Changing of the Guards: Partial or full control- Episode 2

Transcript

NextGen Talks – Shaping the African Family Business Narrative 

PwC: Welcome to episode 2 of NextGen talks, an initiative of PwC Nigeria’s NextGen Club. My name is Chinasa Ken Ogwuh, the host and the NextGen Club co-lead for PwC Nigeria.

At PwC, we find that succession planning is a perennial problem for family businesses. We see this in every survey cycle and at many of the family businesses we work with, and this in large part is because many family business leaders about 46% say they are reluctant to pass the baton to the next generation. With this in mind, the topic for this episode is “CHANGING OF THE GUARDS: PARTIAL OR FULL CONTROL? The event where the founder is reluctant to hand over the reins of leadership completely to his next generation. Joining me shortly on this episode is a PwC Nigeria NextGen club member who is also an entrepreneur,  speaker and a consultant but first listen to our NextGen Talks nugget for this episode.

NextGen talk nugget for succession planning for today is: it is important to provide different family members who have varying levels of education, experience and knowledge with needed understanding and insight about the family’s business in order to build and maintain the trust required to sustain the company’s long term vision. 

PwC: Nike Anani is an entrepreneur, speaker and a consultant. She was rated as the top 100 family business consultant globally. She helps her clients breach the gap between the senior and younger generation, as a result they communicate, collaborate and collectively gain clarity to increase profit and productivity in their family businesses. 

With over a decade of family business expertise in Nigeria, Nike helps owners lead their family organisations to long term impact and legacy. Her inside experience as a second generation family business owner birth the passion to help other families in building legacies enterprises that will outlive them. 

Nike is an accountant, ex-deloitte UK and a top rated family business expert with a family business and wealth adviser qualification from family firm institute. She is the co-founder of African family firms, a pan African association of family businesses and the host of the connected generation podcast, a top 10 family business podcast globally. Nike’s clients choose to engage her, not only because of her extensive professional training but also because of her practical experience as both a business founder and a NextGen. This allows her to uniquely empathise with both generations and act as a connector. Nike is a champion for diversity and celebrates the uniqueness in every individual family and business. Welcome Nike and thank you for coming on NextGen Talks.

Nike: thank you Chinasa, it’s an honour to be here.

PwC: fantastic. So before we go into the session, I would like to ask, what are your thoughts on the NextGen Talks nuggets for today?

Nike: I completely agree. I think that quite often what we see in family firms, particularly in first generation businesses, it seems that the founder is the hero and the founder is building the business, running the business and typically other family members may be passive. In reality, whether family members are aware or not, they are all sub consciously contributing their resources, different types of capital, financial, social, intellectual, human capital that the founder draws upon and builds the overarching business. Now when we are moving into a second generation business, like you said, different family members have different experiences and  exposure, some might not have been on the battle field, some might have been on the side-lines, it is important that they do build up that, we level out the level of understanding and the knowledge, so they build up their confidence and competence to see that actually they do have value to bring to the table and that value might not necessarily be as a manager of a business, it might be as an owner. It is important that families are able to collaborate, to communicate and collectively gain clarity on what is the vision (where are we going), what is the mission (how will we get there) and what is the conviction (what is our deeper purpose and our values) and every family member has to be involved in that process, it has to reflect all the family members, it is not about individual ruler ship but about collective leadership.

PwC: That's interesting. I am wondering how feasible or realistic it is to get everyone on the same page, given that everybody has got varying interests, backgrounds, just because we are family doesn’t mean that we all share the same values and doesn’t that value system feed into the overarching vision, the purpose as you call it. So how realistic is it to get everybody to be on the same page

Nike: I think it is very realistic, it is based on what people’s expectations are. Now it is important to understand that we will compromise, we all are members of institutions where we have shared purpose and shared values and we are not necessarily builders of these institutions, we are members of social clubs, we are members of churches or mosques, we are members of even corporate. When I worked in deloitte, I didn’t set the tone or culture of the organisation but I did very much feel like part of that family so it is not about individual ruler ship, it’s not about the imposition of values or imposition of vision and mission of a set of people, it is collective leadership and in that collective leadership, we need to explore it together. What is ou7r shared purpose, not the purpose of one person but the purpose of all of us as a family, the purpose of the family business, the purpose of- in some instances we might have a family foundation or family office, what are our shared values so you know we might all have different values but what keeps us united, what’s the common denominator between all of us. In the process of defining this shared purpose, shared values, we need to come to the conclusion to understand, what is the compelling reason for us to stay in business together as a family and that might not be everyone working in the business, like I said some will be owners, some will be shareholders, some will be working in the business but we won’t be able to get to this conclusion if we don’t know what are our relative strength, that’s individual, what are we able to bring to the table that we can mash towards the longevity of the business

