When the CEO is the operating model

How much of the way NVIDIA made decisions could Jensen Huang’s successor inherit? It’s a question CEO succession planning can miss.

Huang said he had more than 60 direct reports. He brought leaders together to share information, debate problems, and make decisions. He relied on fewer management layers and held fewer one-on-one meetings, because he believed hierarchy could slow decisions and restrict the flow of information.

He also shared information broadly across his leadership team so executives could understand the reasoning behind major decisions.

It worked extraordinarily well. But seeing a decision get made isn’t the same as making it. Visibility and decision authority are two different things. Executives can understand the tradeoffs facing the business and still have few opportunities to make those calls themselves. Huang’s account showed the visibility a wide span could create. It also invites a closer look at where decision authority sat.

This is the gap. A company can have a robust CEO succession plan and still have an operating model that isn’t succession-ready. Naming a successor answers who will lead. The design question is how the organization will make decisions and work across functions under that leader.

Many founder-led companies are organized around strong functional leaders, with the founder serving as the primary enterprise integrator. Functional leaders own their areas of expertise. The CEO brings their perspectives together, resolves competing priorities, and makes major resource allocation decisions.

The model gives a founder with deep industry expertise a short line to the people doing the work and clear authority to act quickly. Over time, though, if cross-functional disputes and competing investments routinely go to the founder, other leaders get fewer chances to make enterprise-wide tradeoffs and take responsibility for the outcome. That dependency can be hard to see on an org chart.

Succession planning typically focuses on identifying candidates, assessing their readiness, and developing their capabilities. Boards also need to examine the job those candidates would inherit.

A founder may personally integrate technology, operations, commercial strategy, capital allocation, and external relationships. Even an exceptionally capable successor may bring a different mix of expertise, relationships, and judgment. If the operating model depends on the founder’s particular strengths, the incoming CEO may inherit two jobs at once: leading the enterprise and redesigning how it works.

When Steve Jobs returned to Apple in 1997, he replaced its business unit structure with a functional one, bringing major product and investment tradeoffs together at the top. Apple retained that functional structure after Jobs. The org chart can carry over even as a new CEO takes on the work of bringing those functions together.

Before a transition, boards and CEOs can decide which tradeoffs still need the CEO’s direct involvement and give senior leaders authority over others. That gives executives a chance to build judgment across functions while the founder is still available.

For leaders and boards thinking about succession, three questions are worth asking:

1. Integration. Which decisions or conflicts across functions routinely require the CEO to step in?

2. Authority. Who has the final say when functional priorities compete, and is that clear to the people involved?

3. Capability. Which senior leaders are already making enterprise-wide tradeoffs and accountable for the outcomes?

The answers will tell you whether you have a succession plan, or just a successor.