Just because you’re ready to take over the family business doesn’t mean your predecessors are ready to turn it over to you. That is the message I have delivered to more than one successor; most of the time it’s because the successor isn’t trained and not qualified. But, sometimes the reason the transition doesn’t take place has nothing to do with the successor’s training; sometimes it just because the successor doesn’t know how to be a successful successor. Here are twelve rules for the successor.
The General’s was having a staff meeting. The Lieutenant on the back row spoke, “Excuse me, General. But what you are saying is not exactly the way I see it. I think you should . . .” The General nodded and continued. A few minutes later the Lieutenant spoke again. “Excuse me, General. The idea is good but you’re ignoring the new technology available to us. I think you should . . .” The General was fuming underneath the surface. A few moments later, the inevitable happened. The Lieutenant spoke again. The General blew.
“Lieutenant, why must you disagree with everything I say?” “Well,” the Lieutenant said confidently, “I want to get ahead, sir. And I know you didn’t get where you are today by agreeing with your superiors. Fact is I know you have had your own ideas and spoke your mind.” “Yes,” the General responded with his voice lowered, “I didn’t get to be a General without having my own views, expressing my own points and confidently discussing issues.” “See, that’s my point.” the Lieutenant said smugly. The General continued, “But, that’s sure as hell how I made Captain, Lieutenant.”
Just because the successor is trained and capable of taking on additional responsibility, if not the business, doesn’t mean it is time.
Before you can be a good General, you have to be a good enough Lieutenant to be promoted to Captain. And that boils down to the predecessor’s confidence in the successor. Instead of being the impetuous Lieutenant, be a good Vice President.
Yea, but some would insist that my concept is closely akin to “sucking up” and why would anyone want to do that? Well, does the successor have $500,000 to pay the predecessor? That’s what the business is worth. The answer is no. The answer is always no. However, if the answer were yes, then pay the predecessor the $500,000, take over the business and don’t read any further. You don’t need to know how to suck up, er be a successful successor.
If, however, you are trying to get the predecessor to loan you $500,000 so you may purchase the business from them over time and pay them back with the proceeds of the business, then you need to know how to be a successful successor.
Yea, I know that the predecessor (often parents) didn’t know much about business when they started the business. But no one gave them a business doing $1 million in sales, with ten workers whose families’ livelihood depended upon the skills of the person running the business either.
They risk everything and perhaps that was because they didn’t have anything to lose at the time, but they took the risk and succeeded. You, as successor, have that option open to you. If you want to go do it, have at it. But, don’t come whining that your parents ought to give you their business because you happened to pop up in the lucky gene pool. No, you’ll have to do it the old fashioned way – earn the opportunity to succeed by first becoming a successful successor.
In an effort to make the time the successor serves as the understudy happier and more productive, I offer the following sucking up concepts.
1. The business leader must select, train and install their successors in their lifetime (Dr. León Danco, Inside the Family Business, Center for Family Business, Cleveland, Ohio). It is not enough for you to just have been born into the family (lucky “gene pool”).
It is up to you to prepare yourself so you are the most logical person to be selected. The predecessor must train, but you must be willing to be trained. If not, the leader must select someone else or sell the business to an outsider.
2. There can be but one leader at a time. A leader cannot retire in place. A leader does not prepare their successor by stepping aside yet staying at the helm. This frustrates successors and infuriates predecessors. This is a rule that is often broken.
This conduct can lead to no one directing the business and no one taking responsibility. The ship is adrift and the pilot is teaching the first mate a lesson by running the ship ashore. The leader (king) must remain leader (king) until the next leader (king) takes the helm. To do less is to abdicate responsibility.
Or, this conduct often leads to you, the successor, pretending to run the business. “I do everything but the checkbook. Dad still does that.” This is not preparation. This is “playing business.” Further, giving you checkbook responsibility and then taking it back as punishment is a sure way to kill a transition.
3. You cannot make decisions for the predecessor regardless of the righteousness of your position and regardless of what you know that the predecessor doesn’t. The predecessor is in charge until you are in charge. Until then, you advise and assist. One person and one person only can run a business.
You must understand the concept of under command. You are under the command of the predecessor. You would be wise in beginning ideas, changes and solutions with the phrase, “With your permission…”
4. It is impossible for you to join the business without “working” for the predecessor. You cannot “share” power or do part of a function. It is only possible for you to be assigned a real job and then to do it to the best of your ability like everyone else.
5. The leader is responsible for results. Therefore, the leader is responsible for returning to the family MORE money and MORE time than they would have otherwise. And if we are not doing that, then we need to fix it or we need to get a real job. You must be part of this performance-oriented dynamic and not be a drain on performance.
6. The leader (predecessor) assigns authority to everyone, including you. You have no more authority than what the leader assigns. Your first duty is to assume responsibilities of your job. And do so with enthusiasm, loyalty and eagerness. You do not have any more duties or authority until assigned by the leader.
7. You gain recognition and authority from assuming responsibilities of your job. If you do not step up to the responsibilities, you will never receive more authority or responsibility. It is in this gradual earning of authority that the successor gains the confidence of the predecessor.
8. It is as important to earn the confidence and acceptance of other workers as well. Assuming responsibilities not yet assigned will be met with resentment, confusion and conflict from the other workers as well as the predecessor.
9. You MUST know more than the predecessor knows about different things. You are probably more academically qualified than the predecessor. But, that does not mean you know what the predecessor knows. Knowledge of things is not enough to allow you to gain authority. You gain confidence of the predecessor by learning what the predecessor knows and practicing their work ethic.
10. The predecessor sets the work ethic. It is not up to the predecessor to accommodate you; rather it is up to you to adopt the work ethic of the predecessor.
You are not able to change the work ethic successfully until you adopt and learn the old work ethic. If the predecessor comes in early, you come in early. If the predecessor works on weekends, then you work on weekends. These tasks are not entirely necessary to run the business, but these tasks are necessary to gain the confidence of the predecessor.
11. You must have technical knowledge gained by serving in various functions (jobs) of the business. While doing these jobs, you have no more authority than anyone else serving in these jobs. A leader who does not understand the work of those led remains a poor leader forever.
The leader must have technical competence in order to successfully lead.
12. It is your job to accommodate the predecessor; it is not the predecessor’s job to please you.
And there they are – twelve concepts for the successor to consider. I don’t think they can be ignored without adverse consequence.
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Yes, we work with businesses undergoing an internal transition of ownership either among family members or people who work in the business and welcome your inquiries. Message me at tom@crouser.com. I also tweet business topics from @TomCrouser and find me on Facebook by searching for “Business with Tom Crouser.” Also connect with me at LinkedIn.
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