Opening up an insular culture.

• Author: Reiter, Harold D.
• Position: Succession planning strategy

Here is a succession planning strategy that facilitates the embrace of outside talent and fresh ideas.

Peter F. Drucker made the following observation last year: "Management does not need more information about what is happening inside. It needs more information on what is happening outside...The forces that most influence organizations come from outside the organization, not from within...The technologies likely to have the greatest impact on a company and its industry are technologies outside of its own field."

Following Mr. Drucker's line of thought, it makes sense for a company to look outside for top management talent with fresh ideas.

Indeed, consensus is emerging that superior general management and leadership abilities are more important than specific industry knowledge. Approximately eight in 10 business leaders surveyed by the Association of Executive Search Consultants (Executive Advantage Study, 1998) believe that leadership skills transcend industry lines and that effective CEOs need not come from within a business's particular industry.

That being the case, one has to wonder why so few companies have offered the chief executive position to industry outsiders?

For one thing, for every Lou Gerstner, there are more than a few William Agees. And for every successful Al Dunlap, there is, well, a not-so-successful Al Dunlap.

But the problem with unsuccessful outside CEOs rests, as often as not, not with the failure of one individual, the outsider, but with the failure of the entire organization to respond to, assimilate, and work with that individual.

With that in mind, what can companies - and boards in particular - do to ensure that their organization is receptive to new leadership with fresh ideas and new perspectives?

By paying close attention to the nuts and bolts of succession planning, boards can, over time, actually change a corporate culture to make it more open and more receptive to outside ideas and leadership. The trick is to start lower down the totem pole - with recruiting at the division management and upper middle management levels.

Line management in most companies is industry-specific and insular. The people in organizations who come from outside that culture - typically, in human resources, finance, and MIS - are not usually in functions which yield a high percentage of CEOs.

The challenge, then, becomes one of recruiting outsiders into marketing and merchandising positions well before the CEO level.

This approach...