What’s your Plan B?

The best laid plans often go awry. I expect that most business leaders have experienced this truth at one time or another during their careers, and the adage is true for succession planning, as well. Just ask Bill Gross, the chairman and co-founder of the respected Pimco Bond Funds. In February, his deputy and expected successor quit the company, leaving its present and future in shambles.

Gross tried to do everything right by putting a succession plan in place, but now, at 69 years old, he has no plan at all.

His tale highlights the necessity of having a Plan B.

It takes both A and B

I spend my days convincing business owners that they need to develop exit strategies and succession plans and developing their leaders to run the business profitably and sustainably. But as owners are coming up with their primary plans, they should also develop backup plans for how to address the worst-case scenario in case the intended successors cannot or do not take over.

You can do this by developing bench strength in all of your key positions. Your primary goal is to identify the one or two people you think would be the most effective at running your business, then develop them over three to five years to prepare them for these potential roles. You also should identify two or three backups at each position to develop for possible, and hopefully eventual, leadership roles in your company. They may or may not know they’re being groomed as future executives.

The best sports teams invest in bench strength. They do not have a single player who can play quarterback. They have a bench of two or three and are always growing the skills of each member of their team.

If your transition occurs as planned, your strong bench will be critically important to supporting the new management team. And as your business continues to grow under the new leaders, growth opportunities will continue to arise for these next set of high-potential leaders.

But if your planned transition falls apart – if your identified successor decides they don’t want the job or you decide they haven’t developed the necessary skills – you now have a stable of prospective leaders whom you have been cultivating all along.

By working simultaneously on plans A and B, your risk is cut in half. While you can’t cover every conceivable option, you can position yourself for a better upside by doing your planning upfront.

Read more about Bill Gross and his plans gone awry.