by Dinah Adkins
A quick, albeit unscientific, review of business incubator managers on NBIA's Member Listserv suggests few CEOs have given much thought to succession planning for top management. And yet, research is unanimous that program success – and robust outcomes, such as firm survival and job creation – depend on hiring and retaining exceptional leadership.
Virtually all experienced industry CEOs have seen formerly topflight incubators lose vitality and even close when new hires failed. Thus, careful attention to succession issues is necessary to ensure survival of well-functioning programs.
Few are more concerned about these issues than longtime or founding managers who have grown their programs from the ground up. "I am wrestling with this issue now," says Charlie D'Agostino, founder in 1989 of the Louisiana Business & Technology Center in Baton Rouge, La. "Quite frankly, based on fiascos I have seen, we're going to try to do better," says Ed Hobbs, president and CEO since 1998 of the Toronto Business Development Centre in Toronto. Both plan eventually to select and train their successors while they still head up their programs. In Detroit, former executive director of Wayne State University's TechTown, Randal Charlton, acted on that idea, handing off selected duties to a chosen successor for more than a year. Charlton retired Oct. 31 to join BOOM! The New Economy, a new initiative supporting baby boomer entrepreneurs.
Ann Lansinger, who plans to retire in early 2012 after serving as CEO of Baltimore's Emerging Technology Centers for 13 years, was unable to identify a successor, but she is working closely with her board of directors to facilitate a sound transition. Lansinger and other managers have discovered that given the small staff size of many incubators, finding individuals who have the big picture view and drive to become successful CEOs can be difficult. "Even great division managers who are good at their jobs" can fail that test, D'Agostino says.
Despite a dearth of written succession plans, NBIA has collected industry leaders' ideas to spur thinking on the issue, which could lead to more successful transitions.
In Toronto, Hobbs swears by regular three- and five-year planning cycles, each starting with a visioning session that sets the incubator on a future course. Hobbs says eventually he will retire in the middle of a planning cycle, so implementation would be well under way when the incubator names a new CEO. That individual would complete the existing plan, ensuring continuity. In the next cycle, the CEO will likely have more of his own way, but by that time, Hobbs says he believes the changes are more likely to be thoughtful.
Charlton took over TechTown in 2007 at age 67. He had already run a company and taken it public, and he was the incubator's first client. When the then-director resigned, Wayne State University's president asked Charlton to become interim director. The job fit his personality and skills, and he grew the operation from two to more than 30 staff and from five clients to 255. Moreover, he developed one of the country's largest entrepreneurial training programs.
"I saw my role as raising the funds to build out the space and develop the teams to provide entrepreneurial support," Charlton says. He sees his successor's role as "taking the organization on and scaling it." That vision includes "further expanding the footprint of TechTown so it grows from 138,000 to 300,000 square feet in five years" and takes its entrepreneurial message to the neighborhoods, where he says Detroit has unique problems.
"No matter what happens in the auto industry, it will never rehire the numbers it had," Charlton explains. "The issue is how to overcome an unemployment rate that is twice the national average. I see TechTown being an integral part of a much bigger story, which is helping the city reinvent itself."
Russ Yelton, president and CEO of the Northern Arizona Center for Entrepreneurship and Technology in Flagstaff, Ariz., had previously built a robust incubation program that flagged after his departure. Thus, he decided his new incubator "couldn't be centered on me. As my board chair says, 'We're all temporary workers.'" Now Yelton requires staff to sign up for NBIA's Incubator Management Certificate Program, and he annually budgets for staff professional development.
Yelton also holds weekly meetings with staff to discuss, among other things, what happens if he or another staff member leaves. "It's important for a team of people to have communication on the front end about how we're going to function as an organization," Yelton says.
NACET extensively documents staff responsibilities and incubator operations, even including templates for forms and agreements. "We call it the 'Incubator-in-a-Box,'" Yelton says. "We've taken a white board and written down everything that we do, and then assigned people to document their jobs." This Word file is readily available to all staff and is invaluable when individuals are called to fill in for each other or in the event of a staff departure.
Further, each client has three staff counselors – primary and secondary counselors who meet with clients monthly and a third counselor who meets with each client and their other counselors on a quarterly basis. The arrangement helps all incubator staff maintain familiarity with every firm.
Not only has the commitment to professional development, cross-training and documentation assisted the program to scale from nine to 34 companies in two-and-a-half years, but it has made the incubator attractive as a management company. As a result, the program now manages an additional site and has attracted similar discussions with other communities.
