The Three-Dimensional Challenge of Succession: Part One: The G1

From the outside, succession looks like an adequately complex problem. The family firm needs to hand off from one generation to the next, without negatively impacting the firm, while ensuring subsequent leadership is adequate and previous leaders’ contributions are recognized.

From the inside, it is even more complicated. An internal perspective reveals succession as a three-dimensional game.

One axis consists of the current generation of leaders. There is also the next generation of leaders. Finally there is the family and the business in whole, attempting to reconcile the sometimes-conflicting interests of the major players. We’ll describe this multi-faceted challenge in three posts. The first deals with the perspective of the current generation.

The distinguishing trait of the current generation — we’ll call them Generation One or G1 — is the need to play multiple roles in a succession. The matriarch or patriarch of the business simultaneously is also a parent, head of the family and the boss. He or she is charged with dispensing wisdom, settling disputes, giving orders, setting strategy and, ultimately, hiring and firing.

In each role, he or she is likely to be seen as the good guy by some, the bad guy by others. Good, bad or indifferent, the G1 is most likely the imposer of standards, setter of obligations and applier of pressure to meet expectations.

It’s not uncommon for a G1 to tell a Generation Two — G2 — up-and-comer, “I built this for you.” In fact, it is rarely true that a G1 created or expanded a business strictly or even mostly in the hope of happily handing it over to someone else. More usually, the statement is an effort to pressure a G2 leadership candidate to do things the G1 way. If it doesn’t work, G2s balk and it breeds resentment and distrust. If it does work, G2s go along but it still breeds resentment and distrust.

G1s are far from being merely founts of negativity, however. Without the drive, entrepreneurialism, experience and wisdom of the G1, after all, the business wouldn’t be there, or might be much diminished. But while all these positive traits and more are likely to be present in G1, it’s usually not clear how to transfer the tribal knowledge and business smarts to G2.

Succession is, after all, something a G1 typically faces just once in a business career. It’s a rare individual who can approach the job with justifiable confidence. Yet this task is critical, and transferring that intelligence and spirit is a key part of it.

Equipping the next generation is often viewed as something that takes outside the regular experience of a business leader. Perhaps it’s seen as part of the epilogue, to be dealt with briefly after a career has ended. In reality, equipping the next generation to succeed is a long-term process, beginning years if not decades before the time to perform the transfer has arrived.

The G1 brings multiple talents to this essential business mission. But one that most G1s need a little help with is seeing things from the G2 perspective. That is the topic of the next installment.

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