The leadership future had been planned and everything was looking good for ABC company when tragedy struck. JR (not his real name), the heir apparent was killed in a vehicular accident while surveying sites for a possible manufacturing plant. ABC company is a family enterprise with marketing presence in several countries in the Asia-pacific region. It was founded more than 40 years ago by John Sr. Shortly after JR’s death, the embattled father received word that the distribution venture that was JR’s brainchild, had been turned down by creditor banks. The venture was a critical project as it was set up to expand the portfolio and future direction of the company. With its rejection, the game plans started to crumble.
John had the succession planned years before, albeit done verbally, having appointed his talented son JR to be his successor five years earlier. It was a succession straight out of a playbook that allowed John to gradually ease into retirement but still providing oversight on major decisions. With JR’s untimely demise being felt in the organization, John became increasingly distressed and despondent. The company was also facing a dilemma as to who would assume JR's role. Without the 42-year-old CEO who had been carefully developed for the job over many years, what should the company do? The siblings of JR were also active in the business, managing their respective operating units but they were nowhere near JR’s drive and leadership skills.
What can we learn from this case?
- In my experience advising family firms in Asia, it is quite common for any founder or key business leader to invest all efforts into a single successor—usually the eldest son—and not developing a broader capacity or leadership or a deeper leadership pipeline. It is dangerous to bet on one offspring
- The other common problem is the inability to activate a dormant or inactive succession process when there is a crisis
- Succession surprises are not limited to the sudden demise of the incumbent next-generation CEO. Why did no one ask the obvious question in advance: What would happen if JR died? If JR’s behavior suddenly changed or he turned to vices, etc. A more detailed documented scenario planning would have helped foresee this particular form of turnover trauma.
- Would it be wise to put in place an interim team of professionals to help fill the leadership void left by JR?
- Or should the founder start training the younger offspring to assume a leadership role even if they pale in comparison to their deceased older sibling?
Unfortunately, surprises are inevitable. John was on the right track having trained JR early and initiated the sharing of power that allowed his son to assume greater responsibilities. It was just heartbreaking that JR died. But for many founders that I have dealt with, many of them find it hard to come to terms with their own mortality. They continue to struggle and recognize the time when they feel they are no longer the best person to run the company. In short, they stubbornly refuse to let go of power. As they delay the transition process, the next generation leaders remain inadequately trained to take over the business, thus, resulting in failure to continue the business. So when any anointed family member suddenly dies or becomes incapacitated or announces that he or she is stepping back to pursue other pursuits, effective immediately, it could be one of those major surprises that can create incredible turmoil. And when the unexpected happens to the one slotted to assume the role of a leader in the future, his departure will inevitably create a domino-like effect that will leave leadership gaps all along that succession line.