QUESTION: Rhett in Houston and his brother are involved in a family-owned business their father started. How do they keep the quirky brilliance of the founder alive while allowing the second generation to make their own mark?
ANSWER: We’ve done a lot of interviewing and discussing and reading and research on family business and family business transition for selfish reasons. I’m getting ready to do a little bit of writing on that. I’m going to add a chapter to the EntreLeadership online chapters for people to be able to read. It’s a question that’s near and dear to my heart. Thank you for asking because as you guys know—we’ve talked about it this week a lot—our grown children are entering the business in different ways as well.
To start with, the hardest transition emotionally is the first generational transition because the founder is a hardhead. I’m a founder; I’m a hardhead. The person who starts the thing—we’re the ones who fight off snakes and rodents, and we kill roaches. We go in there with a gun, a bat, and a sword. We don’t come out with anybody alive but us. We’re the ones who get stuff done. We’ve survived and gutted it out. To do all of that and then hand our beautiful baby that it took us a long time to shine up over to a couple of greasy-haired kids is hard. It’s emotionally difficult, and yet the paradox for those of us who are founders is if we really love the business we’ve built, to not systematically, predictably transition it is to guarantee the death of the thing we love.
Your dad is going to kill the business except to the extent that he systematically, predictably hands it over to you two. The reason is your customer base knows he’s going to die, and your team members know he’s going to die—someday. I’m 51. Someday, I’m not going to be doing this radio show. So someday, you guys as my customer base—if you still want information, common-sense education and empowerment from our organization—you have to know that I’ve got a plan to cause that to happen. It gives my customer base confidence. It gives my team confidence that I have a transition plan today and that I have a transition plan if I stay here 20 years.
The second thing is 1) we admit that it’s hard emotionally, 2) we say that the thing’s going to die if he doesn’t do it. That’s true of all of our businesses. Then 3) he’s got to lay out some milestones for you guys—that says he begins to trust your competence and your integrity, which as we found in the delegation lesson is the secret to delegating. At these performance milestones—not age, but performance that indicates your maturity in business regardless of your age—he’s going to begin to turn loose this amount. He’s going to turn loose this amount. And the final release is he slips to the side and takes a position of honor. It doesn’t mean he can never come to the office, but he’s no longer in charge. And he can’t come in and spread hate and dissension anymore, which is what we founders do. We tend to walk through the place and just blow things up. He can’t do that anymore. He’s going to destroy the thing he loves if he does that. I’m not saying he does that. I’m saying all of us who are founders do that. We’ve got to systematically hand over.
One of the guys I was interviewing in family business had a great word picture for me. He said, “If you visualize an Olympic-level relay race, if you’ve ever seen them hand the baton off, they run so close and so in sync that when the baton leaves one hand and goes into the other, it’s so in sync, no one realized it happened.” It’s so smooth and so gradual and so predictable and so practiced and so communicated. And so should be a transition.
You guys are in your 30s, I assume. By the time you’re 40, this thing needs to be done because you can’t ask two sharp guys in their 30s to still be subordinates when they’re 60. That’s kind of stupid. It doesn’t work. And you’re going to want to go do something else if he won’t do it. He needs to develop this gradual process to where the team and the customer base—when the transition occurs and one of you becomes the CEO—they all say, “Oh, he’s a CEO? Gosh, I thought he already was,” because everybody’s been leaning more and more and more on you and less and less and less on him to where a gradual, gentle transition happened. If he doesn’t do that, he’ll be a typical founder and he’ll kill his own business.