The Hidden Side of CEO Transitions

CEO succession is one of the most consequential undertakings any board will ever steward. It is the moment when a single decision reverberates through a decade of organisational life, shaping strategic direction, cultural identity, investor confidence, and the organisation’s long-term trajectory. Boards routinely commit significant time and attention to identifying and selecting the next chief executive. Yet surprisingly few apply the same rigour to preparing themselves for the transition.

Most boards assume that if they choose the right CEO, performance will follow automatically. Yet evidence and experience consistently suggest the opposite: the first 12 to 24 months of a CEO’s tenure are shaped far more by the system they inherit than by the individual stepping into the role. A new CEO arrives on a board they did not choose, a culture they did not design, an agenda they did not author, a set of expectations they did not set, and a level of scrutiny that begins before they take their seat.

Boards often underestimate the significance of this asymmetry. Selecting the “right horse for the course” is insufficient if the course itself is uneven, politically charged, or conceptually unclear. Even the most capable leader falters when the board environment lacks alignment, psychological safety, or a shared understanding of strategic direction. This edition of Governance Compass explores the hidden dimension of CEO transitions: what boards must do to prepare themselves before the new CEO arrives. 

The Blind Spot in CEO Succession

Every board has a succession plan; very few have a board readiness plan. Boards often define, with great precision, the challenges the next CEO will be expected to address — whether a turnaround, a digital transformation, a culture reset, a strategic realignment, or enhanced value creation under investor pressure. What they rarely do is ask the reciprocal question: Are we ready for the CEO we say we need?

In many cases, the answer is quietly negative. Boards evaluate candidates with rigour yet seldom reflect on the behavioural, cultural, and relational conditions they themselves create. A CEO does not step into a vacuum; they step into a complex social system. Where the system is coherent, the CEO accelerates. Or the system is fragmented, the CEO becomes a shock absorber rather than a strategist.

Why This Moment Has Become More Fragile?

CEO transitions have always been delicate, but contemporary conditions have made them more fragile than ever. Global CEO tenure has shortened significantly, with many lasting barely five years. Failure rates within the first three years remain high. Transitions following long-tenured or high-performing CEOs are notoriously unstable, and founder-to-institution transitions carry amplified cultural risks. Investor-backed CEOs confront pressure windows that begin on Day 1 and rarely exceed 12 to 18 months.

At the same time, we have witnessed the rise of “marathoner CEOs” — those who lead exceptionally well over a decade or more. Tim Cook, Satya Nadella, Doug McMillon, Jensen Huang, and others have left marks so deep that their successors inherit not merely an organisation, but a mythology. The Economist recently underscored this reality, emphasising the treacherous terrain of transitions—even in high-performing companies.

Our research across industries reveals a consistent truth: CEO transitions are not simply leadership changes. They are transitions in meaning — involving identity, purpose, culture, and narrative. And meaning is created, maintained, and transformed at the top. How the board interprets the moment becomes how the organisation experiences it.

What Boards Must Do Before the CEO Arrives?

Although each transition carries its own nuance, there are three disciplines that consistently differentiate boards that enable successful CEO transitions from those that struggle.

1. Begin with the Future, Not the Predecessor

Boards often hold deep admiration for a long-tenured CEO, and that admiration is frequently well earned. But reverence carries a cognitive risk: boards unconsciously search for a successor who resembles the incumbent. This subtle bias — an instinct to replicate what has worked before — can derail even the most sophisticated succession process.

High-performing boards counter this tendency by deliberately widening their aperture. Before evaluating any candidate, they step back and examine the strategic environment the organisation is entering. They ask what the next era will demand, what new patterns of disruption will shape the industry, what leadership muscles will be required, and what lived experiences will matter most in the coming five to seven years — not the past five to seven.

As Jim Citrin, one of the world’s most respected voices in CEO search, advises: begin with the race, not the horse. Boards that fail to anchor the succession in the future inadvertently import past assumptions into future strategy.

2. Prepare the System, Not Just the Succession Plan

A CEO does not inherit a role; they inherit a system — a web of expectations, habits, narratives, informal alliances, and deeply embedded norms. If the board has not prepared itself, the incoming CEO will spend much of their first year navigating confusion rather than creating value.

Boards often overlook the degree to which they themselves must realign before welcoming a new leader. They must develop a shared understanding of what success will mean in the CEO’s first year. They must surface differing expectations among directors — differences that, left unaddressed, become sources of tension later. They must recognise the cultural and relational dynamics that the CEO will inherit, including unresolved tensions, political undercurrents, unspoken comparisons to the predecessor, and divergent views on acceptable risk.

They must also clarify the Chair–CEO relational architecture. Under a predecessor, patterns of communication, trust, pacing, and collaboration develop over many years. Those rhythms do not simply disappear. If the board does not reset them intentionally, the new CEO may find themselves navigating an inherited system that does not recognise their leadership style.

A long-tenured CEO creates a gravitational pull. Identity, culture, tempo, and narrative are shaped around them. That gravitational centre does not vanish simply because the CEO steps down. If the board does not stabilise the system, the incoming CEO will spend their first year stabilising the board.