An error often made in hiring management staff is focusing only on the duties listed in a job description rather than the qualities required to succeed. "If you look just at duties and responsibilities, you don't necessarily get to the competencies. Too much gets focused on management and not enough on leadership," says Bruce Gjovig, who has served as director and entrepreneur coach of the Center for Innovation in Grand Forks, N.D., for 27 years. In 2008, Gjovig completed an extensive written plan describing his program's social networks and action steps in case of the sudden need of a successor. "I would encourage others [to develop written plans], as it gets the board more focused on values and core competencies – thinking beyond job descriptions and daily duties," he says.
D'Agostino says he believes the ability to network, be personable and be good at public speaking are crucial characteristics for an incubator manager, as is having some business know-how. "I think the critical thing is somebody who has an entrepreneurial background and can identify with our clients – somebody who has started a business or worked in a business who knows the issues involved in being successful and has had to meet payroll," he says.
Charlton searched for a well-rounded, mature individual with depth in his or her resume. Previous potential successors hadn't worked out. "They weren't rounded enough – they were pretty good administrators, but that was it, end of story," he says.
His eventual successor, Leslie Smith, served as general manager of the incubator, and he increasingly ceded authority to her. He found Smith to be a good administrator, highly organized, knowledgeable about helping entrepreneurs and good at raising financing. She had earlier served on former Gov. Jennifer Granholm's staff at the Michigan Economic Development Corp. and thus "knew the space and the challenges of business incubation," Charlton says.
Perhaps just as important to Charlton, "She has affection for Detroit and a passion for it; she sees the reward that would come from helping this city and driving the economy in a new direction. And she has a voice and can stand up in front of an audience and speak with authority and passion."
Charlton began the hand-off by sharing every e-mail with his intended successor. He also involved her in every hiring decision. "When you're succession planning, you need to recognize that the team that works well with you may not be the team that works well with the next executive," he says. "So it's no good hiring somebody you absolutely adore and then walking out the door six months later and that individual doesn't get along with your successor."
Charlton says he and Smith sometimes had what Smith calls "fierce conversations" about people or policies, but he notes, "In an ideal world, before you hand over, your successor is getting ever more comfortable with your evolving team." At yet another stage in the succession process, Charlton began exposing Smith to stakeholders by involving her in board meetings.
Incubator managers also expressed concern about the political environments in which their programs operate, and this has led them to consider who will make the hiring decisions. As managers of university-based incubators, both D'Agostino and Gjovig have had concerns that administrators would hire academics with minimal skills for the job.
For Lansinger and Hobbs, concerns have revolved around keeping the city out of the process. "We want to make sure there isn't undue political involvement," Lansinger explains. The executive committee of the incubator's board and the president of the Baltimore Development Corp., the incubator's sponsor, will make the final decision about a new CEO. An attorney who has extensive experience running search committees will guide their efforts.
Hobbs developed his long-term plans with two board members and a former incubator president; it involved making wholesale changes in his program and stakeholders during the last three years. He got an "amicable divorce" from the city (whose rate of financial support was declining annually); negotiated a long-term, more affordable lease in a highly desirable building; and made his program an independent nongovernmental effort. It now runs two campuses and manages the Toronto Food Business Incubator and extensive training programs.
Lansinger and her board tied compensation to management milestones to ensure the new hire continues to keep the program moving in the right direction. The process helps to hold new management accountable through clearly stated milestones denoting success or failure.
Says Hobbs, who cites Jim Collins' book Good to Great, "It comes down to making sure you have the right people on the bus. It doesn't work unless you get the right bus driver. If somebody wants to go to Florida and you want to go to California, Florida might be a nice place to go, but you've still got to get rid of them."
Written succession plans can be useful in times of a CEO's short- or long-term absence, retirement, resignation or removal. In its briefest form, a plan might simply list bulleted steps. More detailed plans could include organizational charts, planning processes, discussion of cultural issues, and information on reporting structures and networks of stakeholders. A short-form plan should include actions (and associated timeframes) such as these:
Randal Charlton, former executive director, TechTown, Detroit
Charlie D'Agostino, executive director, Louisiana Business & Technology Center, Baton Rouge, La.
Bruce Gjovig, director and entrepreneur coach, Center for Innovation, Grand Forks, N.D.
Ed Hobbs, president and CEO, Toronto Business Development Centre, Toronto
Ann Lansinger, CEO, Emerging Technology Centers, Baltimore
Keywords: Documents- incubator, Effective communication, Exit policy, Incubator management – general, Leadership development, Management team building/Compensation, Professional development-general
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