CEO Succession at Tesla: The Beginning of the End?

When it comes to CEO succession, safe picks are dangerous.

Most boards are ill-equipped to handle one of their most critical responsibilities: hiring a new CEO.

Unlike other corporate functions, hiring a CEO is a rare event, occurring only once or twice in a board’s tenure. Because they have little opportunity to practice CEO succession, boards typically lean heavily on executive search firms to navigate the process.

Unfortunately, this arrangement usually produces disappointing outcomes. Executive recruiters are vendors of the board, who do what the board asks for (or what they think the board wants). They make money by providing candidates the board goes on to hire—not necessarily the candidates the board needs. Thus, they prioritize candidates who check conventional boxes: extensive industry experience, proven track records in high-level roles, and a profile that minimizes risk.

The result is that boards, acting as a committee, end up making safe, predictable choices. And they don’t take into account the unique characteristics of the CEO role…