Leadership Transition In Family-Owned / Founder-Owned Businesses

Most family-owned businesses often struggle with the classic question on what happens once the founding / first generation isn’t involved in leading the business. We’ve all seen great family-owned and founder owned / led businesses that often go to hell in a hand basket as soon the second generation takes over.

We all collectively held our breath when Steve Jobs died, leaving Apple in a perceived leadership and vision crisis. Who would take over? Was it the beginning of the end for Apple? This situation is characteristic of many family businesses and founder owned ones too. How is leadership passed on? How and when do you start training the second generation for a successful transfer of leadership?

Sulaiman Abdulkadir Al-Muhaidib, chairman of the Saudi Arabian conglomerate, the Al-Muhaidib group (and eldest son of the founder) shared with McKinsey company some of the lessons in leadership shared by their father, how he prepared him and his brothers to take over the business and how they are preparing the third generation to take over the reins. For example, this was one way their father taught them:

After our visits to the traders, my father would always ask us to recount what we heard. Based on that, he would advise us to increase our visits to some stores and reduce visits to others. I realized only later that my father was encouraging us to develop stronger relationships with traders who discussed business and to reduce our exposure to those who were wasting time and gossiping.

On how they’re preparing the third generation:

It’s also important to understand where their passion lies and where they can be successful. We have established a formal structure, through our education and development committee, to capture the younger generation’s interests and capabilities. We administer standardized tests and we speak to their direct managers, for those employed in or outside the business. We also have sessions with them, with siblings available for consultation, and try to get an understanding of where they can be successful and happy as we slowly guide their careers. Sometimes, for example, starting their career in the family business may not be the right thing. In this case, we help them find roles with banks, consulting firms, investment firms, or in companies that operate in industries we are interested in.

The main takeaway from this fascinating read is how the intentionality in preparing the upcoming generation for leadership, can look like on a day-to-day basis. You can read the whole article here.

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Victor Muthoka

Lover of God, children & arts, Apple fanboy, Amazon kindle die hard, closet geek, tech enthusiast, entrepreneur, tree hugger and a voracious reader

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