PwC: fantastic. Thank you very much Nike for that answer and for sharing your thoughts. So I will move to the next session which is for you to share with us your NextGen story, a bit about what you do and given your thoughts you shared on this nuggets, clearly you know a lot about family businesses and from your profile that’s essentially what you do so can you share that with us 

Nike: yes. Family business is my life story. My father set up our first family business the year I was born, so he was a medical doctor when I was born, my mum was a young teacher and they couldn’t afford to give myself the standard of living they wanted so my father had his own entrepreneurial venture on the side and a couple of years later will resign from being a medical doctor and went into full time entrepreneurship and so I guess entrepreneurship is, I have always seen it, it has always been in my life. At age 9, myself, my brothers and my mum we moved to the UK and so I was educated in the UK and after university, I worked in Deloitte, I kind of ventured which is where I trained to be a chartered accountant in corporate tax, international but something in me was yearning for more and I did not even know what that was but it felt like a very hollow experience. It was for my deeper purpose and I remember having a phone conversation with my father and he suggested why don’t you just come to Nigeria and see real business world maybe you are just bored and I took him up on the offer, I was like yeah that’s fine, I will come for three months so the plan was three months and I had planned to go travelling after that and then go to business school to give myself margin to just discover myself and I got to Nigeria and I saw Nigeria through a completely different lens, I experienced entrepreneurial Nigeria and I fell in love with them so I was in Nigeria for 10 years-from three months to ten years. I started working with him in the family business, at this point it evolved into a construction business and a real estate involvement company and obviously, I was 24 so I was quite young but I was given so much responsibility and I found that challenging because I didn’t know anyone else that was working with the family and I had to shoulder this responsibilities and I had to learn how to manage and lead teams of people that were significantly older 

PwC: So is it fair to say you were thrown into the deep, just coming:

Nike: Yes, just coming in, no training. In the culture where there is a lot of emphasis on the elder dominance and respect, In deloitte it was a very linear corporate culture and I came at the bottle of the run and I was going through the motion, going through all the prescribed steps back in the family business, it felt like a wild race, there was no structure, I had to cover my own part and find myself, find my feet, find my own leadership voice and I also noticed that decision making was quite interesting in the family business, decisions that would  typically take us in deloitte maybe three four months to take, it will take my dad thirty minutes and also the reverse was true, decisions that should take us thirty minutes, he will sit on them and so I found it really difficult to suggest my ideas, to try to effect change and what have you and it took me a long time to realize and learn that I wasn’t being impactful and persuasive enough in my communication style, I came across as a critic rather than a catalyst for change so to cut the long story short, going along with my personal leadership journey, who am I as a leader because my entry into the business disrupted a lot of things, a lot of people, some were happy, some were not.

PwC: How did you get these impressions, was this from reactions, from working with them or you just don’t feel like they were collaborative?

Nike: A couple resigned. For some context when I came into the business, there was no structure, no HR, no finance, no audit, there was no SOP’s and with my deloitte training, I came from all of that structure, yeah and there were some people unfortunately that were profiting off lack of structure and so the change in culture was just, they didn’t like it and they left, others as human beings became accosted to a certain way of doing things, before chairman said we can do ABC but chairman is not the only one making decisions now so we have to be subjected to different process and human beings typically don’t like change and they had to be reorientation of staff, others who enjoyed the transitioning found that they were empowered which was quite exciting and there was the entrance of new corporate staff as well with a different mind-set which is really exciting. So it was a season of a lot of learning, it kind of eluded to a lot of, there was no HR, no training calendar for the year or the competencies I had to develop and I had to become my own HR manager and drive my own learning, join associations and communities where I could learn from, go on training programmes, get mentors and so it was really tough but I absolutely loved the experience. It was a lot of work, it was a lot of change.

PwC: Alright. So you know the topic we are discussing on this episode is “CHANGING OF THE GUARDS: PARTIAL OR FULL CONTROL? And from your story, in your experience, do you feel like if your dad were to hand over the business to you, he would want to handover completely with zero involvement or do you think there will still be some level of involvement 

Nike: So my father is 59. A little context, if he had told me he is retiring tomorrow and he was giving me full control, I would laugh like yeah, I would see you tomorrow in the office 

PwC: Is that because of his age or it’s a personality thing

Nike: both. His age, I mean he is very restless, I mean what will he be doing on a day to day basis unless I find him a job or something, I will literally have to create a career for him so that he will be fully engaged in that so complete changing of the guard at this state, in our families journey is unrealistic maybe in 10-15 years, it might look quite differently but partial changing of the guard increase kind of devolution of responsibility and influence to the rising generation. I think we have already seen that, we have already seen greater voices, not just with myself, you know I gave the analogy of those on the battle field and those on the fight lines so it is just my father and I working on the business but behind the scenes, my brothers and I, we had started forming a siblings partnership and evaluating and exploring between ourselves what is our vision for the family enterprise, where are we going, how are we going to get there, how are we going to influence change starting now but we are just waiting until we are formally handed over the keys and we formed the family council and we meet regularly and we have had clarity and conviction to influence the family enterprise both on the investing side as well as the operating business side.

