09/18/2013 10:26 am ET Updated Nov 10, 2013

Microsoft's Coming CEO Transition And 7 Step Succession Planning

There are all sorts of ways to manage CEO transitions. Whichever way you choose, make sure you're getting ahead of the curve on the most monumental succession planning priorities.

On the one hand, it's not a surprise that Steve Ballmer's time as CEO is coming to an end. He bowed out earlier than expected, but he's giving the board a year or so to find his replacement.

On the other hand, the "short list" of possible CEOs is relatively long. Internally, there's COO Kevin Turner, Tami Reller from marketing, Tony Bates from business development and finally Satya Nadella from Microsoft's engineering department. Other possibilities include former Microsoft employees like Stephen Elop from Nokia (who's about to become a current employee again), Steven Sinofsky and Kevin Johnson. In particular, The Wall Street Journal's John Stoll makes a good case for why we should take Stephen Elop seriously.

The only thing that's clear at this time though is that the race is on. This is where organizations like Microsoft benefit from having put long-term succession planning in place. But let's back up and clarify the difference between talent development and succession planning.

Talent Development

Talent development starts with the people you've got. Figure out their strengths and pinpoint opportunities for growth. Then, map out plans for them to acquire the knowledge and skills they need to maximize their potential. This will involve training and planned assignments to help them develop certain required skills.

If Elop ends up as CEO, someone will claim they urged him to go to Nokia as a developmental assignment. This will end up as a great (though fictional) example of such an assignment working well.

Succession Planning

Succession planning starts at the other end of the periscope, looking out at future talent needs dictated by the long-term strategic plan. Here are the seven steps from the succession planning tool in our soon-to-be released book, First-Time Leader:

  1. Lay out the strategic priorities
  2. Determine future capabilities required to fulfill those priorities
  3. Assess existing capabilities
  4. Agree on the most important gaps between future and existing capabilities
  5. Identify current people that can fill those gaps and plans to develop those people
  6. Identify positions to fill early on and development plans for the people that fill them
  7. Identify positions to fill later

Microsoft has certainly been doing step five, training people to build knowledge and moving people through different assignments to acquire skills. But what about the other six steps?

If Kevin Turner ends up as CEO, it will be an example of step six, bringing people in relatively early and developing them. I met Turner in July 2009. The story of how he was recruited into Microsoft is a good one. The key moment happened after Steve Ballmer had been trying to recruit him for 18 months over a series of conversations, dinners and the like. Finally, Bill Gates met with him and said "I hope you'll come change the world with us." That hooked him.

But back to the fan favorite, if Stephen Elop ends up as CEO, it will in truth be an example of step seven, bringing people in later on. Of course, Microsoft's board may still go completely outside and bring someone directly into the CEO role. If they do that, the organization's executive onboarding expertise (or lack thereof) will come into play.

Lessons For You

You're not Microsoft. You probably can't invite people to come change the world with you with any credibility. But you must get ahead of the curve on succession planning, figuring out what capabilities you're going to need for the future and the steps you're going to take to acquire and/or develop them.

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