NEW YORK ( MainStreet) -- Advice from the greats? First Steve Jobs, then Warren Buffett, now Joe Paterno.

The beloved Penn State football coach died early Sunday at the age of 85. He was suffering from lung cancer, but many speculated that the stress of child-sex allegations against former assistant coach Jerry Sandusky contributed.

Paterno, nicknamed "Joe Pa," was fired in November after a 45-year tenure as Penn State's head coach as the Sandusky scandal escalated. The school's board of trustees originally agreed to let Paterno finish out the season, but growing opposition led the board to reverse course and remove him immediately so as to not further sully the Penn State name.
Joe Paterno, the beloved Penn State football coach, died early Sunday at the age of 85.

While Paterno was not accused of wrongdoing -- reports say he alerted his superior after learning of the allegations -- many believe he should have done more, such as contacting the police. Paterno was beloved, but the scandal dimmed his reputation.

What can we learn from all this? Here are three business lessons:

1. Create a succession plan. Paterno led the college to multiple championships, but his leadership is not easily replicated.

"He should have retired a long time ago," says Carolyn Thompson, director of human resources at accounting firm Dixon Hughes Goodman. "He probably lived to work, but at a certain point he should have cut back. They kept him because of the reputation and whole legacy, but it wasn't good for his health."

As for the business -- Penn State's football program, in this case -- there wasn't somebody ready and able to step into Paterno's place. Tom Bradley was named interim head coach for the rest of 2011, and this month, Penn State named Bill O'Brien, the offensive quarterback coach for the New England Patriots, to formally replace Paterno. (O'Brien will finish out with the NFL team as it goes to the Super Bowl on Feb. 5.)

O'Brien's leadership skills may be sound, but he has a steep climb to earn the respect and reputation earned by Paterno. Like Apple's ( AAPL) beloved Steve Jobs, who died in October, Paterno was considered an icon in the football world and the face of Penn State's football team, and the sudden absence of an icon -- even when illness or aging made the change inevitable and obvious -- is tough to overcome. (Succession is a question dogging Buffett's Berkshire Hathway ( BRK.A) too.)

Business owners, although they surely lack quite the same iconic stature, shouldn't be left in the same position. They should be grooming and developing a successor to take their place. "At a certain point, realize you're going to have to let go," Thompson says. Paterno could have "stepped back and stepped back gracefully."

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