By Ankit Mahadevia, Chairman of Spero Therapeutics, as part of the From The Trenches feature of LifeSciVC
Nobody stays in a particular role forever. While change at the senior level can be disruptive, it doesn’t have to be. Teams and boards can work together to ensure that transitions happen smoothly and support continuity of the mission. At Spero, we executed on a succession process when I decided to step down after a decade leading the company, as did our Chairman. In one thoughtfully planned process, we found a great successor for me as CEO, I replaced our Chairman who remained on the Board, and another Board member stepped up as Lead Director.
We share what we learned as we undertook the process. I’m grateful for the leadership of our Board across the three stages – preparing for succession planning, building out the plan, and executing the plan.
Preparing: Plan beats no plan
As a CSO who I’ve worked with over the years often says, “plan beats no plan.” Our succession planning efforts went more smoothly in part because we made sure to discuss them periodically ahead of time. Forecasting a future without you can be an exercise in humility, and having a basic framework in place allows for open, thoughtful discussion. A few key considerations to nail down as a group:
- Who are successor candidates for the Board and C-suite?
- What are the needs of the company for each position?
- If no internal candidates exist today, what will we need in place to find or develop them?
- What’s the process to finalize a successor? In my Board experience, this is the part that’s often overlooked but makes a huge difference
- Who is the empowered subset of the Board or team to make a recommendation?
- What external support (legal, executive search, etc.) will be required?
The 80/20 rule applies. Plan enough that you have a running start, but keep in mind that some details will depend on future circumstances.
Building the plan: Process matters
The planning phase of CEO succession is the most intensive if you’re doing it right:
- Good process strengthens the outcome: When you and a subset of your Board have thought hard enough annually about the issue, there’s a temptation to crystallize plans quickly instead of bringing a larger group along. Ultimately, a succession plan for a CEO requires the buy-in of the full Board. A rushed process may be fast on the front end, but likely not serve the candidate that ultimately steps up to the role. If you’re doing it right, all of the necessary deliberation and communication required is a labor intensive process (as my colleagues on the Board can attest).
- Have the right external support: The right external advisor can help greatly. In my experience, an advisor’s longitudinal experience and pattern recognition are their most important contributions to the process. Based on his ability to draw on a variety of prior situations, our advisor was instrumental in pushing our thinking, building out a robust process, and helping us avoid groupthink. Internal support also helps – we were lucky to have a strong senior HR leader who offered valuable perspective.
- Be deliberate even if you think you have the answer: We were also fortunate to have a strong internal succession candidate. If you have that luxury, it’s tempting to short-circuit the planning process; our Nom and Gov Committee did a great job starting from first principles on what the company needed, and taking the time with our advisor to consider internal and external succession paths systematically. While our internal candidate ended up having right experience, EQ, values, and strategic vision for the company, his mandate was stronger since he emerged from a thorough competitive process. (The considerations for who is “right” for a company and how to assay this merits an entire blog post which we’ll aim to tackle in a future post).
Execution: All about communication
Communication is key: Every time a senior leader leaves a mission driven organization, it is human nature to wonder why. A robust communication plan is an important complement when it’s time to execute the process. A few key points came up frequently as we rolled out the plan:
- Why now? Authenticity matters. While we’re all veterans of corporate speak associated with transitions, experienced team members, investors, and the general public typically see through these sound bites. Making a transition at CEO is a deeply considered decision either for the outgoing CEO, or the Board (often both) and there’s power in communicating your rationale.
This was the case for me; the one on one and group discussions about why I wanted a new role at Spero were hugely helpful for the team and our stakeholders when we rolled out the plan. In the setting that this is a Board driven and not a candidate driven decision, there’s still value in as much clarity as possible from the Board about the reasons for the change as it enables folks to trust the process and move forward.
- Why this successor? For this point in particular, communicating how we approached the process made a big difference. Having gone through a thorough process provided comfort that our chosen successor was the right one for the company. Fluid communication between the Board and the senior team about process and rationale helped the team communicate the change effectively to others.
- What will change? Especially since an internal successor was taking the reins, this was a question that required a lot of thought. Certainly, the nomination of an internal successor reflects the Board’s desire to carry on the values and culture of the Company. That said, a new leader must have the latitude to make their independent assessment of the strategy and act accordingly. My successor handled this well, noting that facts on the ground will determine our strategy, and that our mission and core values would continue to be a constant.
Timing matters: Once it’s clear that a succession plan needs to be activated, setting a clear timeline is important. Efficiency quarantines against the risk that the process prematurely impacts team dynamics. Teammates at small companies are pretty good at sniffing out when “something’s up.” An extended period of unspoken uncertainty can be a distraction and impact team dynamics. In addition, in the public company setting, timely disclosure also requires sticking to clear timelines when you decide to put a succession plan in motion.
Plan to support the process once it’s done: Once you’ve successfully executed on the plan, it’s a full Board effort to support both the incoming successor and the team around them. This includes planning for knowledge transfer between the outgoing and ingoing leaders, supporting members of the larger team as they navigate change, and setting shared goals for the team after the transition.
Building Spero since the inception stage has been one of the most fulfilling experiences of my professional life; delivering on our mission to help patients suffering from serious rare and infectious disease is as relevant as when we founded the company. I’m excited to continue supporting the mission and our leadership team as Chairman. It’s in keeping with our mission and values that the Board’s leadership of a smooth, thoughtful transition has put us in the best possible position to continue delivering for patients.
My thanks to Spero CEO Sath Shukla, the Spero team, and Spero Chairman emeritus Milind Deshpande for their contributions to this article