The consequences of poor succession planning can be harmful both for family owners but also for many key stakeholders like employees, suppliers, and customers. So why do so many families fail to invest the time and effort necessary to manage this process strategically, rather than wait until it is too late and rush to clean up the mess?
Given its outsized impact on an organization’s health and continuity, many of the challenges family enterprises face can be linked in some way to succession planning. But organizational complexity, distant time horizons, a natural resistance to change, and taboos around our own mortality are all factors that conspire to make the transition of ownership and leadership a recurrent challenge for every enterprising family.
The first critical step in thoughtful succession planning is recognizing that change is inevitable. There are many obstacles families must overcome when preparing for a generational transition, but the very real psychological aversion to change often amplifies and complicates those hurdles. However, mapping out the process can help families develop a feasible plan to manage these complex transitions.
In this episode of the LGA Lighthouse, Founding Partner Ivan Lansberg and Managing Partner Devin DeCiantis talk about the solutions that exist for families to tackle succession planning, including:
- How families can learn from their own history of succession, and also benefit from the wisdom of others. Founder-led systems may have no institutional memory of or instinct for leadership transfer, but learning about and speaking with other families who have survived the transition can provide valuable insights.
- The concept of “succession conspiracy”, and the many forces in a family enterprise that conspire to prevent organizational change. Awareness is critical to breaking down and compartmentalising these forces into manageable tasks and processes, which can then be systematically addressed.
- How families can overcome a fear of change — at the individual, familial, and organizational level.
- The importance of having a systematic approach to succession planning rather than solely relying on individuals to promote and lead these efforts.
- How different generations struggle to communicate through the succession process, and helpful steps each should take at various stages in the journey. Next-gens benefit from broadening their focus, and better understanding what they can do to create the institutional structures, processes and policies that will prepare them for leadership when the time comes.
- The qualities that define suitable future leaders and how families can determine the best candidates. Senior generations must be willing to invest in the sometimes uncomfortable task of cultivating leadership in the individuals that will replace them.
Ultimately, resistance to succession planning is difficult to overcome, even though it presents one of the greatest risks to family enterprise continuity. If families chose to invest the time, effort and resources, their chances of success increase substantially. The first step in that journey involves recognizing the challenge. Despite what some may believe or even hope, succession won’t take care of itself. As the popular adage cautions: “failing to plan is planning to fail”. Thankfully, there are many resources available to help enterprising families navigate these complex waters.
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