Every CEO change is a high-stakes gamble for the board and the company. Effective succession planning can reduce disruption and ensure progress, but if poorly executed, it risks cascading failures throughout the organization. At a recent Board Summit, Verisk CEO Lee Shavel and DDI SVP of Leadership Insights Matt Paese revealed what it takes to make succession planning a lasting success.
Mr. Shavel, a CEO with diverse experience in the financial and data analytics industries, shared his journey through Verisk's succession process and highlighted three key lessons that directors can apply to their own processes.
1. Please avoid nominating candidates.
One common mistake in succession planning is to name a successor before fully understanding the future needs of the business. “It's dangerous to name a front-runner or have an implicit front-runner if you think the business is likely to change,” warns Paese.
When Shavel was shortlisted, he wasn't necessarily the obvious choice. His background is in finance, not insurance, and he is new to Verisk compared to his peers who are well-regarded internal candidates with deep business roots. “I didn't come to Verisk expecting to be CEO,” Shavel says. “It was a possibility, but considering I grew up in the insurance industry, it was an unlikely possibility.”
What changed the board's decision was a change in the company's strategic direction. Verisk has recently expanded into non-core sectors with several acquisitions, leading to volatility and investors questioning the value of these new initiatives. Mr. Shavel's outsider perspective and strategic acumen suddenly became valuable, and the board saw him as a leader to guide Verisk through a complex transition. “Had the business been doing well…certainly my colleague might have been a better candidate,” Shavel said, emphasizing the importance of context when choosing a CEO.
What about take-home? Boards should avoid naming a successor prematurely and remain open to evaluating potential candidates as business needs evolve.
2. Focus on trajectory, not just credentials
A thoughtful succession process involves candidates going beyond simply attending interviews and undergoing development experiences that simulate what the top job actually requires. For Shavel, this took the form of a CEO simulation conducted by DDI. Shabell recalls the experience as both challenging and enlightening. “It was more about simulating and testing how you would respond to a complex and very kind of time management exercise.”
The simulation allowed the board to observe each candidate under pressure and carry out real CEO responsibilities, from developing a strategic business plan to handling virtual media interviews. . “We were looking at two very different individuals with very different profiles,” Paese shared, and how developmental experiences reveal abilities that may be missed by traditional assessments. We emphasized what we can do.
This approach also fostered a productive and collaborative relationship between the competitors and Shavel, who previously served as Verisk's CFO and continued to assist throughout the process. “We had a very well-rounded mix, but we're both driven, ambitious, competitive people,” Shavel said. By focusing on executive development rather than a “horse race” atmosphere, the Verisk board diffused potential tensions and kept the process constructive.
For boards, the lesson here is to create rigorous development opportunities to assess a candidate's trajectory. “A CEO candidate is like a hockey puck; it's the trajectory that matters,” Paese said. By observing how candidates absorb and adapt to feedback, boards can better determine whether a candidate's growth aligns with the company's needs.
3. Growth predicts growth.
According to Paese, if you see a candidate taking their personal development seriously in the months and years before taking the role, you can predict that their growth is likely to continue once they take the role. . “Mr. Shavel started development two years before taking over and continued on the same development path during his first two years as CEO, which continues today.”
Mr. Chabel shared two important pieces of feedback he received. One is to make your communications more concise, or “boil down and simplify,” and two, to work on your “resting face” so that you appear more approachable when talking to your team. is. “I learned that I have to laugh when I listen to people talk,” he joked.
Despite their initial lack of confidence in inspiring others, Shavel's senior team quickly observed a change. “Lee is the most inspirational leader we've ever had the pleasure of working with,” Paese said, recalling conversations with two of Shavel's senior executives. The feedback wasn't just flattering. It was a testament to Shovel's adaptability and openness to change.
Shovel's journey shows the importance of continuous growth, even at the highest levels. “We find that influencing culture is the biggest way to influence an organization,” said Shavel, who believes his role is to guide decisions rather than direct them. He added that this is true.
Verisk's succession process was a powerful example of how to develop CEOs with the right skills and vision. As boards consider their next leader, they should ask not just who the company needs today, but who it might need tomorrow. As Shovel's experience proves, with the right processes in place, great leaders often reveal themselves when presented with opportunities for growth.
