses um they need to be able to understand what what the what the technology of the business is about there there's a a much greater role for that whereas in a consumer business while there's still going to be

[7:49] technology the primary business of that company is not technology it's clothing food whatever the technology comes into to play in terms of how the business operates but it's not what the business is about so uh that that's just one example of differing needs that businesses that that that yeah differing needs that businesses have okay so then outlining the role so I'm going to be talking primarily about the very top of of of the uh pyramid if you will in a business the CEO the

[8:25] COO uh in a in a in a in the military the the CEO would generally be would generally equate to what we call a commanding officer okay that's the person who is responsible for everything that happens in that unit now um I if you go back and look at um the show I did I don't know I think it was guess was it last week week or two ago I talked a little bit about um how um the the well I talked about how the Army organizes its units um and we we started we the top the highest was a division

[9:02] which is commanded by typically a major general so in that case the commanding officer is a major general because the size of the a division which has as I recall maybe 10 to 15,000 uh soldiers in it okay and and but if you go down from there to say um um a brigade so uh a brigade may have say 5,000 soldiers in it so the commanding officer there um might be a brigadier general okay and then below that you might have a battalion there

[9:38] used to be something called a regiment that doesn't apply anymore um but a a battalion and the Battalion Commander typically will be a lieutenant colonel or a colonel something like that by the way a brigade Commander could also be a colonel it just it just depends on the size and those those sort of things so um so the commanding officer is is the person at the sort of top of whatever the unit is and in a business we would generally call that the CEO that's much more common when I mean when I was a kid growing up you never heard that term president generally speaking was who ran a company and then the next person down

[10:15] in a military unit is generally speaking called an executive officer and the executive officer is someone who oversees the day-to-day operations of the unit generally speaking there one grade below the commanding officer's grade although not always so you could have um a division where the uh CEO is a major general a two-star general the executive officer typically would be a one-star general Brigadier General but it might be a colel again it depends on the circumstances um especially if you're

[10:51] talking in Wartime where there are fatalities so it could have been that the EXO was a one onear General role and he's uh wounded or killed so he can no longer fill the role and so they bring up a you know a colonel to fill that role because you know that's what you have available or something like that so in the business world of course we call that the co the Chief Operating Officer and and generally speaking the Chief Operating Officer is responsible for day-to-day operations of the business while the CEO deals with things like strategy and and and and the the sort of

[11:26] Topline stuff dealing with the board of directors Etc okay so that's really what I'm talking about here although I think you could apply this um in in in other places in the business um so for example let's take a a restaurant so a typical restaurant will have a manager and an assistant manager and then there'll be some kind of regional manager um and then there might be uh you know an even another division before you get to kind of national right so in ter terms of the manager and assistant

[12:02] manager of the restaurant I think this could apply to that as well okay so uh and and again retail store you know manager assistant manager retail store okay um so um while I'm going to be talking more from the CEO coo perspective again you can apply it to to others so outline the role so you know what is the person going to have to do and and and this this will grow out of the needs of the business so if the business is heavily technology oriented um and and and so then the CEO

[12:38] has to be able to understand the technology in order to be able to steer the Enterprise so um you know uh outlining the role requires a a technical background um technical businesses too especially a technical business where you deal with very large clients and ERS so let let's take um an aviation company let's um I Bombardier okay so while Bombardier may sell you know a oneoff order um oftentimes Bombardier is selling a group of

[13:14] aircraft to an airline and so in that case the CEO may be involved in sales to these large customers okay that same would be true with Boeing or Airbus right um You You You See orders for aircraft 100 planes two three 100 planes right inevitably the CEO is going to be involved in dealing with orders of that size where we're talking about you know tens of billions of dollars at stake maybe more maybe you know hundred billion dollars something like that okay

[13:49] so um you know as opposed to you know a restaurant CEO where he's not going to be selling you know anything to anybody most of the time unless the business is itself is being sold so we need to look at what you know what are the functions within the role okay um identify and evaluate candidates U I think that's pretty much self-explanatory and then develop and transition so um how do we make sure that the chosen candidate is ready to step into that that next role or ready

[14:27] to step into the role um and how do we make that transition from the existing leader to to the new one okay all right so with that as a background then let's look at the two paradigms so in aviation the way it works is you have what's called a competitive selection for command okay and what that means is um once a commander a Navy commander and I I'm talking about Naval Aviation by the

[15:02] way so I I I I I can't tell you how it works in the Air Force frankly um but in the Navy once um a commander um in the aviation Community is um eligible for command so they'll they'll do what's called they'll screen for command okay and what that means is they go before a screening board who interviews them I'm it's not unlike a you know a meeting to discuss a job or what we call a job interview or a lot of people call it that okay and um they

[15:40] that board will then select them for command okay now you have the same thing in the submarines Community okay so you have a competitive selection but in the in the case of submarines you have separate comp comptitive selection for the co and for the EXO okay the co commanding officer EXO executive officer so on a submarine the commanding officer gen generally speaking will be a commander the EXO will be a lieutenant

