Opinion: Whether you’re a small business or a head of state, choosing the right leader is crucial

Continuity is the keyword when planning for the future, says Matthew Lewis

As we have just witnessed in Saudi Arabia, good succession planning can make a huge difference to the direction and leadership of a nation, government or organisation. What we are currently seeing is a shift in the leadership style of the next generation of family businesses.

No matter where an organisation is located, the principles of succession planning should be the same, even though the motivation and processes between corporations and private family business are often radically different.

Nevertheless, whether it is the future leadership of an Emir for a state, a CEO of a corporation or the patriarch of a family business, there are strong principles that can be applied to each scenario.

Unfortunately, this is often a critical but overlooked element of corporate or family business in the region, and is an ever-increasing feature of family disputes, corporate infighting and shareholder discord. As Jack Welch, ex-CEO of General Electric, famously said: “Choosing a successor is the most important business decision you will ever make.”

The key word is continuity, which privately owned organisations often overlook. They rarely evaluate the negative impact that uncertainty can bring when the overall direction, leadership and future of a business is unclear. Often, the cost of no succession planning to an organisation is hidden and only reveals itself when it’s least expected.

Statistics show that second to third generation business survival is at most risk in the period of leadership transition, and it’s great to see recognition of this lately. Prince Al Waleed bin Talal has clearly stated: “The lesson is that, number one, this management has to be at the highest class possible. Number two, they have to have a succession plan.”

What we have to expect, and respect, is that the next generation of leaders will have a very different perspective on the future, and the running of the business. This will affect both the structure, direction and stability of the organisation and may require that it becomes more dynamic, adaptable and agile. This may mean focusing on new sectors, like the service sector, versus the traditional product and consumer arenas.

What is certain is that the world is changing fast and in directions we never imagined, so family enterprises should take heed of their ruler’s examples and ensure they are well prepared and have planned ahead for every leadership change eventuality, from Emir to CEO.

Matthew Lewis is a partner with Boyden Middle East and a senior executive search, leadership and executive coaching professional advising family groups and their talent at senior executive level. He is a CEO Coach with N3 Executive Coaching.