I have spent the last year learning about the world of family business after taking on the role of Course Director for KPMG’s Family Business Leadership Academy. Although I’ve worked with many family-owned businesses in my career in deals and consulting, this year has been an immersive experience. As I look back on 2022, a few of the lessons have really stuck with me. My top five lessons from 2022 will follow, but first an acknowledgment:
I have met hundreds of leaders through events, one-to-one meetings and interviews. These lessons were shared freely by wonderful and generous leaders. Thank you for your wisdom!
Successful succession is not passive
Succession strictly means one following another. That’s not the same as transmission – the passing of the mantle of leadership. The latter is a conscious action and preparing for that can take time. It can take ten years to plan an effective succession, preparing the next-generation leader and, as importantly, the organisation they will lead, its customers and suppliers. I have heard stories of successful transitions but the ones that stick with me vividly are the ones that didn’t work. In which both family and business feel the aftershocks for years, or longer.
I am working on several large change programmes and I reflect on the effort that goes into de-risking the change. It’s enormous! Ramp down periods, grey-out times, data migration, rehearsals. Why should we expect the generational leadership change to deserve less effort?
Backing next generation leaders is a measured risk, not speculation
At a recent event we were asked: “Which is investment and which is speculation? Giving your granddaughter a significant sum to invest in her personal project or giving it to an investment bank to generate returns?”
Their logic was that, win or lose, your granddaughter will learn a lot and, if she will run the business one day, that may well turn out to make multiples of the initial outlay in decades to come. The current generation of leaders readily admit to making mistakes, especially if they learned from them, preventing more serious setbacks later. Isn’t it important to expose the next generation to the valuable opportunity of mistakes? Or lessons as I prefer to call them.
Leadership is a mix of the old and the new
Post pandemic both individuals and businesses have gone through a "shock" which has caused them to question the purpose of everything so they need a guide to take them on a transformational journey. As future leaders develop their leadership style, some of what previous generations can pass on is timeless; but not all. People are still people and lots of things remain constant; judgment, attitude to risk, commitment to the long term, knowing who to trust. Other things have changed unrecognisably; technology, the ESG agenda, labour market dynamics. Being an effective transformation leader means knowing which advice is timeless and what needs a fresh take to be relevant. It’s an important judgment call for next generation leaders.
Find out what others are reading
This was a real surprise. One of my favourite round tables this year was at the Campden Wealth London event where an eclectic group of eight people from at least three continents found ourselves situated together. No question posed, no content set. “Talk amongst yourselves” if you will. But rather than comment on travel plans or lunch one participant asked what books were on our bedside table. The discussion that followed on everything from Eastern philosophy, meditation, and cognitive psychology. And a bit of Jack Reacher (everyone needs to relax sometimes). It was rich, enlightening and surprisingly practical. Some of the books described will find their way onto the Leadership Academy Book Club where we will ask our learners to reflect on them and how they can be applied to improve their leadership ability.
Create a network of trusted peers
It’s lonely at the top. And particularly lonely for Family Business leaders. Especially for emotive subjects such as succession. You can’t always talk about Mum or Dad with colleagues who work for them. And while I might look to my family for support after a bad day at work, that doesn’t always work, particularly if they are the subject of a tough shift! So, who do family business leaders turn to? KPMG’s research shows that the next most popular sources of support are other family business leaders and external advisors. It’s important to cultivate networks of people you can turn to outside those who may be conflicted.
Putting it all together – KPMG’s Family Business Leadership Academy
As course director for KPMG’s Family Business Leadership Academy, I have tried to weave that learning into the design of our programme. It’s a course designed for next-generation leaders to learn actively through a mix of face to face and on-demand learning among a group of similar peers.
Designed to fit around busy lives, it offers the next generation exposure to the latest thinking, an experienced KPMG partner mentor and an opportunity to be supported through a significant project. And, thinking about loneliness - we hope that the relationships our next generation leaders form on the programme will last a lifetime, providing a lasting network of peers to turn to for support.
And as I talk to sponsoring organisations it is interesting to observe how they plan to use that support. Some have decided to bank the benefit and de-risk succession. Others have decided to “spend” the risk reduction or, as they put it, “perhaps with all that support we can afford to be bolder and scope out a more ambitious project for our next generation leader”.
So, as we start 2023, what lessons have you learned in 2022, and what are your New Year’s Resolutions? Even if succession is some way off, is it time to start thinking about it? And if it’s coming soon (or even overdue) its worth reflecting on whether you’ve created the conditions for a smooth transfer.