[16:16] commander okay and um in an aviation Squadron once you screen for command um what happens is you um you start out as an executive officer in fact what you really start out is what's called a a pxo a prospective uh executive officer so you'll go to the Squadron while the co and XO the the current Co and XO are still there okay and you become the pxo the prospective executive officer and

[16:53] then when the commanding officer completes his command tour usually it's around 18 months he leaves the Squadron the EXO now fleets up meaning he takes over that job as commanding officer and the pxo becomes the executive officer that's what we call fleeting up in the Navy it means you're sitting in a subordinate role for a period of time until you take over the next roll up okay now why do a Aviation and

[17:29] submarines have these different systems well from you know be viewing it from a chaplain's perspective and and and all I do as a Chaplain is deal with people right I I I don't get to fly um I did get to steer the submarine once it was it was it was a freaky thing to steer in three dimensions okay um just so you know I was what's called under instruction meaning a a very experienced hel man was sitting right behind me telling me what to do okay so um there was no danger to the submarine

[18:05] at any time that I was steering it um but um what I observe is while of course both Aviation and submarines are very techn te te technologically oriented uh um communities in aviation maintaining the culture of Aviation is critical to squadrons being able to do what they do so they have a ve oftentimes a very very robust operational Tempo it's called an Ops

[18:41] Tempo especially when they're deployed oftentimes they're flying every day in fact it's when we have what's called a nfly day on on the carrier all right where where where no aircraft are are launching and being recovered that's that's somewhat of a misnomer because um for example we would have no fly days and in fact our fixed Wing aircraft would not fly but our helicopter still flew on no fly days in fact when I would see my Hilo guys on a no fly day they go sir I thought this was a nfly day how

[19:16] come I have to suit up and you know I mean they meant it as a joke of course but maintaining that culture in order to keep that optempo going and keep the people able to operate is is the critical Factor whereas in submarines even the fast attack boats these are nuclear powered submarines they're carrying a reactor on the boat okay virtually everyone on that submarine is a nuclear qualified sailor from the captain all the way on down to

[19:52] you know the guys um the you the most Junior uh sailor who's you know working in um you know uh a boat maintenance or something like that now there may there are a few people on the boat like the the the the sailors who prepare the food um and the uh what's What's called the um um uh independent Corman who's there to you know take care of the um health and and and uh um you know deal with injuries um they're not nuclear qualified but probably 90% of the people

[20:27] on a submarine are nuclear qualified because when all is said and done making sure that boat is properly maintained is crucial especially the reactor and I'll tell you one of the scariest things that ever happened to me when I was in the Navy was when I was on a submarine we were we were underwater and I'm I'm laying in my rack that's Navy term for bed and um an alarm goes off and and it turns out there was a fire on the boat fire on a nuclear summary right and we're told if you're you know if you are

[21:04] not part of the damage control team get out of the way stay where you are right and I laid there in bed until finally the announcement was made that you know everything was safe but that technical skill was the most important thing and so um you you know the the amount of technical skill that you need to be in EXO is not as high as the amount of technical skill you need to be a CO it has to constantly be increasing until you get to that CO's job and so that's why there are individual selections for

[21:40] EXO and Co okay so you can see two different paradigms there um for for dealing with choosing a successor so let's just kind of go through some of these other things real quickly so um I I talked about needs of the business right strengths weaknesses growth opportunity 's Future Vision right you can see how um one Paradigm or the other would deal with these differently okay so in the case of Naval Aviation strengths and weaknesses or already pretty much sused out at the time that

[22:17] someone screens for command whereas in submarines the the um leadership is going to get an opportunity to to sus out the strengths and weaknesses of an XO and then screen him again before he's going to actually command a submarine to make sure that he has what he needs to be a commanding officer of that submarine and and by the way I I would add to that um rarely is a squadron an aviation squadron commander out of touch

[22:52] with higher echelons of control whereas on a submarine once that boat submerges that cap the captain of the boat the commanding officer of that boat he is not in touch with higher eons of authority so he's acting on his own authority so again the kind of leadership that you need on that submarine is different than what you need uh for an aviation Squadron okay and we talked about you know growth opportunities needs of the business like how does the business need to grow you know what what what is going to grow the

[23:28] business is it more of the technology is it more of the sales how you know what's going to grow the business what's going to create opportunity and that may lead you to decide well this Paradigm is better than this other one Future Vision same thing okay so then you know outlining the role so I I've talked about this quite a bit already responsibilities expectations Authority right I just mentioned the difference in authority you have between a submarine Co who's going to act often times on his you know

[24:03] on his own uh Council if you will when he when when the when the boat is deployed and underwater whereas an aviation um squadron commander um I mean he has a lot of authority but in the end he's he's in Fairly constant uh um yeah fairly constant contact with the airwing commanding officer who's in contact with the stripe group commanding officer we're talking about a a carrier right and so it's a different level of authority and and a different ability to exercise that Authority and there's also

[24:39] different expectations then all right so all of these again how much freedom of action do you need are you going to be giving to someone in your business and and if if that you know freedom of action um so if if freedom of action in the you know in the in the top Ro um is is greater because for example the board may not always the board in a particular company may not be as assertive in exercising its Authority so that may mean something different about who you

