Media giant Verizon has shocked the business press with its announcement that relative newcomer Hans Vestberg – currently chief technology officer – will succeed outgoing CEO Lowell McAdam on 1 August, outmanoeuvring hotly-tipped company veteran John Stratton, who has worked at the firm for 25 years.

Interestingly, Vestberg joined Verizon in April last year following a seven-year stint as CEO of Ericsson, which ended with his decision to step down after failing to turn around a profits slump. Upon announcing his departure from Ericsson, [1] Vestberg said: “As the [telecoms] industry enters a next phase, driven by 5G, IoT and Cloud, it is time for a new CEO to step in and continue the work to ensure Ericsson’s industry leadership.”

However, according to the Wall Street Journal’s coverage of Vestberg’s promotion, [2] he will actually be spearheading the firm’s move into the 5G era, with McAdam describing him as “a better match for where Verizon was going to go”.

McAdam added: “With 5G in front of us, we are at a huge inflection point. Whoever is at the head of the business should be able to see that through.” So Vestberg will be in charge of capturing a technology area that had proven elusive in his previous CEO role. Meanwhile, the 54-year-old Stratton – who currently serves as Verizon’s president of global operations – will retire later this year.

Is it automatically a riskier proposition for a firm to bet its house on a newcomer leader, rather than a dyed-in-the-wool figure who has worked there for a quarter of a century?

In the view of The Institute of Leadership & Management's head of research, policy and standards Kate Cooper, it is likely that Verizon had been caught between acknowledging Stratton’s loyalty and recognising that he doesn’t have the appropriate knowledge for the company’s mission. “Indeed,” she suggests, “in today’s environment – especially in the area of technology – if he hadn’t had that knowledge, he should have recognised it and brought people in to ensure that the answers were there.”

She notes: “You can’t expect one, individual leadership figure to know or do everything. And if that person doesn’t have the knowledge, they need to build a team that does – a loyal team, at that.”

Under those conditions, Cooper says, “when it gets to a point where the board and external stakeholders are making critical decisions about succession, they will think: ‘It’s far too risky not to promote this guy… he’s got a brilliant team – they all trust him; he brings on great talent; he knows exactly where the organisation needs to go and what it needs.’ And then there would be no question of him being pipped to the post.

“So essentially, the risk element to consider here is how leaders can avert the risks of being passed over for more senior roles by continuing to develop their knowledge.”

For further thoughts on evaluating risk, check out these learning resources from the Institute

Source refs: [1] [2]

Image of Verizon signage courtesy of Jonathan Weiss, via Shutterstock

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