Judy Barber

One can predict if an heir will be a successful new head of a family business. The truth is that without a gut level, visceral love of your business, you are not going to manage it well. The best run businesses are led by people who are passionate about what they do. This next generation leader will satisfy at least most of the following:

The heir has earned the respect of the managers, employees, board of directors, outside stakeholders and family.

The successor is a clear choice - so clear a choice, that when anyone raises the name of the successor, everyone says, "Of course, who else could we have chosen? We can sleep well at night knowing that the family is at peace and the company is in good hands."

The successor fits with the strategic needs of the business. This means you're not necessarily choosing a leader who looks like today's CEO; you're choosing a leader who's appropriate for the future of the company.

The heir has the necessary outside experience and business education, in that order. Outside experience in business is an important competitive resource because business is changing quickly and we can learn so much from the way others do business. (I like to see three to five years of outside experience before a family member can ever enter the company.) Outside experience can be gained in a related industry or in an industry that's very different. Business education does not necessarily mean having an MBA. To be an effective business leader one needs periodic installments of education to stay current. An MBA can help greatly if a successor also has drive, common sense and humility.

The ideal successor loves the business and knows it well. One of the biggest myths perpetuated by business schools in the last 30 years is that as long as you're well trained (i.e.: you have an MBA) you can manage any business well. The truth is that without a gut level, visceral love of your business, you are not going to manage it well. The best run businesses are led by people who are passionate about what they do. They like the products and the services that the company sells. They like the people that the company does business with. They love the hours and the daily routine. It's part of their nature. They even love the problems of their business. They couldn't think of anything better they'd rather do.

The successor either commands or has the allies to command control of ownership. If your company and your family are large and you have few other assets to pass to the next generation, it's difficult to pass majority control of the family business to one or sometimes even a few people. But, at the very least, a successor needs to be able to command control of the company through alliances with family members.

The successor has his or her own loyal team in place at the top of the company. This does not mean that the successor has to completely replace all of dad's or mom's executives at the top when she takes over. What it does mean is that the top leadership and employees of the business transfer their loyalty to her.

The successor is willing to take the heat. You can have all of the other factors in this list in place and still not have an heir who wants to lead. Leaders do two things: they stake out a position — and here's the hard part — they take the heat as well as the rewards for that position. If you stake out any position, some people will like it and some people won't, and you are inevitably going to take heat. Leaders not only like taking a position, but are willing to take the heat for what they stand for.

The ideal successor is a boss who is willing to let go. This tends to be, believe it or not, the bigger half of the puzzle for most family businesses. If the senior generation doesn't want to let go, all the great successor qualities are helpful, but will be virtually ineffective.

Developing successors involves preparing the key stakeholders in each of the family business three circles, and working closely with the board of directors, the family council, and top management.

John A. Davis is a leading consultant, researcher and lecturer to family companies throughout the Americas, Europe, Asia and Australia. He is senior lecturer at Harvard Business School where he received his Doctorate in Business Administration. John can be reached at www.ombiconsulting.com.

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