Possibly one of the hardest tasks in family business succession is for the existing leadership team to release their way of doing things which have built the successful business that exists today. And to allow the new leaders free reign in finding their way of doing things.
Active Knowledge Question:
What approach are you taking to allow the old and new ways to be blended and discover the strength in each?
Danger 9/12 – Quicksand
Existing management is unable to surrender past practices and cannot embrace new ways.
Change is constant, and the needs of your customers are continuously evolving driven by globalisation, the Internet and digitalisation. What made a business successful for the last 40 years is almost certainly not what will make it successful for the next 40 years.
Businesses that have been built through periods of industrialisation, the growth of a middle class or friendships in developing economies, will likely need to be built on a new foundation for success on transition to the next generation of managers and owners.
Success can at times be the barrier that stifles change. ‘Why try something new when what we are already doing works so well’ is often the paradigm that will strangle a business as it seeks to transition across generations.
The new team is seen as inexperienced and untested with an academic education that did not exist 50 years ago and a whole range of ideas and language that seems foreign. Add to this a set of values that can often challenge the sensibility of an older generation and you have the barriers that will slow down dramatically, if not close out, a succession process.
Change is hard and when combined with a succession process can be even harder for the incumbent team to surrender past practices and to embrace new ways by an over-eager new generation. A path must be found to comfortably transition across to the new team who are equipped to respect the past and adopt their learning and experience while seeking new paths and practices that will support the successful growth of the business for the next generation.
If the incumbent team is unable to find the middle ground to create the space the new leaders will need, then it is likely the existing business will slowly sink in the quicksand of conflict and inaction.
Quotes From Travellers – Principal Outcomes:
“Do not send to the fourth-generation companies that do not interest them, and to ensure the survival of businesses” – From A Family Business in Luxembourg
“Allow current members to leave the executive position and transfer power to the sons and nephews” – From A Family Business in Brazil
“A complete shift to the second generation for driving operations and a meaningful seat of high influence for the 1stgeneration” – From A Family Business in USA
The Twelve Dangers
There are many dangers that the traveller must be wary of and keep a close eye out for. Not only must they avoid these dangers but be proactive in protecting against them.
Part 9 of the series: 12 Dangers To Be Avoided In Succession
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All the best in the success of your business,