Hiroshi Suzuki’s 21 years and the handover to Eiichiro Ikeda (2021)

How to design the “next” after charismatic leadership

What marks this succession is that the top of a long-lived regime made the decision to step down of his own accord — not driven by a financial crisis, but at a time when both earnings and the share price were high. Hiroshi Suzuki was a founding-family manager who had built, through the discipline of ROE and capital allocation, a high-margin company that stood out even as a manufacturer. Rather than bringing in a successor from outside, that Suzuki handed management to a home-grown CTO who had led the technology division. The market took it as a “surprise” because it was a graceful exit in the very midst of good health.

That said, what is truly at stake in a succession is whether one can inherit not the person but the discipline. Suzuki’s high margins rested on a thoroughgoing capital allocation that shrank businesses with no prospect of growth and moved capital into growth fields. Ikeda said he would inherit that discipline under the words “portfolio rotation,” yet whether, after a charismatic long-lived regime, it can be continued as an institution without relying on the pull of one particular individual is the task left after the handover. How to design the “next” after a successful charismatic leadership through the business mix of the coming ten to twenty years — this decision began by placing that question at the centre of management.