Why succession sometimes fails

A new study by Professor Heather Haveman and PhD candidate Mukti Khaire reveals why some companies succeed or fail following the departure of a founder.

by Columbia ideas@work
Last Updated: 21 Aug 2015

By studying the magazine industry in the US between 1741 and 1860, they found that organisations are more likely to fail if their founder had been an intensely ideological leader.

Ideology comes to define the organisation and affect its 'strategies, structures and outputs'. Further they discovered that founders with a core role (such as editor) as opposed to ancillary role (such as publisher) were probably going to leave a strong ideological legacy behind and therefore such organisations were more likely to falter following succession.

But what about companies that need to retain the ideology set by the founder? In such cases, it is better if the manager had a single role, in which case he was more likely to have hired like-minded people to fill his role who would carry on the company's ideological character.

But managers of ideological companies with multi-managerial roles, who were less likely to hire like-minded successors, left their companies in a weaker position.

Source: The impact of founder succession
Columbia ideas@work
Review by Morice Mendoza

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