Life in the Fast Lane: Handing-Off Your Business Olympic-Style
By Andrew J. Birol, President, Birol Growth Consulting
In Olympic track and field, the world's best runners first compete individually and then, on the Games' last day, race together as members of their nation's relay teams. Regardless of the raw speed of most teams, victory usually goes to the quartet most practiced in the intricate ballet of a flawless handoff.
Since the baton must change hands at top speed inside a congested “fly zone,” mistakes are spectacular and costly. Many world record holders have left the track in defeat after they dropped the baton or collided with each other. Why? They simply did not practice their handoffs.
Although business succession usually involves just two team players, the parallels to a relay race are striking. In both cases, the forerunner and successor must jointly prepare for the handoff or face joint defeat. In last month's article Preparing for the Handoff I outlined how both generations should prepare. Now I will describe how two owners can best exchange power, control, and leadership.
- Despite both father and son agreeing that an outside, interim president is necessary, the son sabotages the new leader's efforts by suddenly moving into his father's office and making arbitrary financial moves.
- After promising a chosen successor she can manage with a free hand, the new leader is derailed by family members second-guessing her critical decisions while demanding jobs for unqualified offspring.
- Unresolved personal issues plague an otherwise clear-cut family transition, paralyzing the firm's ability to respond to outside threats and opportunities, and then plunging the business into disarray.
With so much already in place and even more at stake, even well-planned management successions can run off track unless leaders remain vigilant. Three common flaws are usually behind a bad handoff.
Three Ways to Blow A Business Succession Handoff
- Place your ego in front of your business. If either parent or child uses business position and power for personal gain during business transition, trust is usually the first casualty, followed quickly by declining business performance. If you are reaching for or handing over the baton, this is no time for grandstanding. Keep your attention focused on the transition and take your prize home later.
- Change nothing except your titles and expect business as usual. In these volatile times, most businesses are facing necessary changes during the changing of the guard. When two leaders accomplish nothing more meaningful than getting new business cards, the successor is missing an opportunity to implement new ideas. Just as great runners accelerate as they grasp the baton from their teammate, new leaders should make quick and decisive moves to right wrongs and put their business back in the lead.
- Pursue short-term opportunities instead of long-term value. Incumbent and emerging leaders often lose perspective during their succession. While no one wants to lose momentum in the short run, any business that lasts more than a generation is in it for the long run. Neither the outgoing nor the incoming leader should attempt to cash out or goose results by sacrificing the firm's brand or future. Every new leader, especially those inheriting sick companies, comes in with a clean personal slate. Those who think in terms of years rather than months do better.
Letting Go of The Baton
There is much both the leader and successor can do to help ensure a stable, confident handoff. The point at which the two leaders “hand-off the baton” is where communication of their common goal will determine continuity of purpose and strength.
As the retiring leader, when the time is up for transferring power to another leader, these three steps will ease the transition:
- Do your job, and do whatever it takes. Your successor is well trained. You have agreed on an ironclad schedule. But your job is not over. Whatever business problems you are entrusting to him or her must be clearly understood. You must still communicate these issues and ensure there are no surprises. If contingencies are likely, define them clearly. Keep your ego and your mortality out of the picture. The more selfless and humble the outgoing leader is, the more he or she will be recognized for moving past success and into true significance. Letting go quietly and with dignity, according to plans, allows a retiring leader to leave while still at the top of his game.
- Exert authority and take responsibility. Your final decision is to turn over complete authority to the one whom you have given responsibility. When others look to you for direction, direct them to your successor. Take responsibility for the past but not the present. Leave that to your successor. Turn over the visible signs of leadership. These certainly include spending authority, public pronouncements, and all hiring and firing.
- Transfer assets and liabilities and don't look back. Finally and ultimately, it is time to turn over the keys to your kingdom. As you do this, bestow the good along with the bad, the wealth along with the debt. Barring a last minute stumble by your offspring, this is your final step in your race. Take it with grace and style and without remorse.
Taking Hold of The Baton
The new leader also has to adjust stride during the transition:
- Do your job and do whatever it takes. As the moment you have prepared for most of your life approaches, initiate your leadership with a quiet, observational approach and keep your ego in check. By its very nature, succession implies that your parent is mortal and your maturity is under scrutiny. These are humbling times. Show grace, patience and a steady hand. Your employees, vendors, and customers will be watching with every wish for your success as long as you are doing your part.
- Exert authority and take responsibility. There is an old adage; you start doing a job before you are told you have it. With your parent's trust and guidance, you should be assuming more and more duties. Now when problems arise, you can take direct responsibility for solving them. And you also have the luxury of not having to discuss it with a boss. When you do go back to a parent to discuss problems, you are more likely to be asking for forgiveness rather than permission for something. If your forerunner starts coming into work less often and he or she is pleased when he or she does, take that as a sign that you are on the right track.
- Transfer assets and liabilities and don't look back. When your parent takes this final step, you will take on all of the good with all of the bad. That's a lot of responsibility. Just as your forbearers did before you, be willing to risk as much as you inherit. Your business will probably need sprucing up, so invest time, money, and energy to make it grow. As you do this, you'll put your own skin in the game and make the business truly yours.
Racing through the succession fly zone is just as harrowing as watching a leading Olympic runner pass the baton on to the next leg of the race. As the crowd holds its collective breath, the next portion of the race is all up to those two runners. For your business, the spectators for your succession are your employees, vendors, and customers. They are all anticipating a successful outcome. As the leader straining to hand the baton off to your successor, your job does not end as you let go any more than it does for the follower for whom the race has just begun. In part three in this series we will explore that issue, so stay tuned to see who wins.
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© Copyrighted by Andrew J. Birol, President of Birol Growth Consulting, who helps owners grow their businesses by growing their Best and Highest Use ®. Andy can be reached at (412) 973-2080, by email at email@example.com, or on the web at www.andybirol.com.