When a new venture is just a twinkle in their eyes, most business founders don’t realize that their leadership assets likely won’t meet the eventual needs of their expanding enterprise.
The realities of leadership transition and ownership succession were quite clear in our observation of the Richards Corporation, and how sustained success brought this family business to a critical juncture: “We were managing a larger more complex enterprise than we ever expected. As we stretched to hurdle the obstacles, we were on a collision course with the planned retirement of our principals.”
Stan Richards was the Chairman and longtime owner, along with his brother. They foresaw the need to transform their leadership team to sustain the organization’s growth and better position the company to accommodate his family’s eventual successful exit.
Acknowledging that a good leadership team is no longer the right team is agonizing when you’ve built a business and a close-knit staff. While engaging essential new executives, they retained a cadre of great employees who would also be ongoing assets to the organization. Moreover, Mr. Richards notes, “It was important for me to deal with my real value in this changing enterprise – as non-executive Chairman. Going forward I am not the right guy to be CEO. Sure, it would have been easier to stay the course with all the people we knew in their roles. But playing the right game with the wrong team would have eventually forced us to the same decisions, but on someone else’s terms.”
“We were facing unaccustomed obstacles and we weren’t about to squander our successes,” he adds.
The Richards Company did engage new executives who re-positioned the business for accelerated growth. That made the Company an appealing acquisition for a suitor who purchased the business at an attractive price. Additionally, the new executives were retained and, even through new economic challenges, the unit’s profitability was sustained.
The Richards Company and its former owners are exemplary in their growing, positioning and selling a closely held business. Most business founders find it difficult to acknowledge and forthrightly plan for their eventual departure. Consciously or unconsciously, many resist the recognition that their personal leadership assets won’t meet the eventual needs of their expanding enterprise.
Former jewelry industry executive Curtis Ley advises business CEOs or owners to regularly consider if “your skill set is no longer adequate to lead the parade and grow the business.” He additionally counsels owners to recognize when “you are approaching the end of your career and need to have an exit strategy in place.”
Stan Davis is the Founding Principal of Standish Executive Search, a New England-based firm that advises business owners, executives and boards who are positioning their companies for accelerated growth, change or succession.