The Wall Street Journal
NBC's handling of the Jay Leno-Conan O'Brien succession provides lessons in what not to do, management watchers say.
NBC made two critical missteps six years ago when the network signed Mr. O'Brien to replace Mr. Leno in 2009, say management consultants. It's a bad idea to promise someone a promotion in order to retain him, they say, and so is naming a successor too far in advance.
The moves came back to bite NBC this month, and offer a cautionary tale for managers in other industries.
Lesson No. 1: "Never try to staff an organization just to block the career options that follow from a talent surplus," says Jeffrey Sonnenfeld, a professor at Yale's School of Management, via email.
In 2004, NBC announced Mr. O'Brien would succeed Mr. Leno atop "The Tonight Show" in 2009. Mr. O'Brien's contract was set to expire, and NBC risked losing him to CBS or ABC. The deal meant that Mr. Leno's tenure would last 17 years, much shorter than predecessor Johnny Carson's 30-year run. By 2009, "Leno was not ready to go and his audience was not ready to let him go," Mr. Sonnenfeld says.
He argues that well-run companies can benefit when stars leave to fulfill ambitions elsewhere: The firm gains a reputation as a hotbed for talent. Ironically, GE, in its corporate ranks, is often cited as an example of this phenomenon. After Jeff Immelt won the horse race to succeed Jack Welch in 2000, runners-up James McNerney and Robert Nardelli left to land CEO jobs at other companies. 3M Co. wooed Mr. McNerney; Home Depot Inc. hired Mr. Nardelli. GE has long enjoyed a reputation as a sought-after place to develop a career.
Such companies "are a breeding ground for stars which is a magnet to attract … ambitious new talent," Mr. Sonnenfeld says.
Lesson No. 2: Don't wait five years between the engagement and the marriage. "There's a Goldilocks time frame for a succession: If it's too short, people don't have enough time to get acclimated," says Ben Dattner, an organizational psychologist. "If it's too long, the world can change."
Most well-regarded CEO handoffs are shorter – especially once the successor has been formally announced. Xerox Corp.'s transition to Ursula Burns from Anne Mulcahy is generally viewed as a model of good succession planning. Ms. Mulcahy signaled Xerox's plan in 2007 by naming Ms. Burns, a Xerox veteran, president. In May 2009, Xerox named Ms. Burns CEO, effective July 1.
An NBC spokeswoman said via email the Conan-Leno situation isn't analogous to other corporate successions, saying it's "a unique decision any company in the talent business faces." NBC named a successor far in advance because it has "a responsibility to protect our franchises." She added: "If you sign a sought after quarterback out of college with the promise he will start in a couple of years for the veteran, but when he does can't win a game, you have to decide if that decision you made then worked … Studios sign deals for film and TV projects, often well into the future, all the time. Sometimes they don't work out because things change."
Management watchers see one bright spot for Mr. Leno: Some corporate stars have returned to employers to complete successful second acts.
Steve Jobs is the most famous example. Apple's co-founder left in the 1980s but returned as an adviser in 1996 after Apple agreed to buy NeXT Software Inc., also founded by Mr. Jobs. A board member convinced Mr. Jobs to retake the helm in 1997, as the company struggled; Mr. Jobs was "interim" CEO until January 2000. He returned the company to profitability, launched Apple-branded retail stores and guided the development of the iPod, which transformed the music industry and Apple.
For Mr. Leno, it's key that he address the controversy, says Matthew Paese, vice president, executive succession management, at Development Dimensions International, a consulting firm. It "would be a mistake for Leno to come back and to not acknowledge that there's been a real hitch in his career," he says.
NBC made two critical missteps six years ago when the network signed Mr. O'Brien to replace Mr. Leno in 2009, say management consultants. It's a bad idea to promise someone a promotion in order to retain him, they say, and so is naming a successor too far in advance.
Lesson No. 1: "Never try to staff an organization just to block the career options that follow from a talent surplus," says Jeffrey Sonnenfeld, a professor at Yale's School of Management, via email.
In 2004, NBC announced Mr. O'Brien would succeed Mr. Leno atop "The Tonight Show" in 2009. Mr. O'Brien's contract was set to expire, and NBC risked losing him to CBS or ABC. The deal meant that Mr. Leno's tenure would last 17 years, much shorter than predecessor Johnny Carson's 30-year run. By 2009, "Leno was not ready to go and his audience was not ready to let him go," Mr. Sonnenfeld says.
He argues that well-run companies can benefit when stars leave to fulfill ambitions elsewhere: The firm gains a reputation as a hotbed for talent. Ironically, GE, in its corporate ranks, is often cited as an example of this phenomenon. After Jeff Immelt won the horse race to succeed Jack Welch in 2000, runners-up James McNerney and Robert Nardelli left to land CEO jobs at other companies. 3M Co. wooed Mr. McNerney; Home Depot Inc. hired Mr. Nardelli. GE has long enjoyed a reputation as a sought-after place to develop a career.
Such companies "are a breeding ground for stars which is a magnet to attract … ambitious new talent," Mr. Sonnenfeld says.
Lesson No. 2: Don't wait five years between the engagement and the marriage. "There's a Goldilocks time frame for a succession: If it's too short, people don't have enough time to get acclimated," says Ben Dattner, an organizational psychologist. "If it's too long, the world can change."
Most well-regarded CEO handoffs are shorter – especially once the successor has been formally announced. Xerox Corp.'s transition to Ursula Burns from Anne Mulcahy is generally viewed as a model of good succession planning. Ms. Mulcahy signaled Xerox's plan in 2007 by naming Ms. Burns, a Xerox veteran, president. In May 2009, Xerox named Ms. Burns CEO, effective July 1.
An NBC spokeswoman said via email the Conan-Leno situation isn't analogous to other corporate successions, saying it's "a unique decision any company in the talent business faces." NBC named a successor far in advance because it has "a responsibility to protect our franchises." She added: "If you sign a sought after quarterback out of college with the promise he will start in a couple of years for the veteran, but when he does can't win a game, you have to decide if that decision you made then worked … Studios sign deals for film and TV projects, often well into the future, all the time. Sometimes they don't work out because things change."
Management watchers see one bright spot for Mr. Leno: Some corporate stars have returned to employers to complete successful second acts.
Steve Jobs is the most famous example. Apple's co-founder left in the 1980s but returned as an adviser in 1996 after Apple agreed to buy NeXT Software Inc., also founded by Mr. Jobs. A board member convinced Mr. Jobs to retake the helm in 1997, as the company struggled; Mr. Jobs was "interim" CEO until January 2000. He returned the company to profitability, launched Apple-branded retail stores and guided the development of the iPod, which transformed the music industry and Apple.
For Mr. Leno, it's key that he address the controversy, says Matthew Paese, vice president, executive succession management, at Development Dimensions International, a consulting firm. It "would be a mistake for Leno to come back and to not acknowledge that there's been a real hitch in his career," he says.
