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  • What happens when a leader dies?

    February 26, 2017 | Blog | Dr. Dave
  • When a CEO dies, his or her employees and team must — in the wake of their grief — introduce a new leader, adjust to change and continue to operate at the best of their ability. At the same time, they will likely attempt to preserve their late leader's legacy.

    The death of a leader may precipitate uncertainty and even instability in an organization, even if the death is health-related and expected. The following is a list of questions that may arise following a CEO's passing, and how some organizations have responded to them.

    1. How will the company fare without its leader, especially if he or she was the founder? When Apple founder and CEO Steve Jobs passed away from pancreatic cancer in October 2011, the company, industry leaders and consumers alike wondered how Apple would perform without their revered leader. Mr. Jobs took a medical leave of absence in the beginning of 2011 and resigned in August due to his declining health, giving the company and investors time to prepare for business without his visionary leadership. He chose Tim Cook, who previously served as Apple's COO, to succeed him.

    In an email to the Apple team before the third anniversary of Mr. Jobs' death, Mr. Cook asked employees to "take a moment to appreciate the many ways Steve made our world better. Children learn in new ways thanks to the products he dreamed up. The most creative people on earth use them to compose symphonies and pop songs, and write everything from novels to poetry to text messages. Steve's life's work produced the canvas on which artists now create masterpieces." Mr. Cook added that Mr. Jobs' vision and creativity is what has allowed Apple to flourish, and the values on which he created Apple will remain with the company, according to Time magazine.

    2. How can new leaders reconcile preserving their predecessor's legacy with their own goals? Despite having Mr. Jobs' approval as Apple's next leader, Mr. Cook would have trouble escaping his predecessor's "genius trap" even years after his death. Mr. Jobs had defined Apple and its products based on his own tastes for the last decade of his life. He radiated an almost religious authority that Mr. Cook couldn't replicate. Furthermore, current and former executives, employees, investors, consumers and the media would compare every decision Mr. Cook made to those made by Mr. Jobs.

    As Apple's new chief, Mr. Cook is dually tasked with the need to do the job after Mr. Jobs and further Apple's growth — to preserve his predecessor's legacy and simultaneously establish his own leadership presence.

    3. How can a leader's death affect current projects and innovation? Satoru Iwata, president and CEO of Nintendo, died of cancer July 11 at age 55. The company has not yet named a successor, though Genyo Takeda and Shigeru Miyamoto will continue to serve as representative directors, a position that, under Japanese law, gives them the right to make decisions on the company's behalf, according to The Wall Street Journal.

    Mr. Iwata's death came just months before Nintendo embarks on its entryway into mobile gaming following years of declining sales. "Nintendo is undergoing one of its biggest shifts ever," Serkan Toto, a Tokyo-based videogame consultant, told The Wall Street Journal. "Iwata-san's passing away will make things a little problematic, but it is not unsolvable." 

    The death of Mr. Iwata occurred at a critical time for Nintendo, which recently partnered with DeNA in mobile games and plans to release the first Nintendo game for smartphones later this year. Takatoshi Itoshima, chief portfolio manager at Commons Asset Management, said Mr. Iwata's successor's main task will be to carry out the smartphone gaming project, according to Reuters.

    4. How does an unexpected death impact the organization? Unlike Mr. Jobs and Mr. Iwata who battled life-threatening health conditions before eventually succumbing, CEOs who die suddenly and unexpectedly are unable to prepare their companies for their passing. Understandably, succession planning becomes an even bigger challenge, in addition to dealing with grief.

    Additionally, the unexpected death of a CEO impacts his or her company's value on the stock market. For example, following the sudden death of Wendy's CEO Gordon Teter after he suffered a heart attack in 1999, the stock price decreased by 7.8 percent in the 89 days before a successor was named, according to a 2012 whitepaper from the Stanford Closer Look Series. When McDonald's CEO Jim Cantalupo died of a heart attack in 2004, the company's stock price decreased by 2.6 percent. McDonald's named Mr. Cantalupo's successor on the first trading day following his death, so the stock market change reflects the combined reaction to the announcement of his death and the appointment of his successor. 

    5. How can an organization manage its employees' grief? Dave Goldberg, CEO of SurveyMonkey and husband of Facebook COO Sheryl Sandberg, died unexpectedly of a head trauma in early May after he fell while running on a treadmill in a private villa in Punta Mita, Mexico, during a vacation with family and friends. Mr. Goldberg was 47.

    When Mr. Goldberg joined SurveyMonkey in 2009, the company had 14 employees, according to the New York Times. He grew the company into a provider of web surveys on a multitude of topics with more than 500 employees and approximately 25 million surveys created. SurveyMonkey was valued at nearly $2 billion last year.

    Since his death, SurveyMonkey's leadership team has had to deal with finding a replacement for Mr. Goldberg while running the company and managing the emotions of grieving employees. At the companywide meeting after his death, all of the eight speakers broke down in tears at some point. However, the company has tried to maintain business as usual, according Bennet Porter, SurveyMonkey's head of marketing communications.

    SurveyMonkey's top executives have attempted to avoid "strategic paralysis from a culture of mourning, and emotional revolt from telling people 'get over it,'" Jeffrey A. Sonnenfeld, a professor at the Yale School of Management, told the New York Times. "There is a way to take a loss and make it into strength."

    Although his employees and friends wanted their time to grieve, Silicon Valley was not waiting. According to the New York Times, recruiters for other tech companies were reaching out to SurveyMonkey employees to see if they would be interested in new positions.

    6. How does an organization go about finding and installing a new leader? Despite the grief a team mourning the death of their leader experiences, the company must continue to operate. The board would likely assign a temporary leader to fulfill CEO duties, as in the case of Mr. Goldberg's death. Zander Lurie served as interim CEO after Mr. Goldberg passed, and Bill Veghte, who previously served as COO of Hewlett-Packard, was named permanent CEO of SurveyMonkey, effective Aug. 3, according to a CNBC report. Mr. Lurie was recently named permanent chairman of the board. Additionally, Ms. Sandberg joined the company's board.