Tag Archives: Family Business Coaching

The 70/30 Succession Curse

The month of May has been quite challenging. An ugly feud erupted for control of a family-owned business in country A and I have been requested to intervene.

The sons of the founder are attempting to wrest control of the company from their father. Several thousand miles away in country B, another scenario has befallen another company, this time pitting siblings against siblings after the sudden demise of the matriarch. In both cases, my intervention posthaste was due to recommendations from associates that felt there was still a glimmer of hope for mediation.

The caveat is that should my initiatives fail in the next 12 months; a litigious process pitting lawyers from both sides will ensue. I can almost anticipate a very public mud-throwing spectacle between the warring parties much like the Lotte Group conflict in South Korea and the Philippine’s Ilusorio and Romero family disputes.

In my initial research, the problems started manifesting when the children were forced to join the business without any clarity related to their roles and responsibilities. After the ownership structure was distributed to the children, the plot to unseat their father intensified. I cannot pass judgment nor speculate on the motivation of the four siblings why they rebelled against their father. One thing is clear –– the issues are deep-seated and have created so much strain on the family. The children are now in their early 40’s.

Theoretically, I refer to the first case as rebellious. It is one of the three patterns of ineffective succession where the next generation launches a clean slate approach to the organization as an overreaction to the founder’s control of the firm. As a result, traditions, legacies and even the business model are rejected and discarded.

This case is just one of a handful of unwarranted family squabbles where the children would attempt to dislodge their parents from controlling the companies that the older generation founded. Predictably, these conflicts implode when governance, succession and ownership processes are set aside. And these same type of issues can happen to any family owning business, big and small.

As a family business advisor, I have never been remiss in constantly reminding leaders to initiate the process of succession immediately. Unfortunately, procrastination, an air of invincibility (superman mentality) and an inflated ego can oftentimes obfuscate the founder’s rational mindset.

The facts are clear, seventy percent of wealth and ownership transitions are not successful and seventy percent of family wealth ends with the 3rd generation.

So I am posing a direct challenge to family business owners: Be among the thirty percent who have successfully transitioned their wealth and ownership to the next generation.

One of the worst mistakes entrepreneurs can make is to postpone naming a successor until just before they are ready to step down or when death comes knocking.

Sometimes founders avoid naming successors because they don’t want to hurt family members who are not chosen to succeed them.  Yet, both the business and the family will be better off if, after evaluating the candidates as they work in the business, the founder picks the successor based on that person’s skills and abilities, early enough.

So my advice to business owners in their 60’s and 70’s is to have an open mind on the topic of succession planning. It can be both exciting and daunting at the same time. Daunting as the “letting go” phase for someone else to take over can be initially tough on founders. However, for visionaries dreaming of perpetuating their businesses, they must recognize that this leadership transition is both critical and indispensable.




Lee Kum Kee: 129 years and Growing

Lee Kum Kee International is a Hong Kong-based food company that manufactures oyster flavored sauce and a wide range of Chinese and Asian sauces. It is a popular fixture in most Asian dining tables. It is also loved by Filipinos.

The brand was founded in 1888 by Lee Kum Sheung, a chef working in a small eatery that sold cooked oysters. He eventually formed the Lee Kum Kee company to market what has now become a staple sauce, seasoning and condiment sold in more than 100 countries.

Today, the Lee Kum Kee (LKK) group continues to run as a family business under the leadership of the 5th Generation family members. I shared this inspiring family business in my workshop last Saturday.

At the center of LKK’s corporate culture and existence is a Mandarin saying:

“Si Li Ji Ren” which means “Considering Other’s Interests or Put Other’s First, before yourself.”

Si Li Ji Ren is the heart and soul of the Lee Kum Kee’s very existence and the foundation of their commitment to ingrained values such as Pragmatism, Integrity, Constant Entrepreneurship, and Benefiting the community.

Today, family enterprises that are haunted by a multitude of daunting challenges related to succession battles and sibling rivalries may do well by learning powerful insights from LKK’s success formula as well as its preference over family embracing the business.

I espouse business first in my coaching work to dramatize the need to grow the business in a highly complex and competitive environment but the case of the LKK family business’ endless pursuit in espousing best practices under a family first model is equally inspiring.

Quoting a well written article by Jeff Pao… “Family first before business,” company chairman Charlie Lee Wai-chungonce said in an interview. “If family members work together, the business will thrive naturally.”

