There are certain CEOs who are intrinsically tied to their business; it's almost impossible to imagine the enterprise running without them. Take Steve Jobs, who left Apple in late 2009 and the company underwent a turbulent ride. Upon his return in 2010, Apple evolved into one of the most admired companies in the world. Now that Jobs has announced his third medical leave, amid speculation of a failed liver transplant or a recurrence of pancreatic cancer, the media and Wall Street are abuzz over whether Apple has the talent in-house to replace its visionary leader.

A Highly Confidential, Annual Event

Most companies consider succession planning as a highly confidential, annual event involving members of the human resources board and the CEO. The singular purpose is to ensure that there is a replacement candidate ready to step into an executive role in the event of a vacancy. The succession timeline is two to three years with a focus on ensuring that business will continue with only marginal interruptions. The board uses tools and processes that are tried and true but usually end up looking like a glorified organization chart populated by names of candidates who will fill the slots left over by departing incumbents.

But in today's world, where risk mitigation is the primary role of the board and where leadership is in increasingly short supply, a new perspective needs to be brought to bear on this very secretive and arcane process.

Beyond Boxology

"My first exposure to succession planning occurred when I was a young HR director at an oil company and I went to see the CEO about the potential termination of a senior executive. As we discussed alternative approaches, he reached into his upper right drawer and took out what looked like an organization chart covered in yellow Post-it notes. On each note was the name of a potential successor," says Michael McInerney, vice president, Aon Consulting Canada. "His notion of succession management was to move around the Post-it notes until he had the organizational alignment that worked for him. Today we have computer programs that populate the charts for us, but the process and outcome are pretty much the same."

It is not that this process is inappropriate, but in the opinions of leading thinkers on the subject of succession, it's "necessary but insufficient."

"In the fast-moving and complex business environment today, we must look beyond 'boxology' and we must develop succession systems that are as adaptable as today's companies must be to stay ahead of the market and competition," says McInerney. "Just as today's banks must stress test their capital requirements, succession plans must stress test the human leadership capital in light of different strategic scenarios."

The succession management process can no longer be at the mercy of a few board members. The search for successful leadership must now take into account many points of view and include considerations of all its stakeholders.

The 720-degree view

Most succession programs limit their review to candidates within the company and consider only executive candidates. In the future, the scope of a succession plan should be much broader and deeper into the organization and consider all functions and management levels. This is an internal 720-degree view of the company and gives the board a good view of the internal capabilities. But how does the board ensure that the internal pool has the best candidates for the company's future success?

Often the candidates are brought forward based on a rearview look at what has been successful in the past or candidates mirror image the current incumbent's attributes and skills. This approach is good if you want to maintain the status quo but if you want to change strategic direction or the organizational dynamic, the board needs to bring different perspectives into the room.

Measuring a potential candidate against his/her internal peers will only result in the best internal candidate. If the board wants the best possible successor they must get an additional 360-degree view of the potential candidates from the outside talent market. Executive search firms can assist in the external review process. The total view of the internal pool plus the external market is what we refer to as 720-degree view of succession.