Part 2 of Levy Consulting Co’s series exploring leadership transitions, succession planning, and the hidden risks that emerge between strategy and execution.
If you missed Part 1, we introduced what economists are calling the Great Ownership Transfer. A generational wave of business transitions that is currently underway, with roughly 6 million small and midsize U.S. businesses expected to change hands by 2035. The scale is historic. The preparation, for most organizations, is not.
The Plan That Isn’t Really a Plan
Here is something I hear often, usually from a founder or board chair who is genuinely thoughtful about the future of their organization: “We have our legal documents in place. The tax and estate plans are done. We’re covered.”
And they mean it. They’ve done real work. They’ve sat with attorneys and financial advisors and checked the boxes that needed to be checked. That work is necessary and important. But that work is missing one (major) detail: it does not prepare the next person to lead.
Documents transfer assets. A tax plan protects wealth. A succession plan (a real one) answers an entirely different set of questions. Who makes decisions when the founder is no longer in the room or available? How does the organization handle conflict? What does leadership actually look like after the handoff?
Most organizations never get to those questions. About 35% of companies have a formal succession plan. And for those that do, many confuse having a document with having a strategy. The document names a successor. The strategy is an active practice that prepares one.
Authority Without Context Is a Setup
The most common failure pattern I see in executive leadership transitions isn’t a bad successor. It’s a successor who was handed authority before they were handed context.
The next generation, whether it’s a family member, a long-tenured COO, or an incoming executive, often inherits the title and decision-making power before they fully understand the why behind prior decisions. The relationships. The informal handshake agreements. The institutional reasoning that lives in a leader’s head rather than any document. They step into the role with authority but without the clarity that makes authority functional.
Research from McKinsey confirms that roughly half of leadership transitions fail because readiness was misjudged. Currently, leaders are assessed on their performance in their current role, not on their actual readiness for the next one. The gap between those two things is where transitions fall apart.
This is not a knock on incoming leaders. It is an indictment of the systems (or lack thereof) they were handed.
The Founder Who Didn’t Leave
There is another side to this that doesn’t get talked about enough, and it is one of the more delicate dynamics I navigate in my work.
Founders and long-term CEOs struggle to redefine their role after a transition. Not because they are selfish or controlling, but years of being the person everyone turns to doesn’t just disappear overnight. Old habits are hard to break, especially when no one ever clearly defined what the new boundaries and expectations.
What ends up happening is subtle. The founder answers a question they should have redirected. They weigh in on a decision that now belongs to someone else. They express doubt about a direction the new leader is taking. None of it feels malicious in the moment (at least it shouldn’t). But on the receiving end, the new leader is constantly second-guessing whether they actually have the authority they were given.
This is one of the most common and least discussed reasons transitions fail. It is not about bad intentions. It is about undefined expectations. And undefined expectations during executive leadership transitions are expensive.
What Has to Change Before Leadership Does
The organizations that navigate transitions well share something in common: they do the structural work before the leadership change happens.
That means getting specific about decision rights. Who owns what, who has final say, and where the line is between advising and deciding. It means revisiting governance structures that may have been appropriate for the organization at one size or stage but no longer fit where the organization is headed. It means building accountability frameworks that don’t depend on any one person’s memory or relationships to function.
None of this is glamorous work. But the data is hard to argue with. According to a recent Gitnux market analysis, 82% of companies with strong succession plans report revenue growth compared to peers without them. The difference isn’t luck. It’s the structural foundation that allows a new leader to actually lead, rather than spending their first year untangling what they inherited.
What This Means for Your Organization
If you are a board or foundation chair, the question is whether your governance structure can function independently of the individual currently at its center. If the answer is “mostly” or “I think so,” that is worth examining.
If you are an incoming or second-generation leader, the question is whether you have historical context, not just authority. Whether you understand the decisions you are inheriting, not just the role.
If you are a founder or a departing executive, the question is harder but more important: Have you defined your role after the transition? Not in theory, but specifically.
These are not comfortable questions. But they are the right ones, and they are far better asked now than in the middle of a transition when the organization is already absorbing the change.
What We Do at LCC
At Levy Consulting Co., this is the work that sits at the center of what we do. We help leaders and organizations close the gap between a succession plan on paper and one that works in practice. That means helping define decision rights, clarifying governance, preparing incoming leaders for what they’re walking into, and, when needed, helping founders navigate the very real identity shift that comes with stepping back from something they built.
Steady leadership for complex transitions isn’t just a tagline. It’s a description of what this work actually requires. the outcome, but they also remember how it felt to get there. We help leaders build organizations that take both seriously.
