- The Three Envelopes
Preparing the successor
Michael Scharge writing in HBR blog relates this anecdote:
A retiring CEO presented his successor with three sealed and numbered envelopes. "Open these if you run up against a problem you don't think you can solve before going to the board. Trust me on this," he told her.
Not four months later, sales unexpectedly plummeted. Desperate, the new CEO went to her desk, pulled out the first envelope and opened it: "Blame your predecessor."
So, during the analyst's call, she tactfully but forcefully pointed to her predecessor as the source of the sales slump. The Street and media responded well to her bluntness. Sales picked up. The problem passed.
Almost a year later, sales again dipped when a key global product had to be recalled. The CEO quickly opened her second envelope: "Reorganize."
This was swiftly done. The company rebounded well.
Sales and profits climbed over the next year. A major acquisition succeeded. The share price blossomed. But an unanticipated personal crisis threatened to undermine the CEO's support from her board. She went to her office and tore open the third envelope: "Prepare three envelopes."
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