As most readers know, former CEO Howard Schultz had to step in as interim leader of Starbucks several months ago, after the departure of Kevin Johnson. The move represented Schultz's second return to the firm after his long tenure as CEO. On two occasions, Schultz had to step in when the firm was underperforming, and in both cases, it appeared that Starbucks did not have a successor ready to take over. Why was Starbucks not prepared for these two transitions? Moreover, given the problems Schultz has unearthed and encountered during his few months as interim CEO, one wonders if the Board didn't act quickly enough to move on from Kevin Johnson.
These changes at Starbucks came to mind when I thought about a recent paper published by qresearchers David Larcker, Brian Tayan, and Edward Watts. They found that, "many companies are slow to terminate underperforming bosses, get caught flat-footed when a CEO suddenly departs, and often fail to appoint a viable or permanent successor." Here's an excerpt from the Stanford Insights article profiling this research: