Running a family business is no walk in the park. The family dinners or holiday gatherings could be mistaken for board room meetings, with topics of conversation jumping between family matters and minute business topics. Discussions get further complicated when it comes time for a transition of ownership as the first generation of family businesses starts to look towards retirement and relinquishing control of day-to-day activities. Who will step in to lead the company? A number of succession issues arise ranging from siblings quarreling about how to divide up the business and inheritance to instability within the organization as employees wonder what their future holds. Yet, so many family owned businesses don’t have a solid plan.
Problems in Succession Planning in Family Business
When you start to peel back the layers, the emotions and history of a family are always at the center. Ed Pendergast, a board executive who has sat on eight family boards and advised many more family businesses, often sees one or more family members feel that they are not being treated fairly by other family members. Whether it’s viewed as a grudge or just selective memory, these power dynamics among the next generation in line can cause headaches for the business.
But surprisingly, Pendergast doesn’t view the second generation as the biggest challenge: “It’s actually the third generation with the hardest road ahead,” he says. “The first generation runs the business and passes it on to the second generation. And then by the time the second is trying to figure out who to pass it on to, family member A has three kids, family member B has two, and family member C has none. Who’s going to be in the business? It becomes much more complex the more people are involved.”
The numbers show just how difficult this transition is. Approximately 12% of family-owned businesses are passed down successfully to a third generation and only 3% to a fourth or beyond.
So how can families avoid the common pitfalls in succession planning, and instead focus on best practices?
It took just one leaked password to breach Colonial Pipeline in the May 2021 cyberattack. A few months earlier, in March, more than 30,000 U.S. organizations were hit by hackers who used Microsoft Exchange to gain access to email accounts. In June a cyberattack took down the IT systems at JBS meat processing plant, resulting in the temporary closure of all nine of its U.S. locations.
These headlines are just a fraction of the recent cyberattacks on companies. And experts say we’re in for a long, vulnerable ride. According to Cybercrime Magazine, ransomware attacks against businesses will occur every 11 seconds this year and cause $6 trillion in damages. By 2025, the grand total is expected to hit $10.5 trillion annually. That’s why it’s not enough to build a response-to-recovery playbook. Organizations have to have thorough, vise-like cyberattack prevention measures in place to ensure it’s (mostly) business as usual.
“Incident and crisis management are the key pieces—business continuity is the umbrella,” InterimExecs RED Team executive and CISO, Zeeshan Kazmi says. “But who’s taking care of all the other stuff? Recovery without formal plans can’t blunt the impact. But with a plan, you face an initial crisis and recover from it. And then pretty quickly, you’ll come back.”
Here he breaks down the background on ransomware, the impact of cyberattacks, how to protect your company, and a step-by-step guide if—gulp—you’ve been hit.
Growth strategies are one of the three topics that are top of mind for US CEOs in 2021, according to a study by PwC. Yet 86 percent of CEOs will fail at creating sustained growth, according to Bain & Company.
Should you call in an interim chief innovation and growth officer (CInO)?
Private equity funds are entering a new phase that requires new tactics to be successful against many alternative sources of funds. With a vast reservoir of dry powder – $1.5 trillion waiting to be deployed – PE funds seeking the whip hand will build and pivot while the economy is reinventing and reviving in 2021 and 2022. But what worked in the past won’t work in the future. Moving forward, adding value will require more attention to management fit for the purpose of rapidly transforming portfolio companies.
“Every good private equity professional will tell you that the most important factor behind a successful investment is the management team,” said Eric Jones, a partner and member of the corporate and private equity groups at Detroit law firm Honigman LLP. Jones was a speaker at the University of Michigan Private Equity Conference held virtually in September 2020 and attended by InterimExecs. “You can have even market share, but without a very strong management team, it’s not going to be sustained. The business isn’t going to grow and the investment piece isn’t going to be realized,” he said.
The only certainty in business is change. But change is accelerating, less predictable, and increasingly, beyond the control of organizations. As technology and unforeseen events continue to drive exponential change, businesses that can’t keep up risk being left behind.
Companies struggling to generate growth and stay relevant amid rapid transformation often look to new leadership. A growing number of companies are also looking to a different kind of leader—one who specializes in change and embraces the challenge of helping companies solve their biggest issues. Enter the interim executive, a new breed of on-demand leadership that brings outside perspective, cutting-edge thinking, veteran experience, and a laser focus on results.
