HomeOpinionLack of a succession plan is bad for business

Lack of a succession plan is bad for business

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By Shephard Majengeta

AS we pursue Vision 2030, of an upper-middle income economy, it is imperative that today we build institutions that stand the test of time.

I recently came across a book ‘Prominent Personalities of Rhodesia’; a compilation of excelling black businessmen who defied the odds and made it in racist Rhodesia.

As much as I enjoyed reading this book, what saddened me was the absence of many of these businesses in the year 2024.

It is important that what we are building today should be huge in the year 2030.

The tuckshop built today should be a chain of supermarkets in the year 2030.

The food vendor of today should run a successful line of restaurants.

While many factors, chief among them being lack of a conducive operating environment, led to the decline of yesteryear businesses, I could not help but feel we are also partly to blame for the collapse of the businesses.

Zimbabweans, in the then brutal Rhodesia, found ways to establish and assert themselves in business just as today they are thriving despite the illegal sanctions imposed by the US and its allies.  

The businesses that flourished in the then Rhodesia include Bulawayo’s Happy Valley Motel; Pelandaba Road Services; Mboma Super Buses of Highfield, Harare; Rutendo Bus Service;  M & A Special Bus Service; Farayi Uzumba Buses and Stores, among a host of others.

And how many of these have survived to the second and third generation?

Many of these business crumbled after the death of the founder.

The majority of African businesses crumbled after the death of their founders.

The demise of these businesses tell us a story of business visions that were not communicated to kith and kin.

In most instances, heirs and heiresses have been blamed for the collapse of once thriving entities.

While this may be true, still the blame can also be apportioned to the founders who should have groomed their progeny better.

It is time we study the causes of African businesses’ failure, rather than continue seeing institutions with vast potential crumbling.

Why is it that businesses elsewhere have been retained within families for centuries?

Among the oldest known family businesses is Japanese temple builder Kongo Gumi, founded in 578AD. 

More than 1 400 years ago, Prince Shotoku contracted the Kongo family members, whom he brought from Korea to Japan, to build the Buddhist Shitennoji Temple, which still stands to this day. 

After the completion of the project, the Kongo Gumi family continued with their line of business, constructing many famous buildings over the centuries, including the world-famous 16th Century Osaka Castle in Japan. 

The Kongo Gumi business empire still dominates serious construction business in Japan today, continually repairing and building religious temples. 

When Toshitaka Kongo headed the business, next in line to take over the company was his son Masakazu Kongo. 

The family firm is thus central to Japanese business culture.

Business continuity and succession planning are crucial aspects of any successful enterprise, especially in the context of family-run businesses. 

The example of Toshitaka Kongo’s succession plan for his company highlights the importance of a smooth transition from one generation to the next, ensuring the continued success and longevity of the business. 

However, when we look at African businesses, particularly SMEs, we often see a stark contrast in terms of continuity planning and the ability to transcend generations.

In Japanese business culture, the passing down of businesses from one generation to another is deeply ingrained and meticulously planned for. 

This ensures that the vision, values and strategies of the founding members are preserved and carried forward. 

Masakazu Kongo, set to inherit his father’s business, exemplifies this tradition of continuity and succession.

On the other hand, in many African countries, SMEs form the backbone of the economy and are seen as key drivers of economic growth. 

However, the lack of effective business succession planning has hindered the potential growth and sustainability of these enterprises. 

Despite the importance of SMEs, the absence of a clear continuity plan often leads to disruptions and even the downfall of businesses when ownership is transferred to the next generation.

The challenges faced by African businesses in implementing successful continuity plans are multi-faceted. 

First and foremost, there is a cultural reluctance to discuss matters related to succession, especially those concerning life after the founder’s passing. 

Such discussions are often seen as taboo or even disrespectful, making it difficult to initiate conversations about long-term planning and succession.

Moreover, traditional beliefs and practices play a significant role in shaping the succession process. 

In many cases, businesses are automatically passed on to family members without considering their qualifications or suitability to lead. 

This practice, while rooted in familial ties, can lead to issues such as lack of expertise, internal conflicts and a divergence from the original vision of the business.

The absence of a structured continuity plan further exacerbates these challenges. 

Without a clear roadmap for succession, businesses are left vulnerable to internal disputes, mismanagement and a loss of direction. 

The lack of formalised processes for identifying and grooming future leaders also contributes to the difficulties faced by African businesses in transitioning between generations seamlessly.

To address these issues and ensure the sustainability of African businesses across generations, a paradigm shift is needed. This includes:

Cultural Sensitisation

  • Encouraging open discussions about succession planning while respecting cultural beliefs and traditions.
  • Education and awareness programmes can help bridge the gap between cultural norms and modern business practices.

Professionalism

  • Moving away from solely relying on family ties for succession and instead focusing on meritocracy and professional development.
  • Implementing training programmes and mentorship initiatives to groom potential successors and equip them with the necessary skills and knowledge.

Formalised continuity plans

  • Developing comprehensive business continuity plans that outline succession procedures, roles, responsibilities and contingencies.
  • This ensures a smooth transition of leadership and minimises disruptions during ownership transfers.

Conflict resolution 

  • Addressing internal conflicts and rivalries through mediation, clear communication and fostering a collaborative environment.
  • Resolving conflicts proactively prevents them from escalating and damaging the business.

Long-term vision

  • Instilling a sense of long-term vision and strategic planning within the organisation.
  • This includes aligning the goals and objectives of successive generations with the original vision of the business, ensuring continuity of purpose and direction.

By embracing these principles and practices, African businesses can overcome the challenges associated with succession planning and pave the way for sustainable growth and generational continuity. 

The success of businesses like Masakazu Kongo’s family firm are testament to the importance of thoughtful planning and strategic leadership transitions in ensuring enduring success.

Vision 2030 will come to fruition as a result of the success of businesses built today.

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