3. Understand the Reality of Following a Legend

Succeeding an admired CEO is one of the hardest leadership challenges in business. Brad Smith, Intuit’s former CEO, arranged a conversation between his successor and NFL quarterback Steve Young, the athlete who succeeded the iconic Joe Montana. Young admitted that he spent his early months trying to “be Joe”: mimicking his style, rhythm, and presence. He later described it as the worst half-year of his career. The lesson was clear: one cannot inherit a legend by imitation.

Boards play a decisive role in helping a new CEO step into the role authentically. They must resist nostalgic narratives, provide clarity instead of comparison, and protect the incoming leader from the gravitational pull of the predecessor. They must also ensure that the departing CEO supports the succession through an elegant baton pass — one that leaves momentum, not ghosts.

Satya Nadella captured this elegantly: If your successor fails, so does your legacy.

The Hidden Dimension: Why Board Dynamics Determine Transition Success

The dominant assumption in failed CEO transitions is that the CEO was not the right fit. Yet more often, the root cause lies not in the CEO but in the board. Boards rarely examine how their own behaviour shapes transition outcomes — how they interpret risk, how they handle disagreement, how they navigate tension, how they converge or fragment under pressure, or how they communicate expectations implicitly and explicitly.

A board that is fragmented, reactive, or uncertain creates an environment in which an incoming CEO becomes a shock absorber. A board that is coherent, reflective, aligned, and capable of shared interpretation creates an environment in which an incoming CEO becomes a force multiplier.

This distinction reflects the core logic of Generative Governance — the board’s capacity to make meaning together, especially under conditions of ambiguity. Generative boards create coherence before demanding it. They frame the moment before evaluating performance. They slow down assumptions, explore weak signals, anticipate cultural risks, and steward trust proactively. They understand that a CEO cannot create coherence if the board has not built it first.

The Transition Moment as a Test of Board Resilience

A CEO transition reveals the board’s true maturity. Boards that have not developed psychological safety, shared sense-making, constructive tension, systemic awareness, and a clear Chair–CEO partnership will find these deficiencies exposed quickly.

• Employees sense fragmentation within weeks.

• Investors detect inconsistency within months.

• The CEO feels it from the first meeting.

High-performing boards demonstrate a different pattern: they evolve themselves before asking the organisation to evolve. They recognise that resilience during transition is not something the CEO brings into the system; it is something the board must cultivate in advance.

What Effective Board Preparation Actually Entails?

Boards that navigate transitions successfully engage in a series of disciplined preparatory steps. They begin by realigning expectations and strategic priorities, not through informal conversations but through deliberate framing. They examine their own behavioural patterns and identify where they fracture or rush toward premature closure. They clarify the Chair–CEO partnership in advance, establishing rhythm, communication norms, crisis posture, and mutual expectations. They address cultural drift or unresolved tensions so that the incoming CEO inherits a platform rather than a problem. They articulate the narrative of the transition, not only for themselves but for employees, investors, and wider stakeholders. And they commit to adjusting their own posture, recognising that a new CEO requires a different board, not merely a continuation of the previous leadership era.

Succession planning is not complete until the board prepares itself.

The Hidden Dimension Boards Cannot Ignore

CEO success is determined far less by the quality of the succession slate than by the maturity of the board the CEO inherits. This is the hidden dimension of leadership transition — and one of the least examined frontiers of modern governance.

Boards tend to focus on the visible mechanics of succession: candidate profiles, search processes, external benchmarking, and investor optics. Yet the decisive variables sit beneath the surface. They reside in how the board interprets uncertainty, how it handles tension, how aligned it truly is around purpose and priorities, and how coherently it behaves when the centre of gravity shifts.

A new CEO experiences these dynamics immediately. They sense whether the board is unified or fragmented, reflective or reactive, clear or conflicted. In the absence of coherence at the top, the CEO is forced into a stabilising role long before they can lead strategically. When coherence is present, the CEO is amplified rather than constrained.

This is why CEO transitions are at their core a test of governance maturity. They reveal whether the board has developed the behavioural, relational, and interpretive capacity required to lead through ambiguity — not just oversee performance in stable conditions.

Boards that navigate transitions well do not rely on goodwill or hope. They make the invisible visible. They develop insight into their own decision patterns, relational dynamics, and sense-making habits. They practise operating as a coherent leadership system before the transition begins, rather than improvising under pressure once it is underway.

For boards seeking a deeper understanding of these dynamics — and a practical framework for strengthening resilience, coherence, and decision quality — this white paper, Building Resilient Boards: A Blueprint for Thriving in Complexity Through Generative Governance, explores this terrain in depth. It examines the behavioural forces that shape board effectiveness, the conditions that enable successful leadership transitions, and the governance capabilities required to thrive in a complex environment.

In a world of constant disruption, the essential question for boards is no longer whether they have chosen the right CEO. It is whether they have prepared themselves to lead through the transition that follows.