When your successors have a low Adversity Quotient (AQ), they may struggle to effectively cope with challenges and setbacks. This lack of resilience can lead to risk-averse decision-making, an inability to adapt to changing market conditions, and a reluctance to innovate.

It is a fact that many next-generation family members have a Low Adversity Quotient (AQ). Consequently, when next-generation successors have low AQ, there is a significant risk that the business they inherit will suffer. AQ is crucial in determining how individuals respond to and navigate challenges, setbacks, and uncertainties. When successors lack resilience and adaptability, the business they inherit becomes more vulnerable to various adverse outcomes. Expected ramifications vary, but based on my experience mentoring next-generation leaders in Asia, the most common characteristics of adult children with low AQ are the following: 

a. They struggle to cope with challenges and setbacks

b. Their lack of resilience and risk aversion can hinder decision-making and stifle innovation

c. They may resist change and find it difficult to adapt to evolving market conditions

d. Their leadership effectiveness may suffer, leading to internal conflicts and reduced employee morale

e. Family conflicts might arise, further hindering business operations

f. Without the ability to overcome obstacles and drive growth, the business may stagnate or decline, potentially jeopardizing its long-term viability and success

g. With poor leadership, other stakeholders may eventually lose confidence in the business, affecting its reputation and growth prospects

Tough Times Create Strong Men

The quote "Hard times create strong men, strong men create good times, good times create weak men, and weak men create hard times" serves as a powerful warning about the potential dangers that can arise across generations for family-owned businesses. 

Tough times create strong men: This phase refers to the early stages of the family business when the founders or the first-generation entrepreneurs face numerous challenges and hardships. They must be resilient, innovative, and hardworking to survive, thrive, and successfully grow the business.

Strong men create easy times: As the business becomes successful, the second generation, who grew up witnessing their parents' hard work, may experience a more comfortable and prosperous environment. They benefit from the efforts of the previous generation and often enjoy the fruits of their success without fully understanding the struggles that led to it.

Easy times create weak men: The third generation, having experienced relative ease and abundance, might become complacent and lack the same drive and ambition as the founders. They might not fully appreciate the value of hard work and resourcefulness.

Weak men create tough times: With a weaker work ethic and entrepreneurial spirit in the succeeding generations, the business can face challenges and decline, leading to tough times once again.

Founders/Leaders Must Address this Low AQ

This cycle illustrates how the strength of character, resilience, and determination in the founding generation can lead to success. However, as subsequent generations may lose sight of the hardships that built the business, they might not be as equipped to face challenges, potentially jeopardizing the sustainability of the family business. To break this cycle, it is essential for family businesses to pass down not just the wealth but also the values and work ethic that made the business successful in the first place.

Finally, to manage these predictable challenges, it is crucial for the founders or current business leaders to recognize the next-generation successors' low AQ and take appropriate steps to build their resilience and leadership skills. This may involve advisors or non-family executives mentoring, training, providing exposure to difficult situations, and encouraging a growth mindset.

If you are just like any other business owner — cautious and committed to preserving family traditions, values, and culture for generations — you may be hesitant to let a non-family member join the family business in a C-level role right away. That said, to support you in your business continuity journey and to help identify any potential challenges that may hinder the longevity of your business, including issues like low AQ, I invite you to join our upcoming event on preserving a family business for many generations.

During this event titled "Family Business Continuity: Ensuring a Fail-Proof Succession Plan," you will have the opportunity to learn about strategies and secrets to maintaining a thriving and enduring family business from fellow family business expert, Dr. Josh Baron, successful successors of tycoons, Mr. Kevin Tan and Mr. Lance Gokongwei, and myself.

For reservation, contact Marivi Estrada of ICON Executive Asia at 0977-835-5533, or register at the following link: https://bit.ly/FamilyBusinessContinuity.