[25:14] need as a leader okay next um identify and evaluate candidates so this would be what we call the screening process okay screening for command so all of these things um become relevant in in in the Navy and of course they're all relevant in business as well okay and and when you when you look at these so um internal external family skills and experience cultural fit vision and ambition all of these play into what do

[25:51] you really need in for your business so let's say for example your business needs to pivot in another Direction well having an internal candidate do that may be difficult they may be too steeped in the company's culture in the way it's been doing business for them to be able to um make that that big paradigm shift for your business okay on the other hand if if very strong if you have very strong culture that you want to maintain then promoting from inside may be

[26:27] important as well and and again you see the same thing in the Navy so um the the fact that in an aviation Squadron the EXO fleets up to the co you're you're keeping a to a to a certain extent a a c a much more um contiguous culture in a submarine when when that Co leaves another Co who has no experience with that boat comes in now that can be good and that can be bad if the boat is having some troubles okay having someone who's loyal to that CEO Fleet up on a submarine

[27:04] could be bad because that could perpetuate the the the problems and now you've got you know a nuclear-powered submarine out there right with problems that aren't getting solved whereas if you bring in new blood you maybe have a better likelihood that the problem will be solved on the other hand you can have a boat that's running really smoothly and you know it would be great to have the the the EXO Fleet up but because it doesn't work that way someone new comes in and and throws the whole situation into disarray okay um because of the nature of dealing with a submarine I

[27:40] think the Navy has you know concluded we need to have new eyes on to make sure that you know things aren't being missed and that's that's the most important thing all right and then finally develop and transition so any leader is going to need proper training and mentorship um in a in a few weeks I think I'm going to be talking about how the Marine Corps trains its leaders it's it's actually quite a remarkable um uh plan that they have um and um but you

[28:16] know training and mentorship H needs to take place there also should be a timeline okay so it so it's not wishy-washy what's happening when and there needs to be communication to people now in the in the in aviation Squadron it's understood once you screen for command and you and you go to a squadron as a pxo um within a short period of time you're going to be fleeing up to be the EXO and then you're going to spend roughly 18 months as the EXO and and and then after that 18 months the COO is

[28:51] going to leave and you're going to Fleet up to be the COO you're going to spend 18 months as a CEO and then off you go in submarines um I honestly I don't recall the the the um the term that a CO has I believe it's two years if memory serves um and then and then you turn over to a new Co now you try and make sure that that there's a turnover period where they their they um where the existing Co will still be there for a period of time while the new Co you know kind of gets his SE legs so to speak um

[29:27] and and so the timelines typically o um um overlap but sometimes they can't because of the needs of the Navy people have to you know go on to their next job okay and the same thing same questions come up in business ideally you have some overlap so I want to take just the last few minutes here to talk about a couple examples where we see this successor issue so often um if you follow the Walt Disney Company at all you know this has been a perennial problem going all all the way back to when Walt Disney was the creative head of the company and Roy Disney was the

[30:02] business head of the company when Roy when Walt Disney died okay the the his successor was his son-in-law um and his son-in-law really frankly didn't do a great job running the company and and and and the succession of leaders that happened post Walt Disney were what caused the company to somewhat falter and eventually led to it being bought out um and the creation of what is now called the Walt Disney Company before that it was Walt Disney Productions and it and then um um uh

[30:38] Eisner um it's not Robert Eisner Michael Eisner became the CEO of Disney he was the CEO for a long long time and one of the big issues he wrestled with was who was going to take over for him and um finally he chose a guy by the name of Michael Ovitz who was one of of the biggest talent agents in Hollywood take over um and Michael Ovitz came in and and was there for just a short period of time it was clear it was not a good fit and he left the company again leaving this successor Gap and eventually Robert Iger took over and be

[31:15] and he ended up being CEO for a long long time as well and then a few years ago Robert Iger left and a guy by the name of Bob chapek took over chapek lasted for I think less than a year here and they brought Iger back and now again one of the big issues for for the Walt Disney Company is who's going to succeed Robert Iger you also see the same thing in Starbucks where um uh shoot all of a sudden I went up on the name of the guy uh Howard Schultz started the company left came back left came back now the the current CEO seems

[31:53] to be doing okay time will tell he hasn't been doing it for that long I think maybe a year but you can see two two iconic companies where this issue of succession has really been problematic for you could almost argue the life of the company right so I think it behoves us to think about these issues in our companies to avoid these kind of problems all right so um here's just you'll see these links um in the show notes if you have any questions want any help and then there's the legal stuff so there we go I'm just going to close pops up and and wrap up

[32:28] real because we're we're past time already so thank you for joining me today I hope you found this interesting hope you find it useful and applying to your businesses tomorrow Wednesday at 10: a.m. is my show people making money hope you'll join me for that and then we'll start again next week on Monday at at 10: a.m. with trust and Estates weekly so I wish you a wonderful rest of the day and signing off as I always do Marie you're my bell thanks so much