Harry couldn’t understand what had gone wrong. He thought he had groomed the perfect team to take the reins of his biotechnology company – ready to step in and march the company forward just like he had done for the past 35 years.
However, ever since he returned from his three week vacation, his team was a bit jittery, which only seemed to get worse when he was around. Harry had worked with a variety of consultants and experts over a period of time and tried to implement the various suggestions they had given him. But in the end, all he had was a “Junk Drawer” Exit Plan and an apparently frustrated team that couldn’t understand the direction he was setting.*
Baby boomer Harry had failed to understand the X Factor in Succession Planning. In a world of Groupon, GoNabit, BRIC, Twournal, Nowism, Flash Sales, Foursquare and Off And Away, Harry was having a hard time even carrying on a conversation with his team, much less deciding who among them could best take over leadership.
Research shows there are 12 principal reasons business owner transitions, successions and exits fail. Each of these reasons impacts the company’s longevity and ongoing annual profitability as well as an owner’s transition and future exit results. This article addresses the eighth of these 12 reasons:
Reason #8. No Clear Successor. You have failed to develop or select the right successor to take the reins when you are ready to move on to the second half of your life.
As Baby Boomer business owners come to grips with the notion of passing their company forward to the next generation of leaders, it becomes important to understand Generation X – their belief system and world view. By examining the presumptions that Gen X has about life, relationships and responsibility, Boomer executives can attract and keep the right team members and select the right successor, as well as prepare themselves for the organizational changes that will likely occur as the succession process unfolds.
This is not a warning, exactly. It is more like the opening of a window that has been closed for a long time. If the succession with Gen X unfolds optimally, a new view of future possibilities will emerge. Your company’s product line may become more relevant and competitive. A new sensitivity to environmental responsibility, community and technology may surface. Your business model may change and develop. And this is just the beginning.
The generational differences between the business owner and his/her Gen X successor are significant:
Baby Boomers (born between 1945 and 1964) are achievement-oriented, career-focused and responsible. They care about self-discovery, welcome challenging projects and desire to make a difference with their lives. They fancy themselves as individualistic innovators who broke free from the societal assumptions that defined the “Bob Hope-Korean War” generation that preceded them.
Generation X (born between 1965 and 1981) values freedom and autonomy. They are technologically adept, small group oriented and avoid jobs with structured work hours. They hate being micro-managed. Unlike the optimistic Boomers, they are cynical about their future. Because so many come from divorced homes, they assume impermanence is the norm. Insecurity is their theme. Generation Xers work to live rather than live to work.
Here are a few of the ways Gen X successors – and their management teams – will likely vary from an organization driven by Baby Boomer executives:
“Why” Before “What”: The Desire For Meaning
Generation X workers have seen their parents strive for advancement only to lose their jobs for what seem like meaningless reasons. Their parents’ career drive, in retrospect, seems pointless. As a result, they may balk at supporting the latest corporate initiative, even if it will serve customers. They appear less respectful of rules and uncommitted to tasks that hold little meaning for them. They are not apathetic, exactly; rather, they simply want a “reason to care.” Boomer execs, used to command and control leadership tactics, will be surprised at the amount of time their Gen X successors will spend leading thoughtful discussions with employees about the meaning of their work, asking questions like:
“What do you most need from your work?”
“When did you last feel energized by your work?”
“What would you miss if you left this job?”
Although these discussions take valuable time, employees (many of whom will be Gen Y employees) will be more prone to engage in value-creating activities that are shaped by proactive behavior, creativity and passion.
Open-Office Organizations And “Loose-Tight” Company Structure
The Boomer executive who transfers his/her firm to a Generation X successor and then leaves for a year-long vacation will see a different company upon returning.
In short, the company will likely have grown through a series of alliances even though the physical corporate facility has shrunk. 30% to 50% of all employees may be working out of their homes, using technology to engage customers or colleagues.
Fun At the Office: Employee Engagement Magnetizes Customers
Most Boomer-led companies rely on procedural routine to maximize efficiency. But office routine can also foster a dry, spiritless culture that underutilizes employee talent, “disengaging” workers from truly connecting with customers in a non-routine way – which impacts loyalty.
Gen X successors will emulate the examples provided by Zappos and Google, where employees celebrate their individuality and foster informal rituals among themselves that make work fun. Duty, learning and passion will be mixed into a profitable elixir.
So, What Should Harry Do?
Harry thought he had two or three key employees who could succeed him. How could he know how to choose the right Gen X successor? And how could he be sure they stuck with him?
To start with, two things will help you identify the right Gen X successor with minimum fuss:
- Ability to understand your company’s multifaceted business model and envision how it can be improved;
- Ability to communicate a clear point of view in a group setting as well as listen thoughtfully to other workshop participants, weaving together disparate opinions.
It takes three to four hours to examine the NINE BUILDING BLOCKS IN YOUR BUSINESS MODEL and work through various strategic planning scenarios interactively. As one potential Gen X successor after another gets involved in the dialogue, it will become clear who has the best grasp of what the company really is and what it can become.
My full White Paper and keynote presentation on this topic is called “The X Factor In Succession Planning – What Baby Boomers Must Understand Before Transferring Their Companies to Generation X”. If you would like a copy or to schedule a keynote or workshop for your organization or business, please call or email me.
*This Newsletter contains no information that can be used to identify a specific client. This illustration was not the business in which our specific client was engaged.
Next Newsletter – How Irene’s “Wishes Are Horses” Exit Plan left her and her family without a horse to ride.