When it comes to handing off their business to a successor, every business owner understands the importance of grooming their successor to take over. And most owners feel they’ve done a good job. But while most owners ensure a successor understands the business, many owners don’t do the leadership and ownership development required to help their successor succeed. In fact, studies show that over 2/3 of successions fail!
Here are three of the common mistakes owners make in developing a successor, along with suggestions on how to correct/overcome them.
BELIEVING THAT BUSINESS KNOWLEDGE IS SUFFICIENT
Most business owners know that a well-groomed successor should have at a working knowledge of operations, sales and marketing, customer service, administration, and finance. But this knowledge, although necessary, is not sufficient if a successor is to effectively lead a company into the future. In addition to having a firm grasp of the mechanics of the business, a successor must become an effective leader, have vision and foresight, think strategically, have good judgment, manage risk, and adopt an owner’s mindset. Each of these capabilities takes time to develop and requires regular coaching and mentoring by the owner and/or a professional executive coach.
In the absence of this development, a successor will be more likely to send the company in a poor direction, thereby jeopardizing future cash flow and profitability.
ALLOWING BLIND SPOTS TO RESTRICT THINKING
It’s very common for an owner (and in fact, an entire organization) to think and approach problem-solving in a certain way. The phenomenon is called “group think” and can even permeate an entire profession. “This is the way we do things around here…”
This pattern creates “blind spots” that prevent new, innovative solutions from being considered. In other words, these blind spots keep people from seeing what they’re missing. If an owner suffers from having too many blind spots (we all have them), he or she may very well pass them along to their successor. “After all, certain solutions have always worked in the past…”
The best way to reveal blind spots and enable creative thinking is to have a fresh pair of eyes and ears examining and challenging current beliefs. Almost always, an outside, unbiased and objective perspective is required.
FOCUSING ON SYMPTOMS RATHER THAN PROBLEMS
Typically, successors have become excellent managers – effectively allocating resources, driving productivity, and adroitly responding to day-to-day demands. However, the role of manager is often one of reacting to issues as they arise and then developing tactics to address them. Leaders, on the other hand, need to think strategically. They need to develop strategies that address problems, rather than to develop tactics that address symptoms.
The reality here is that “solving” a symptom (instead of the underlying problem) usually leads to the creation of more challenges. Additionally, addressing a symptom is simply a band-aid. The problem never goes away. The key to developing a great strategy is to spend time identifying the real problem. A successor needs to learn how to dig deep enough into a situation to uncover the problem. Only by accurately identifying a problem can an effective strategy be developed.
An owner (or a competent executive coach) needs to mentor a successor in how to uncover problems and create sound strategies. This process will help a successor develop critical thinking, sound judgment, and strategic thinking – all required to successfully take a company into the future.
By grooming a successor beyond the mechanics of a business, an owner will increase the likelihood of business continuity, and ensure future cash flow and profitability.
If you’d like help assessing and developing a successor, give us a call. We offer assessments and executive coaching – all designed to help successors succeed. In addition, we work with owners to strategize on how they can best mentor their successor.