An incumbent keeps succession open among several strong candidates for a defined period, so each one delivers on the incumbent's priorities while the business and the board see who handles the larger job best.
Borderline: whether this move is justified depends on the situation, and only the person in it can judge.
An example
Two years from retirement, the chief executive of an auto-parts supplier had three division presidents who could each plausibly succeed him. He told the board he would not name one yet, and he told the three the same thing, together, in one meeting: the decision would come in eighteen months, against four stated measures, including the electric-drivetrain program he wanted launched before he left. Each president took a piece of the launch. The braking division, which had resisted moving engineers onto the program, sent its best twelve. The chief executive gave all three the same access to the board and the same written feedback every quarter. At month seventeen he named the head of the powertrain division, the board approved, and one of the other two left within the year to run a competitor.
Why it works
For each candidate, delivering on the incumbent's priorities looks like the best way to stay in contention. For the incumbent, leaving the question open is easier than deciding, since it needs no public choice, while naming an heir early looks worse, because a designated successor stops competing and starts building a transition team, and it costs more, because it fixes a timeline and creates passed-over candidates with a grievance. That covers all four ways it works. It needs several credible candidates, enough authority to keep the contest alive, and a horizon long enough that waiting seems worth it.
The thinking behind it
Edward Lazear Rank-Order Tournaments as Optimum Labor Contracts (1981), by Edward Lazear and Sherwin Rosen, shows that when output is hard to measure, paying by rank with prizes fixed in advance can produce efficient effort, and that effort depends on the gap between the winner's prize and the others. Succession is such a prize. An open contest with stated measures draws effort from every candidate, the losers included, and the measures decide what they compete on.
Sherwin Rosen Prizes and Incentives in Elimination Tournaments (1986) explains that in a career ladder where contestants are eliminated round by round, extra weight must sit on the top prize to keep the survivors working hard at every stage. The chief executive role is that top prize, which is why the last round of a succession contest draws so much effort from division heads, and why the gap between winning and losing feels so large to them.
Thomas C. Schelling The Strategy of Conflict (1960) argues that the power to bind oneself can be a source of strength, because a commitment the other side can see changes how it behaves. An incumbent who announces the date and the measures to all candidates at once gives up the freedom to string the contest along, and that loss is what makes the contest credible. Private signals of favor undo the commitment.
When it fits
You need real authority, two to four years of runway, and more than one candidate who could do the job, with nobody an obvious winner yet. The board must agree to the timeline. It suits a period when the leadership team has to carry a demanding program and you want to see each candidate run part of it before you choose.
How to use it well
Tell all the candidates the same thing at the same time: there is a contest, it ends on a stated date, and these are the measures.
- Tie the measures to the business, including the priorities you need delivered, so performing for you and performing for the company are the same work.
- Give each candidate equal access to the board and written feedback on a fixed schedule.
- Keep private signals out of it. Nobody hears they are ahead unless everyone hears where they stand.
- Decide on the date you set, and help the candidates who lose find their next role, inside or out.
Agree on the timeline with the board first, so the contest has an owner other than you.
What it costs and where it backfires
Every contest has an endgame you cannot dodge: at some point you must choose, and the candidates who lose often leave. Candidates may see the pattern and band together to demand a decision, which is fair if you have been slow. Board pressure, disclosure rules, or your own health can force the choice early. Two things turn this into a succession derby: telling each candidate privately that they are the favorite, and keeping the contest running past its date to protect your own seat. Both cost the company its best people.
When it is used on you
You are in a tournament when succession keeps getting deferred, you and your peers each get private signals of favor, and no written process, timeline, or criteria exist. Over-delivering for the incumbent only confirms it. Talk to the other candidates and ask together for a decision date, take outside offers seriously to show your independent value, or ask the board to impose a structured process.