When the leader can’t let go

The recent startling events at the Tata group have shone the spotlight on an important and uncomfortable aspect of business leadership in India. Too many promoters, founders and chief executives find it difficult to let go of the reins sometimes even after handing over the business to their chosen successor. This is true not just of family-promoted businesses but even in many so-called professionally-run businesses with diversified shareholding.

As the pace of change quickens in every industry, and as the threat of new competition and disruption grows, this reticence to let go will become increasingly problematic. Creative destruction is an essential and healthy phenomenon in business as in life; the old order must constantly change, yielding place to new ideas and new ways of doing business or else run the risk of irrelevance and decline.

One company that exemplifies how this should happen is the venerable General Electric Co. (GE). Jack Welch, who became CEO in 1981, wasted little time in re-architecting the company and undoing much of the legacy that he inherited although GE was hardly underperforming at the time.

“Neutron Jack” slashed employment, dismantled the bureaucracy, closed factories and exited businesses where GE could not compete. In his 20-year reign, Welch transformed GE from an industrial company to a financial services powerhouse.

His handpicked successor, Jeff Immelt, has not been a passive inheritor of the house that Welch built. He has sold off GE’s plastics and appliances businesses, NBC and most of GE Capital and returned the company to its industrial roots.

Now GE is embracing the “Internet of Things” to rapidly transform itself into a new-age industrial company fit for the 21st century. Each leader had the freedom to reshape GE without the long shadow of their predecessor over them. It is this ability to constantly adapt itself to the times that has allowed GE to flourish for over 100 years.

It is important to understand why letting go is so hard for so many leaders. Successful enterprises tend to be built by vigorous leaders with strong opinions and forceful personalities. If you make great sacrifices, pour all of your energy and the very best years of your life into creating an enterprise or an institution, it is impossible to not be profoundly attached to your creation. The combination of a forceful opinionated personality and great love for the institution, makes it difficult to watch as a successor dismantles part of your legacy. As every disgruntled and anxious employee seeks solace and support in you, it takes a great deal of restraint to not leap back into the fray.

The second reason is that, frequently, your identity becomes intertwined with the enterprise. It is entirely natural to wonder “who am I if I am not the CEO of X?” Will people still respect me and flock to me? How do I stay relevant? After years of being in the limelight, fading away gracefully is not easy for many leaders.

Yet there are wonderful role models out there. Bill Gates is one such example. He has gradually and successfully weaned himself away from Microsoft Corp. and poured his energies into his foundation and new technology ventures. I still remember meeting Gates with Mukesh Ambani in 2010; he was studiedly polite yet clearly bored when talking about Microsoft but quickly came to life as the conversation shifted to big challenges like infectious diseases and energy poverty. Gates had clearly moved on.

As a result, Satya Nadella has had the space to profoundly reshape Gates’s and Steve Ballmer’s legacy, making such heretical decisions as embracing Open Source software, exiting Nokia, making the upgrade to Windows 10 free, committing Microsoft to build cross-platform apps and services that run on rival operating systems.

Closer home, Nandan Nilekani is yet another example. It is rare for a leader to have a spectacular second act and almost unheard of to have a great third act. Yet post Aadhaar, Nilekani is hard at work on solving tough problems like financial inclusion and illiteracy and having great fun as a philanthropist and as a venture capitalist and mentor to lots of young innovators.

So the trick to letting go is this. Decisively and resolutely close the last innings and pour yourself into a consuming new endeavour. In a wonderful book, How to raise an adult, author Julie Lythcott-Haims makes a persuasive case against over-parenting; to raise a good adult, paradoxically one must let go of the desire to over protect and over-manage the child. “Go get a life and your child just might do the same someday,” the author advocates. Perhaps this is good advice for retiring CEOs too!

Ravi Venkatesan is the former chairman of Microsoft India.The views expressed here are personal.