Bridging the Generation Gap

A business, as an entity, can continue on in perpetuity.  However, the transition that takes place at the end of a key stakeholder’s career introduces a myriad of challenges. Although current key stakeholders drive the succession planning process, those with the most at stake are their successors, who may have less of a say in decision-making. Preparing a seamless transition can be particularly complex in private, closely-held family businesses where family dynamics can interfere with business decisions, skew individual perspective and otherwise impact the sustainability of the business.

A perfect parallel is a relay race where one generation passes the baton to the next, with success measured by the collective performance of all participants. Any breakdown or stumble along the way restricts the business from realizing its true potential. 

Balancing the “old” versus the “new” is one challenge many successors encounter and must swiftly navigate to stay on track. Understanding the existing business fundamentals is critical to bridging the different generational perspectives as transparency regarding the succession plan at all levels. This open collaboration cultivates commitment and dedication to the business, while integrating individual contributions and fresh, invigorating thinking at the various generational levels. 

Case Studies

A third generation auto parts distributor had expanded from one location under the founder to four locations. Upon entering the business, the founder’s grandson and now vice president took the lead in introducing technology into the everyday business processes. This task had seemed daunting for the older generations, although they knew times were changing rapidly and in order to remain competitive they would need to embrace the new technology. With additional insight gained from his degree in business, the grandson was able to improve efficiency by streamlining processes, which allowed the entity to do significantly more volume without increasing headcount. Mobile device capabilities further provided the executives with the freedom to access information on demand from anywhere.

 Another motivated successor recently entered his family’s business immediately after college as part of the company’s product development team. He, his brothers and cousins are part of a third generation looking to take the specialty food business their grandmother started in her kitchen, which now generates $200 million of revenue globally,  to the next level. 

This individual received a degree in architecture, while his brothers and cousins are pursuing engineering and food science degrees. Although architecture is seemingly unrelated to the food business, he suggests that concepts learned in architecture allow him to uniquely visualize product development and business strategy. These kinds of unique perspectives foster innovation and keep traditional businesses positioned ahead of the changing demands of the business world. 

Overcoming Obstacles

Family businesses also face a particular hurdle in the form of perceived entitlement. Whether the source is non-family member employees, customers, or vendors, there can be a sense that family-member successors have not earned their position. Some sound advice provided by the specialty food successor is to “not to worry about the perceptions you cannot control. Be humble and simply approach each task with passion and hard work to build a well-rounded understanding of the business. This will position you as a valuable asset to the business plan and make you well respected by others.” 

The auto parts vice president added that at some point there is a transition from working side-by-side with the employees and being their friend to being their boss. He started in the warehouse sweeping floors, gradually moved up to customer service and then sales before becoming vice president. He attributes the hard work he put in along the way as key to earning the respect of the employees. His advice for other successors is “To be the hardest working person at the business and never forget that the reason you’re successful is because of your people – treat them with respect and you will get the same in return.” 

The younger generation will define the legacy of any existing family business. They must be cultivated and their innovation embraced. 

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