Real-Life Succession Planning Failures … and How To Avoid Them

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Succession planning is a critical yet frequently neglected responsibility of leadership and corporate governance. The transition from one generation of leadership to the next can either ensure an organization’s continued success — or become the cause of its downfall. Despite clear evidence that succession planning protects long-term viability, too many companies treat it as an afterthought.

According to Teamshares, nearly 2/3^rd’s of family businesses do not have a documented succession plan, which puts the long-term survival of their business at risk.

Below are several real-world examples of succession planning failures, the lessons they teach us, and practical strategies you can adopt to avoid their fate.

The “Too Late to Plan” Failure — Apple’s Early Transition Crisis:

When Steve Jobs first left Apple in the mid-1980s, there was no structured succession plan in place. The company replaced him with an external CEO who didn’t understand Apple’s culture or vision, resulting in a decade of turmoil and financial decline. Only after Jobs returned years later did Apple regain its footing.

Lesson: Waiting until a crisis to plan a transition exposes the business to operational chaos and identity loss.

How to Avoid It:

Treat succession planning as a continuous process, not a one-time event;
Identify and develop internal talent early, so future leaders understand company culture and values; and
Include leadership development in your strategic planning cycle.

The “Founder’s Grip” Failure — When Letting Go Becomes the Hardest Part:

Many founders struggle to step aside when it’s time to exit. In one well-documented case, a family-owned manufacturer saw profits fall 30% after the founder repeatedly delayed retirement. His reluctance to transfer authority caused confusion among employees, resentment among family members, and paralysis in decision-making.

Lesson: A founder’s inability to let go can be as damaging as a lack of successors.

How to Avoid It:

Acknowledge that succession is a leadership responsibility, not a loss of control;
Create a timeline for transition, with milestones for transferring roles and responsibilities; and
Consider engaging an outside advisor or consultant to facilitate honest discussions and an objective evaluation.

The “Wrong Successor” Failure — When Popularity Beats Competence:

Another common pitfall is appointing a successor based on loyalty or seniority rather than ability. For example, a large non-profit selected its longest-tenured executive as CEO without proper vetting or assessment. Within two years, employee morale plummeted and key donors withdrew because the new leader lacked strategic and financial acumen.

Lesson: Succession planning must prioritize capability and leadership alignment, not sentiment.

How to Avoid It:

Define a clear competency profile for the successor’s role;
Use objective assessments, performance metrics, and 360-degree feedback to evaluate candidates; and
Make leadership development a measurable goal within your talent management program.

The “No Communication” Failure — Silence Breeds Instability:

In several high-profile corporations, boards have chosen new leaders behind closed doors — only to face backlash from employees, investors, and customers. Poor communication around succession can erode trust and disrupt continuity, even when the successor is competent.

Lesson: Secrecy undermines credibility. Stakeholders want to understand the company’s direction and leadership continuity.

How to Avoid It:

Communicate succession intentions early and transparently, especially to key stakeholders;
Frame succession as part of the company’s long-term stability strategy; and
Use the transition to reaffirm company vision and confidence in the new leader.

The “Single Successor” Failure — Overreliance on One Person:

In a midsize logistics company, leadership invested years grooming one successor. When that individual unexpectedly left for another opportunity, the business was left scrambling — and ultimately sold under pressure.

Lesson: A single-solution is a fragile plan.

How to Avoid It:

Develop a leadership bench — multiple capable candidates ready for advancement;
Cross-train emerging leaders across functions; and
View succession as an ecosystem of readiness, not a one-and-done appointment.

The Bottom Line – Make Succession Planning a Strategic Imperative:

True succession planning isn’t about naming a successor — it’s about building leadership resilience. It requires foresight, objectivity, and discipline. The best organizations make succession an integral part of governance, review the company’s succession plan regularly, and update the plan as circumstances dictate.

