Is The Family Business Leader Born Or Made? Follow The Rattle?

[David Spitulnik]

In their November 30 Article in the Wall Street Journal, “Do You Really Want to be a Leader,” Drs. Preston Bottger and Jean-Louis Barsoux suggest that too many people focus on the wrong question when they look at business leaders. Instead of trying to address whether leaders are born or made, they should consider questions relating to individual motivation. Bottger and Barsoux suggest that the right questions for individuals to consider are:

• “How far do you want to go?”
• “What are you willing to invest?”
• “How will you keep it up?”

I suggest that while these questions are appropriate in a general business setting, they do not capture the reality of the family business. In family business situations, often the leaders are literally born into that role, or at least that’s the position the parents may take. The first baby rattle may very well be the key to the executive suite.

Here then, the question is not whether family business leaders are born or made, but rather whether good leaders are born or made. When assessing this question in the context of the family business, we must consider not only the motivations of the next generation leaders, but also the motivations and willingness to invest, in terms of self evaluation, time and money, of the current generation. And over what period of time will the investment be made?

Let’s focus first, then, on some questions for the current generation of leadership.

• Have you discussed your plans for the next generation with them? Are you ready to deal with the issues (and consequences) that their desires and goals may not be the same as yours?
• Are there a clear set of guidelines both for entry into the business as well as for progression up the ladder?
• Are you ready to tell the next generation when they are not measuring up to expectations?
• In the case where there are multiple members of the next generation, is there a clear understanding of what they will need to do to ascend to the top? Have you started to think through possible power sharing arrangements in the event of multiple next gens?
• To the extent that there are members of the next generation who are not or will not be active in the business but will still have an ownership stake, are you working on a governance structure that will allow those driving the business the latitude they need while still providing a framework within which the core values of the family can be maintained?
• Do you have a plan in place for your transition out of the business that both accommodates your wants and needs as well as those who you wish to maintain and build on your legacy?
• Are you willing to invest in coaching for the next generation to help them develop the skills and qualities necessary to lead, as well as the current generation to help them plan for what they will do next?

Obviously, not a simple set of questions, but nonetheless important ones if you want to provide the best opportunity for a successful transition of leadership.

For the next generation, the questions posed by Bottger and Barsoux are indeed good starting points. However, in the context of the family business, they perhaps need further refining.

• How far do the members of the next generation want to go AND are the next generation people willing to perhaps subsume some of their fire for the good of family unity?
• What is the next generation willing to invest in terms of time and money in leadership AND are the next generation leaders willing to share the power with their extended family? Again, over what period of time are the leaders willing to make this investment?
• How will the next generation leaders keep up their intensity AND will the extended family continue to support the activities, both work and non-work related, that enable the next generation to continue leading the charge?

There has been much written about how, why and when family businesses fail. One of the often stated issues is the failure to plan for generational transition of leadership. Therefore, as with any business situation, the next question that should be asked of family business leadership is: “Have you learned from the transition that got you to where you are today and how can you improve on that process to make the transition to the next generation even better?”