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Asian tycoons lack confidence in their sons and heirs: Keeping it in the family

Asian tycoons lack confidence in their sons and heirs: Keeping it in the family
Ultra-successful Asian entrepreneurs often lack confidence in sons who succeed them. They should accept they have their own unique qualities

Victor Li Tzar-kuoi with his father Li Ka-shing. Not every dynasty proves so successful. Photo: Edward Wong
Victor Li Tzar-kuoi with his father Li Ka-shing. Not every dynasty proves so successful. Photo: Edward Wong

Successful Asian family firms are founded and built by extraordinary people – indeed, often some of the most interesting business players in the region.

Having had the privilege to interact with a number of them, and having studied quite a few more, I have seen that they share a number of characteristics.

Asian family firm chairmen – they are almost exclusively male – are typically extremely entrepreneurial, visionary and courageous. Usually, they come from modest backgrounds and experienced hardships or crises early in life that shaped their outlook on risk-taking.

Starting out modestly, they frequently said “yes” to opportunities that others shunned. The more they succeeded, the more confidence they gained.

They have usually tried various businesses – failing in some while extremely successful with others – and as a result, built a diversified group of enterprises.

These “superman” founders possess a truly outstanding intuition for “what will work” without being able to articulate why. Almost without exception, they are opportunistic, action-driven and pragmatic, taking all decisions personally as they grow their businesses.

But as much as I admire them, I have also noted over the years that they tend to have a blind spot: they fail to grasp the quality of their sons as successors.

It is rare to come across a chairman who has full confidence in a child in line to succeed him. Even if they do not directly say so, their actions towards their sons speak volumes. (Daughter-successors are rare. But the few cases I came across seem to follow the same pattern.)

Supermen (or Superwomen) are not born every day, and the chances of a founder’s children mirroring his unique qualities are slim. Rarely are children younger copies of successful founders.

 

Yet, the superman-chairman expects nothing less and is deeply disturbed if a son does not match his extraordinary flair. Sometimes, this lack of trust becomes a self-fulfilling prophecy: by hovering over their sons and not believing in them, these chairmen unconsciously create the very conditions for their sons’ failure.

Moreover, they also generate a lot of avoidable tension in the firm and the family.

However, looking for a superman-junior may not make business sense. If the founder has done a great job building a business empire, it is likely that the most effective successor who can bring this Asian family business group to the next level of professionalism is a person with rather different qualities.

Many of the most successful Asian family empires are strong in terms of hands-on leadership, but weak on systems and middle management quality.

Indeed, these business groups seem too far stretched and too haphazardly built to survive beyond their extraordinary founder.

When I visit some of these firms, I cannot help but notice how the senior management run after the chairman on a daily basis, without being able to develop long-term priorities or consistent policies.

Most members of the “lucky sperm club” – to borrow a term from Warren Buffett – intuitively know that reliance on a superman-founder for each and every decision is not going to make their business last for generations.

What these founder-dependent empires need is not another superman, but a leader who can transform their own great entrepreneurship into a great legacy through solid governance systems. In short, someone who can stabilise the group and give it strategic direction.

Indeed, what is needed at this stage may be the very opposite of a business wrapped around a super-leader: it is a super-business that can survive without an outstanding leader.

Who would be best qualified to lead such a transformation from a personalised business towards a long-lasting legacy?

Most likely, it would be someone who can credibly hold a team of competent top-managers together, who can command respect from banks, partners, employees and authorities, while also keeping the entrepreneurial spirit alive.

What a superman should wish for is someone who can enshrine the chairman’s values in the business, and turn it into a long-lasting legacy, without actually having to take all decisions personally.

The perfect heir is not necessarily a younger copy of the founder. Rather, the founder of a successful family group should judge their offspring not by their own unique and rare characteristics, but think about what the business really needs going forward.

While it is of course possible that a son is unsuited for the firm, a chairman must apply the correct metrics.

By taking a broader angle on the future of the business, it might become apparent that perhaps that not-so-very-entrepreneurial son is the perfect choice after all.

In fact, when looking for what the business needs, it may be wise to cast the net wider: perhaps, a capable daughter, nephew or trusted outsider would be most suited to bring the family business to the next level of professionalism?

This blind spot can be avoided with a careful look in the mirror from multiple angles. Doing so will prevent avoidable friction and go a long way towards a long-lasting legacy of excellence.

Marleen Dieleman is associate professor of strategy and policy at the National University of Singapore Business School

This article appeared in the South China Morning Post print edition as Keeping it in the family isn’t always best for business

PUBLISHED : Saturday, 10 October, 2015, 12:23am
UPDATED : Saturday, 10 October, 2015, 12:23am
Marleen Dieleman

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