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NBC’s TONIGHT SHOW: Succession Planning Gone Wrong

Published: 2010 04 13 | Views: 3023

It seems like a truism among business experts that it is never too early to start working on a succession plan.  No matter how large or small the business and even when dealing with a not-for-profit organization,  the importance of planning sooner rather than later for the day that the person in charge is no longer in charge cannot be under-stated. 

The recent very public fiasco at NBC over the Tonight Show might at first blush seem to shake the assumption that early planning can only be a good thing.  However, I see it quite differently.  To me, NBC’s succession planning mis-step was not that it did it too early but that it did it poorly without thinking through the consequences.

In case you missed the story, from the early 1990s until mid-2009 Jay Leno had been the most successful host of the Tonight Show airing weeknights at 11:35pm.  In mid-2009, Leno was replaced on the show by Conan O’Brien and moved to the 10pm time slot.  In January 2010, as a result of horrible ratings on both shows, Leno was moved back to the 11:35pm time slot and O’Brien departed with a cheque for $32 million from NBC. 

From this distance, it seems clear that NBC made at least two major mistakes, one from a business and the other from a succession planning point of view.  The business mistake was not predicting the severe and immediate ratings free-fall in both time slots.  The succession planning mistake is the focus of this article. 

Leno was replaced on the show by O’Brien in 2009 as a result of a promise made by NBC to O’Brien in 2004 that the job would be his in 2009.  Why did NBC make that promise?  Some have speculated that it did so to avoid the public and nasty war of words that took place between Leno and the presumed heir-apparent David Letterman in the early 1990s when the legendary Johnny Carson announced his retirement from the show.  Others say that this was what NBC had to do to prevent O’Brien from leaving the network after so many years biding his time on the late late show. 

No matter the reason, we have to assume that NBC had good reasons to name its successor a full five years before the planned succession date.  The question to be answered is why NBC would promise the show to O’Brien without first securing Leno’s agreement to depart at the same time.  Failure to do so presumably resulted in NBC having to find another job for Leno in the 10 pm time slot with all its attendant disastrous consequences.

The story of the Tonight Show is a story that is played out in similar albeit far less public forms in many privately-owned businesses.  Think of a next-generation child in the business as Conan O’Brien.  In order to attract him to the business and keep him there, the owner promises the child that “one day this will be yours” but to the child that day never seems to come.  In some cases,  like in O’Brien’s, the child finally gets fed up waiting around and an ultimatum ensues which in turn forces the hand of the owner. 

The succession planning lesson to be learned from the Tonight Show story is that it is alright and indeed advisable to plan for succession early,  but then be sure to take advantage of the early planning to do it right and cover off all the bases.  NBC seems to have been pressured to make the job offer to O’Brien without first properly securing Leno’s release and by all appearances that mistake cost them dearly.  It might not cost you $32 million but it could cost you substantially nonetheless if proper steps are not taken.

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