“As a family business, we’ve gone through several transitions within our family. And the two key transitions in the 1970s and 1980s have exerted huge shock on our family governance,” he said.

In 2002 the family decided to set up a family council as part of their efforts to bolster business growth.

Lee Wai-chung, the fourth-generation heir, said involving all family members in the business may not necessarily be a good thing.

“It’s a common belief that you are a part of the family unless you join the family business, or you become an outsider. But that idea is outdated and has to be changed,” he said.

A traditional family embraces harmony and tries to avoid infighting. So even if there are issues, they tend not to confront them for fear of causing disharmony in the family.

But those issues have to be tackled, Lee said, adding that it’s normal for family members to have different views.

In Family businesses that my advisory firm, W+B assists, the family leaders have the habit of sweeping the problem under the rug and totally ignoring the underlying problems. It should not be that way.

My model of coaching work is simple… when there is conflict make the family members internalize the values. Values are like glue that keeps the family together.

Values inspire people to do things that are sometimes difficult, to make commitments that require discipline and to follow certain behaviors that will redound to the benefit of the greater good. An enduring commitment to values is the greatest strength and competitive advantage family ownership can bring to any enterprise.

The Lee Kum Kee model is a glowing example of what family businesses should be.


My urgent advice to family business owners

THE late great Peter Drucker immortalized this statement: “The final test of greatness in a founder is how well he chooses a successor and whether he can step aside and let his successor run the company.”

I have used this quote many times and I will continue to resonate this line to stress the importance of codifying governance and succession in family businesses.

My passion to coach family businesses all over the world

It has been an incredible week of flying with several time zone changes that started in Japan last week then Dubai and Madrid.

As this article sees print, I am on a plane heading to Los Angeles to do a series of exciting talks related to the expansion of the highly coveted brand Organique Acai Group owned by the well loved enterprising Cebuano couple Elton and Cathy Salimbangon. But this is another topic that I will readily share in the near future.

So why am I passionate despite my incredible calendar this November? The answer is simple and requires no scientific explanation. I love my work because family members experience visible results when governance is embraced by everyone.

My coaching work revolves around the most fundamental but often neglected elements:

1. Establishing rules and code of conduct

2. Making sure each family member complies and is made accountable

3. Providing oversight and, when necessary, do intervention to mitigate conflict among siblings/branches

4. Helping source the right talent through our executive search network

5. Singular thrust toward growth and expansion

Coaching work can also be frustrating

Frustration can come in many sizes and shapes. One of the most common drawbacks is the patriarchal shadow continuing to loom large over the next generation members, thus preventing or clipping their desire to perform to the detriment of the family enterprise.

Family business leaders, particularly the entrepreneurial founders, often neglect the issue of succession because they are so protective of the business they started.

Although they want their ventures to survive them and to pass the torch of leadership on to their children, they seldom support their intentions by a plan to accomplish that goal. They just dream of continuing the business long after they’re gone but take no steps to make that dream a reality.

It is also a very common sight when succession planning begins in response to an external event such as illness, accident, death, marriage or hostile separation.

Planning should not be undertaken only as a reaction to a major health emergency of the family business leader/founder. For then, everything might just be too late.

Succession is a precarious event

One of the worst mistakes entrepreneurs can make is to postpone naming a successor until just before they are ready to step down. Sometimes founders avoid naming successors because they don’t want to hurt the family members who are not chosen to succeed them. Yet, both the business and the family will be better off if, after observing the candidates as they work in the business, the founder picks the successor based on that person’s skills and abilities, early enough.

The best way to avoid deadly turf battles and conflicts is to develop a governance and succession plan. Without it, family businesses face an increased risk of faltering or failing in the next generation. Succession planning reduces the tension by gradually “changing the guard.”

I have identified several time-tested tips to ensure growth and sustainability of the family business:

1. Decide if the enterprise will follow a family business or Business family model.

While many businesses that are owned and managed by families recognized the importance of ownership and management, few know where and how to start in developing a governance and succession plan.

The key is determining what model or template to follow. Family managers must make a very important choice…should you prioritize family over the business or vice versa?

The Gokongweis, the Aboitizes and Ayala families decided generations ago to pursue a business family model and no one can question their dramatic growth, not just in the Philippines, but all over Asia.

To be continued.