Tesla's Model 3 launch highlights the need for a succession plan, especially if the top executives are spread too thin.
As the late-July launch of Tesla's make-or-break mass-market Model 3 sedan neared, CEO Elon Musk allowed himself an unguarded moment on Twitter: "The reality is great highs, terrible lows and unrelenting stress," he wrote, momentarily agreeing with speculation that he might even be bipolar, before adding that he didn't literally mean it. "When you buy a ticket to hell, you can't blame hell.''
The moment illustrates that even world-changing entrepreneurs like Musk battle stress. And having an irreplaceable, overstretched founder is a legitimate concern for any fast-growing business if there is no strong team in place as a backup should something happen to the visionary leader.
"When it's your own money, fine," said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. "When you take other people's money or public capital, the obligations change.''
Even so, many of the management challenges Tesla faces as it morphs from a niche automaker into a global renewable-energy one-stop shop apply to less-exalted businesses, from small manufacturers to midsized service companies.
Management experts have a playbook for scaling up management of growing companies, and Tesla is learning similar lessons on the fly. And in some cases the company isn't there yet, by textbook standards. But the company is taking key steps on its path to growth. Most notably, it has locked and loaded Musk in an incentives-based compensation plan that gives him a low salary, no cash bonus or incentives until he hits targets related to stock price and brings products to market. Tesla also added independent board members in July to diversify its brain trust.
Here are important steps every company should take to ensure there is no disruption in business if something should happen to their most important asset: the visionary founder and CEO.