The generational transition: the American lesson

Often the managerial theory constructed for large American companies does not fit well with European family businesses, and not infrequently it turns out that the latter's way of doing things is better, even if less 'publicised'. familyandtrends believes that there is nonetheless much to be learned, especially since the debate in the USA is not intoxicated by prejudices of nepotism and selfishness that hover over family capitalism, especially in Italy. Let us see what questions the American academy is asking that may be of interest to Italian entrepreneurs.

The first: when to start? The succession process should be started early because it lasts a long time and when one is in a position of strength and there are no immediate needs so that one can raise successors (even more than one) with patience and authority. There may be crisis successions, but these are generated by events that cannot be planned and must be dealt with by means of a 'crisis protocol' that everyone must have ready and kept reserved in a drawer.

The second: where to go? Nowhere says the US academy, the longer the current leader stays the better, when he leaves there is a risk of creating a cultural and strategic vacuum. Whenever possible, it is better to create a period of shadowing between the two leaders. This is why to ask the question in good time: Cook of Apple is 65 years old and in office for more than 14, Huang of Nvidia 62 and in office for more than 32 (!) years, Nadella of Microsoft 58 and in office for more than 11, Pichai of Alphabet/Google 53 and in office for more than 16. Once the successor is in office, the assumption that the predecessor will leave the company is the least advisable (much to the chagrin of advocates of the 'managerialisation' of family businesses). If he already is and intends to leave office, he can become a director without delegated authority; Bill Gates, Larry Page and Sergey Brin and 15% of the founders of the S&P500 have done so. Remaining as an advisor does not diminish the authority of the successor, it increases the total authority of the family members and ensures continuity and wisdom. Another option is for the predecessor to have a functional role in a specific area, e.g. research, product development, relations with external entities, etc.: Larry Ellison at Oracle remained CTO, Parker Harris of Salesforce became CTO of Slack, to improve integration.

The third: what to leave? Tactical and operational activities and decision-making to be more strategic and advise rather than decide. From a psychological point of view, the succession process changes identity, so it is natural that it is a psychologically difficult and 'irregular' process: none of those involved should be surprised. The evolution must lead the person leaving to a role that satisfies his or her passions and desires, that serves the needs of the company and is synergic with the successor: if there is a conflict between these three areas, the needs of the company take priority.

The fourth: how to leave? Step by step, since it is a process and not an event, it is a series of small changes that take time and not a disruptive event (except for crisis successions for which, as mentioned, a ready-made protocol is needed). The first part of the process is to raise one or more potential successors so that they are ready to start when they are mature enough to have learned but not old enough to have a long tenure in office ahead of them. The second part of the process, where the predecessor, if he or she wishes to remain in a different role, must have a system in place to ensure its success with time for review and comparison, a network of authoritative and trusted people to ensure different points of view, feedback and alignment as well as to intervene when the process is in danger of jamming (this function can be performed by good board members, but not only), a series of regular meetings for feedback and recalibration to ensure minor adjustments as deemed appropriate.