PwC: Alright. So was this done with your father involved in that process or was it just the siblings?

Nike: it started with just the siblings, we first had to gain clarity on who we are as siblings or as a sibling’s partnership rather. I think a common issue we see in our side of the world is that siblings have a lot of experience being siblings but not enough experience being partners and that partnership usually is called to the test in moments of crisis so usually the founder passes away and suddenly we are scrambling around who is going to take over the business, who is going to sort the assets and they are forced to go into partnership then and the problem of high stress and they have not had experience on working together, collaborating together, communicating together even understanding who they are and where they are heading so there is very little cohesion and ideally you want to be forming that partnership, trying that partnership during the lifetime of the founder such that when the inevitable happens, we can hit the ground running. Obviously it is still going to be bumpy, death is not linear, grief is hard, there will be surprises but for sure the journey will be a lot smoother having practiced collective leadership, having had clarity together, what do we all want and having that founder in the room kind of moderating in cases where there might be conflict, we all want to go in three different directions but we can then go back to dad and be like okay what do you see and what’s your view on all these instead of postulating ‘’daddy would have wanted us or mummy would have wanted that or he would have wanted me to be in charge of ABCD’’ postulating and hypothesizing that which we have zero clarity over.

PwC: okay. I think what you have just described sounds like what everyone should be doing and all businesses. Do you think that the law of family businesses in Africa is beginning to sort of have this kind of preparation or is it still very new and what are you trying to do about that with your work? 

Nike: It is still very new. Unfortunately in Africa, we are conditioned to think very short term and it requires the reorientation of mind set from life time thinking, I would even say I am not sure we are even lifetime thinkers in Africa, I think we are just survivors so it’s like reorientation from survivors which means if we are trying to build legacies we have to be long termists and build and dig deep to the foundations and we will see the returns and rewards from generations to come. So there is still a lot of reorientation of the mindset of our community to embrace this type of thing and not just focus on ‘’okay we need profit in the business, we need cash, we need revenue’’, that’s true we do but if we want a legacy, to protect the family from poverty, future generations and also ensure that the business will continue to be at home and communities will be a bedrock and the economy then we have to do some digging deep now and it is counter intuitive that digging deep is not just investing in the business and coming up with great strategy and have that investments also on ourselves as family members, taking in time to have considered conversations ‘’where is this going’ ‘’who are we’’ ‘’how are we going to get there’’ ‘’what are our individual roles in this wider picture’’ and what have we’’, having this conversations and ironing this things out are very important. 

PwC: Thank you for that, Nike. My next question is about the father son rivalry. Do you think it is a big issue in Africa, you know the situation where the father feels the son will never be man enough to run the business and then tries to hide that feeling from his son but at the back of his mind, he just feels like this man or this person is never going to be me and won’t take it as seriously as I would. Is that an issue from your interactions with different family businesses, is this a big issue?

Nike: yeah I would say so but I wouldn’t make it gender, I think it is just a father child relationship, I think it’s difficult for parents to, family businesses owners to divorce and separate their identities as parents from their identities as employers and typically they see their children as their little babies and they protect them and guiding them as opposed to seeing them for who they are as adults having lived a different life to them, different exposures and different ideas and so the issue really is one of moving from as I often say, moving from monarchy to a democracy where we are able to encourage submission of ideas from a wider range of people because the founders have typically been so used to being the custodian of all the ideas and now it is really leaning in and your child might not have had the same life experiences as you, they might have been educated abroad or they might have worked in corporate or they have a flair for technology and it is humility that is require to lean in and think what can I learn from you and that humility goes both ways by the way. So I think it is often very difficult for founders to see, to divorce like I said the relationship as parents, in our culture as parents they have say, they can dictate to you what to do, their age gives them a premium where they should be respected and you should not question and that dynamic plays itself in the business, even an employer employee relationship need not be that way, it often is in our side of the world but we can have an environment whereby we encourage contribution from everyone and not just contribution of ideas and solutions but also we want everyone to challenge the status quo and that’s where innovation happens 

PwC: But isn’t that where the culture gets in the way because  to challenge is to be seen as disrespectful, like you said that when you came in to introduce some of the changes, some people left, like how do you leave your source of livelihood because someone has come to make the business better?