Uncertainty is growing in the US with coronavirus cases
mounting. California, Illinois, Michigan, and other states have taken serious
actions with shelter-in-place orders, leaving many people wondering how this
will impact them personally as well as their companies and the economy as a
At the same time, we’re reflecting on how much there is to
be grateful for, including the strong relationships we’ve built over 10+ years
with inspiring leaders. These are women and men who focus their careers on running
into the burning building – the company in trouble – learning fast,
listening, assembling resources, providing fresh and objective insights,
developing new plans and actions for survival and ultimately blueprints for a
We recently convened a call with some RED Team execs who shared how they are adapting to new ways to work. Many executives shared experiences on the front lines figuring out how to help combat the virus and also help people work smarter and safer:
Technology is the most disruptive force in the business world today. It transforms everything that it touches, creating new opportunities while at the same time threatening incumbents and late-adopters.
Futurist Peter Diamandis describes the technology paradox in the following way: “Entrepreneurs will create more wealth in the next decade, than we have in the entire past century. We’ll also experience the reinvention of every industry. Understanding how to navigate accelerating technological change is essential for every leader. The problem with such dazzling change is that most people fear the future, rather than being excited by it. And fear is a terrible mindset from which to create and leverage the opportunities ahead.”
InterimExecs recently held a webinar with Chief Information Officers (CIOs) David Mitchelhill and Kevin Malover about how you should be thinking about technology and your business strategy as we enter 2020. Among the topics discussed were ways to navigate disruption to stay competitive, the value of outside viewpoints in technology, when to pursue new technology versus maximizing current assets, and balancing the fear of change with the fear of falling behind.
Friends, we are kicking off 2020 energized by all the big wins to come after completing an excellent 2019 adventure. Ok, ok, 2019 is seeming a bit passé now that we’re in a brand new shiny decade (still letting that set in), but before we get into upcoming plans, will still need a quick recap and note of appreciation for your hard work and support.
First, a big thanks to our team of elite executives we call RED Team Ready, who performed in amazing engagements throughout 2019 in the US and Europe. We are nothing without your trust, your encouragement, and your daily support. Truly.
With a go-to team of brilliant leaders eager to jump in at a moment’s notice, we have an unmatched capability that makes up the essence of RED, Rapid Executive Deployment. While you hail from around the world and your skills and abilities are each unique, we can sum up your excellence with a common and shared passion and unstoppable energy to give your best in everything you do. We know you love the people and organizations you lead, and cannot say thank you enough for teaming up with us.
“CFOs are retiring at the fastest pace in at least a decade,” reports a Wall Street Journal article citing that the increasing complexity of the role and for public CFOs, the lure to cash out shares in a hot stock market, make it even more attractive to make the change. An analysis of 12 years of regulatory filings by Audit Analytics for The Wall Street Journal showed that “one in six executives who left the CFO position at a U.S. public company in 2018 did so to retire, the highest share since at least 2007.”
In addition to many baby boomers simply being of retirement age, CFOs are facing new demands professionally. Historically, a CFO’s workload was focused on compliance, best accounting practices, and financial reporting. As the financial world grapples to evolve at an accelerated rate with the onslaught of digital transformation, so does a CFO’s job description. Today CFOs are faced with even more complex responsibilities that include making strategic decisions about investments, understanding and leveraging technology to streamline accounting practices, and developing financial disaster recovery plans to deter risk and cybercrime.
“Write down a change you would like to make in an organization that you are currently with…or change in the marketplace. Any kind. It can be a big change, it could be a small change – strategic, tactical, something you want people to start doing, something you want people to stop doing,” says Jeff Leitner as he looks around a room filled with CEOs, CFOs, CIOs, and other C-Suite executives at this year’s InterimExecs’ RED Team meeting. He continues “You’re change is absolutely, almost certainly going to fail. It’s not your fault. It has nothing to do with your particular genius – has nothing to do with your insights. Changes fail. They almost always fail.”
Jeff Leitner knows a thing or two about change and innovation. He spent the last 20 years improving organizations from the US State Department to NASA, Starbucks, Panera, and the Dalai Lama Center for Peace. In a world where innovation and disruption is key, the question is why does change rarely stick in organizations, markets, and society? Jeff has dedicated years to studying why change fails and in his most recent speaking circuit, issharing what leaders can do to be more effective in leading change initiatives.
First-year Change Agent members have access to the Interim Institute’s 4 hour audio program on the Fundamentals of Interim Management, and a one-hour strategy session to help jumpstart their interim career.
*$200 additional charge for Accelerator Program only applies for first-year members. After the first year, membership renews at $485/year.