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Re: Succession - The entrepreneur's dilemma

How do you move on when you’re ready? What do you do when the organization you’ve led is near a value realization event? Or when you need other – greener – pastures?

Entrepreneurs – those who’ve led the kind of mid-market growth vehicles we specialize in – face a unique generational challenge.

At some point, you want to leave. The issue is this: who will take over and lead the charge from here? It’s not abstract – the value you are going to be paid for the entity depends on many things

• The value of the customers and franchises built
• The market share owned by the company
• The assets (many oil and gas takeovers are only for assets)
• The consistent earnings the purchaser can expect

The last – really the core discussion - is rooted in the capable organization put in the saddle before you go. Because if you want to leave you won’t be here to drive on, unless you want to work for someone else. The capable people give the numbers top spin. It means the purchaser is getting more than a collection of stuff that he has to organize (and staff).

Even for non-profits, having the entity collapse behind a departing leader is hardly the legacy you want to leave.

But many leaders find this hard – really hard – as hard as anything you’ve attempted so far. Many now report persistent difficulty. Difficulty with:

• Getting people to carry the ball without constant goading
• Workers hiding out in their turf, executing their narrow specialties and waiting for senior direction
• Managers having to be reminded what the company is really focused on or stands for
• People downline with lack of imagination and initiative when left to themselves.

Entrepreneurs are a special breed. When no one else will step forward to grasp opportunity, you will. When there is doubt or ambiguity, you’ll set ‘em straight. A decision required? You’ll make it! Enterprises move forward as far as their reach and energy extend. And often no further….

Like any other strength, these muscles, overdeveloped and overused, become a liability. When you want to leave – and capture value or leave a legacy of organizational strength – others have to deliver. – Hence the succession dilemma.

I know – there’s a financial deal to be done. But if your folks are accustomed to sitting back, letting you drive, you need to look after that or – no premium, no legacy.

So if you are:

• Consistently having to intervene to set things right,
• Finding the thorny problems somehow end up on your desk,
• Disappointed that your team cannot perform autonomously
• Frustrated that “they don’t think like me!”

then it’s time to take stock. Those complaints – frequently expressed to me as “pet peeves” – are the signs that you are keeping yourself from your next developmental challenge.

You need to build the team of tomorrow – a true team that can operate the company just fine without you. A team that can:

• Act on its own initiative – and do it right
• Solve difficult issues without mediation
• Foresee upcoming challenges
• Take bold action

The leader who does not yet have that team – one that can stand on its own, has not yet created the full enterprise. And the full value / legacy will not be there until they do.

What does it take?

• Realization. Realization that it has not been done, that it can be done and should be done
• The right people on the bus. Jim Collins was right – in spades!
• A succession plan:
  • The future org chart
  • Assessments of the incumbents against the mandates of the future roles
  • Gap analysis
  • Tracking and routing your next generation through developmental work and training
  • Resourcing the people power that can’t be found internally
• Oh yeah. Executing the succession plan! Thinking about it does not execute it!

Our work has come to be substantially centered on succession. Leaving capability behind is personal work, highly President focused and moving out to the team from that office. So it can’t be delegated - until the framework is in place and until the leader has been coached to make the necessary personal style adjustments that will let the team come through. That’s our work – creating the framework and sympathetically but effectively coaching the leader’s adjustment.

So when you’re ready…

Doug Bouey

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