Nike: I mean nothing good happens in a place of status maintenance, nothing great and I think this notion of we can have it all, we can please everyone, those that are upholders of heritage whatever that means and those that are pushing for the new and the novel is the fallacy and I think it’s important to stick to fact. I believe it’s important to be confident with who you are, be authentic with that, some people will be happy, some will not. That's fine but what is important to you is individual, what are your values. That I believe is where the starting point is. If you take a step back and look at a lot of founders, they have been cultural pioneers in many ways, they have been rebel’s to some degree because to be able to build something that doesn’t exist against all odds where people tell you it is not possible, to be a visionary and see things in your mind’s eye that others can see with their physical eye and you are able to bring that to life, it’s not beans and so this notion that change comes with ease or building comes with ease or legacy comes with ease, we must dispel it. The truth of the matter is what we are placing our minds on and what we are working towards is far bigger than this costs so to speak along the journey. So I believe that a lot of family business owners will find themselves as cultural pioneers, going to places that others have not, doing things in ways that others have not but I believe that it is in this places that we will unlock innovation and so much creativity 

PwC: Thank you for that Nike. We are going to have one more question before we end this episode and it’s just sort of looking at the possible solutions to this issue we have in the continent and maybe globally. What is the best way to address this issue of changing of the guard where the founder is reluctant to hand over the reins completely? How can we actually fix this issue? 

Nike: Firstly if you are a next gen or a staff, it is important to understand the perspective of the founder, come from a place of empathy. You know there is a lot of metaphors and analogies that says a business is like a baby to the founder and there have been scientific studies that show that actually when founders think of their businesses, the same areas of their brain that are activated when they think of their baby, their actual physical baby, they light up as well

PwC: there is even one that says mistress as well 

Nike: exactly. So there is a deep emotional bond with the business and to suggest certain things for that business might be very distressing for the founder. It is them also grappling with fear of their mortality because retirement is really a sign post of you are entering into the latter phase of your life and also represents a loss of their identity, their identity has been wrapped up in building this business, the loss of significance and in fact founders are often dealing with a lot of anticipatory grief so the manner in which we are handling someone that is dealing with trauma, it has to be extremely delicate enough and not preach at that person but speak to the person in empathy and to bring about the desired change that we want, that’s what I will say. And to be able to deeply understand the position and ideas of the founder as opposed to other things is simple- observe, listen and learn to understand the perspective of the founder. What they are feeling, what they are thinking, what they are seeing, what they are hearing, the reality is that their perspective is likely different from yours, their priority is likely different from yours and so before just trying to Marshall change and grabbing on to responsibility, it is important to know what it is that is important to them and when you are in a position where you are learned on the way they see things, let me say the way they see life which is their reality then you would communicate your ideas in a manner that will sound and sing well with them  and sing well with them. For instance, I observed that a lot of founders are typically more focused on the short medium term and NextGens typically are more focused on the long term and for founders, typically, they want to see more revenue, more Cash flow and productivity and so if a next-gen is submitting the idea of how he can make this business into a legacy, multi-generational for your great great grandchildren, how is that going to bring money to the table. So your ideas just need to be articulated and communicated, highlight the benefits that sings, that will keep the founders interested, be able to seem more persuasive 

PwC: in a nutshell. That is essentially finding that Balance between what the founder wants when you understand them, their short term view and saying You know what I can give in the short term versus the bigger picture, the long term and you just getting that across to them in the best possible way right? 

Nike: yes 

PwC: okay. Thank you very much Nike and to end this episode we will just like you to share two top recommendations that you think are important to foster succession planning or business continuity in Africa 

Nike: number one I will say start with conversations as a family, it is important to have clarity of vision, clarity of mission, clarity of conviction as a family that’s the first thing and the second I will say is to seek to collaborate. Collaboration is not domination or one person’s view but really about a wider stakeholders about the collective and if you can build the clarity, the collaboration and the communication, you are setting yourself for a good steady growing legacy for your family enterprise HOST: thank you Nike for an amazing conversation and for coming on NextGen talks 

Nike: thank you so much for having me 

PwC: We have come to the end of this episode of NextGen talk but before I go here is a quick note to all family business owners: “remember conflicting differences of opinion are inevitable, we are only human but the emotions involved in  family discussions can be difficult to resolve internally. Thank you for listening.