Executive Succession, Reengineering and Apple iPad's Strategic Marketing

Solution Preview

See the attached file.

1) What is executive succession? Discuss the hiring of insiders versus outsiders, and provide examples of each.

The process of executive succession inside of organizations has become increasingly important as many researchers and analysts have focused on how corporations succeed their leaders, specifically the CEO and how that impacts the business (Lafley & Tichy, 2011).

In general, executive succession is the process of determining who will be next in line to replace the current leader of their company. This process is typically determined by and managed via the company's Board of Directors. Typically the Board will have two options, insider candidates or bringing in an outsider to succeed the current leader (Lafley & Tichy, 2011).

Typically this process occurs over a designated period of time to allow for a stable transition of power between the executive and their successor. Sometimes however, the choice is instantaneous based factors such as death, termination, or resignations and the board will have to move swiftly and decisively to replace their CEO. That is where a succession plan comes into play and is very helpful (Lafley & Tichy, 2011).

Having executives in lower positions or from other organizations already identified as potential replacements in the succession plan can greatly reduce investor angst in the midst of executive turnover (Lafley & Tichy, 2011).
When organizations have to decide on hiring insiders versus outsiders, there are many researchers who contend both insiders and outsiders are the best. It generally comes down to what is the company's intention and reason for the hiring of a new executive that should determine who is selected. If the Board of Directors has determined that the company is heading the wrong direction, needs a new culture, or should be "shook up", then often the outside candidate is chosen to bring in these new ideas and implement the change (Lafley & Tichy, 2011).

On the other hand, if the company is running very efficiently and is extremely profitable, it is often suggested that an insider should succeed the executive who is removed in order to keep the transition smooth and sustain the current pace which has proven effective (Lafley & Tichy, 2011).

Examples of both hiring decisions can be seen within the Google Corporation within the last 12 years. In 2001, Google investors stepped in under mounting pressure to grow the stock and insisted that the then current co-founder and CEO Larry Page be replaced with someone who could provide "adult supervision" to the work force and instill maturity and demand success. The investors wanted to hire an outsider to come in and shake things up (Saporito, 2011).

So, in early 2001, Google announced that hiring of Eric Schmidt, a technology veteran and a professorial engineer who had previously held top executive jobs at Sun Microsystems Inc. and Novell Inc. (Saporito, 2011). Originally many feared the transition, however, Schmidt formed a bond with Page and Google's other co-founder Sergey Brin, and together they worked hard over the next 10 years to create the internet's most powerful company (Saporito, 2011).

This success lead to the somewhat surprising decision in 2011 to reinstate Page back into the CEO position he had held nearly 10 years ago. His growth and maturity under Schmidt had been noticed and investors willing to honor Schmidt's intentions to move on to other things, elected to this time succeed their leader from the inside and that led to Schmidt's getting the job again (Saporito, 2011).

The Google example shows both decision factors investors face when trying to ...