How do I know if my next generation family member is ready to take over the reins of my family business?
That simple question has perplexed countless company owners – particularly founders – for about as long as family businesses have existed. The anxiety around that question often plays out in a tension between the incumbent generation and the next where they struggle how the transfer decision will be made. The founder often sets the table stakes based upon what has worked during their own tenure.
That, oddly enough and more so now than ever, could be the cause for the business to fail when taken over by subsequent generations.
By attempting to set a strict framework for a successor to be “qualified” the founder or incumbent leader actually can be failing to explore the capacity of the business to stay apace of what has become exponentially accelerated change in the business and social environment.
True, there is certainly a full range of capabilities, personal disciplines, and leadership qualities that are on the table when considering who should take over and when. Perhaps somewhat unique to the family enterprise, it’s also common that a founder wants to be sure the next generation will carry forward the values that so closely link the business to the family itself.
However, a typical dynamic is that the next generation needs to make the case about why the business needs to change and be run differently. To the founder, such change can represent a risk – a risk big enough to collapse the discussions and prompt them to consider other options, including a sale to an outsider.
But what if that conversation was flipped where instead of the next generation making the case for change, it is the incumbent leader who challenges the potential successor to prove they will lead the business differently? Instead of trying to control the approach of the successor, the incumbent creates the conditions where the enlightened, committed successor can try out their approaches.
There is enormous intellectual capital in a generation of emerging leaders raised in a very different, inter-connected, collaborative and technology-driven world. It is best to expect them to lead the business differently. Likely, they would agree.
Guest blogger, Larry Grypp, serves as President of the Goering Center for Family and Private Business, located at the Carl H. Lindner College of Business at the University of Cincinnati.