To succeed where others have failed:

Start early;
Stay objective;
Communicate openly; and
Build depth, not dependency.

Succession planning, when done well, safeguards not just the leadership transition — but the very legacy of the business itself.

Did you like the content in this article ? For more information about business exit and succession planning, the author has posted his entire series of business exit and succession planning articles on the media page of his website at www.greaterprairiebusinessconsulting.com.

About Greater Prairie Business Consulting, Inc.:

Greater Prairie Business Consulting, Inc. is an award-winning, national consulting practice serving entrepreneurs, small to mid-sized privately held and family-owned businesses and middle-market companies of any type with revenues between $1 million and $250 million. The firm helps small, mid-sized, and middle market companies maximize their performance and exit.

Greater Prairie Business Consulting, Inc. can be reached by calling 1-800-828-7585 or e-mailing info@gpbusinesssolutions.com.

About the Author:

James J. Talerico, Jr. is an award-winning author, blogger, speaker, and nationally recognized small to mid-sized (SMB) business expert.

With more than thirty- (30) years of diversified business experience, Jim has a solid track record and an A+ BBB rating helping thousands of business owners across the US and in Canada tackle tough business problems to improve the performance of their organizations.

His client success stories have been highlighted in the Wall St. Journal, Dallas Business Journal, Chicago Daily Herald, and on MSNBC’s Your Business. He was named “Texas Business Consulting CEO of the Year,” by CEO Today Magazine, identified as a “Top 10 Management Consulting Entrepreneur to Watch” by Entrepreneur Magazine, was listed among the “10 Most Visionary Companies to Watch” by The Inc. Magazine, and has also been ranked among the “Top Small Business Consultants” followed on Twitter.

For more than half a decade, Jim was a regular guest on “The Price of Business,” a nationally syndicated radio program on Bloomberg Talk Radio and has also appeared as a subject matter expert on many FOX Radio interviews. He is a regular contributor to several blog sites and has frequently been quoted in publications like the New York Times, Dallas Morning News, Philadelphia Inquirer, The Entrepreneur’s Review, The International Exit Planning Association’s blog site, and on INC.com, in addition to numerous, other industry publications, radio broadcasts, business books, and Internet media.

Jim received a Gold “Stevie Award” for “Thought Leader of the Year,” a Gold “Stevie Award” for “Media Hero of the Year During Covid” and a Bronze “Stevie Award” for “Best Entrepreneur” in the Category of “Business and Professional Services” at the American Business Awards ® in New York City. The competition received more than 3,700 nominations and is the premier accolade for business excellence in the US honoring organizations of all sizes and industries. Jim also received an “Outstanding Leadership Award” at the Money 2.0 Conference for his contributions to the financial services industry.

Jim is the author of “8 Steps to Becoming an ETHICS FOCUSED ORGANIZATION,™” a small business certification program that utilizes a unique eight – (8) step approach for strengthening ethics in any organization. The certification program won the Better Business Bureau’s “Torch Award for Ethics” for the North – Central Texas Region, the International Better Business Bureau’s “ Torch Award for Ethics,” and a Gold “Stevie Award” for “Ethics in Sales” at the International Sales & Customer Service Stevie Awards®. Participants who complete this certification program are eligible to receive eight – (8) continuing education units from the University of Texas’ Division of Enterprise Development.

Jim received his Certified Business Exit Consultant (CBEC)® designation from The International Exit Planning Association (IEPA) to help entrepreneurs, small business owners, family businesses, and middle market companies maximize their business exit, and he received his certification in succession planning from the ASPE.

Jim is also a Certified Management Consultant (CMC)® and an active member of the Institute of Management Consultants. The Certified Management Consultant® mark is awarded by the Institute of Management Consultants USA (IMC USA) and represents evidence of the highest standards of consulting, a commitment to continuous development, and an adherence to the ethical canons of the profession. Less than 1% of all consultants in the world are Certified Management Consultants (CMC.)®