The first step in succession planning is to ask yourself what you will do post the handover – in the second innings of your working life.
There are 2 kinds of founders – those who have a strong sense of purpose outside the family business that they have built – and those who don’t.
Some founders post-retirement work with missionary zeal on projects they have long contemplated but did not find the time for earlier. For some this may mean building a cancer hospital in their mother’s memory. Then there are those who roll up their sleeves and start building a school in their native village. Others start work on the art collection they had started but could not complete.
The Bill & Melinda Gates Foundation has such a compelling mission that Bill Gates has severed all ties with Microsoft after he quit the board in 2008. He wants to focus on global health and development, education, and climate change and may well be busier now than when he was running Microsoft.
For other founders, this post-handover period may mean teaching their grandchildren how to ride a bicycle and taking them out on trips. Others may have a long bucket list of exotic places they always wanted to visit but did not have the time for. So if you fall in the category of founders who have a strong sense of purpose and are clear about what you will do outside your business then the transition will be easier with no regrets and no back seat driving. You will, of course, still need a 10-year succession planning window to select, train and groom a successor and pass on the relationships with key stakeholders.
But there are more founders in the second category – those that do not have a strong sense of purpose outside their company. Imagine how difficult and emotional it can be for founders to walk away from a business they have built brick by brick in the face of insurmountable odds. This journey has consumed the best years of their life and is their source of pride, joy, and wealth. This business funded their first Rolex watch. It is a success story crafted with sweat & tears and one which has made them a rock star in their business, family & social circles. Their identity is so closely tied up with the company they have cannot imagine a life away from it.
If you fall in this category of founders – and most do – then the succession planning path has to be different. Since in all probability you intend to continue working till health permits – often well beyond 70 yrs – there will a long overlapping period of 20 years or more during which the next generation and you will be working together. In such cases, if the next generation wishes to join the family business and your business size permits then it is best to adopt one of 2 approaches. Either hand over a standalone independent business division – not function – to the next-gen to manage without oversight from you. Alternatively, encourage them to set up their own ventures with financial & other infrastructural support from the parent business. This will develop and expose the next-gen to the ground realities of running a business and also diversify the family business. Otherwise, the prime years of their life will be spent waiting in the wings for the founder to pass on the baton and causing unnecessary stress and heartburn across both generations.
More on Managing a Multi-generational Family Business ……
Family Business Advisor