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What Succession Means in Business

Succession is an interesting concept. Basically it is a sequence of events happening in order. Business succession is a bit for more complicated. If a business is successful then it stays around for many generations of employees and ownership. Its product, services and name (or brand) are run by many different people over what will hopefully be a very long time. There are few businesses in the world that can last past the first year, and even fewer that last longer. Japan actually has many businesses and shops that have lasted over 100 years (you may have them in your country as well)! And the reason behind it is business succession.

Blog4-4_What Succession Means in Business

When most people hear the phrase business succession they think that one person “takes over” the business from another. They may even go as far as to say that this is for the best and that, the new person probably has new ideas that can invigorate a company, and knows new business practices. For example, a young businessman would probably know how to easily put a shop online, expanding their potential market to the entire world. While this can be truly successful, business succession actually has nothing to do with “taking over” a business.

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Good business succession is not a simple “take over” for a number of reasons. A business that is already successful (and has been successful for a long time before the newest generation came along) is because of their relationships and history. A successful business has a product or service that is already well known, they have a good relationship with their customers. This relationship can’t just be average, it has to be good enough that those customers pass on their good experience to their friends and children, this is how businesses survive multiple generations. In addition to a good relationship with customers businesses that survive over 100 years also have good relationships with their suppliers. They know how to get the best prices, they’re known for paying their own bills on time and for being a good shop for other businesses to work with. The third relationship that 100 year old businesses have to maintain is the relationship with employees and the surrounding community. Long term businesses must have reliable and dedicated employees that want to help the business succeed. A business has to be known as a fair employer in order to keep producing quality products or services.

So, if you’re the next generation about to “take over” a company that may have been successful for the last 100 years, what methods should you use to make sure you keep the company successful?  Don’t think of it as simply taking over the business, think of it as taking over its history, and its relationships with customers, suppliers and employees. Instead, think about “sustaining” the good business. Consider what you need to do in terms of keeping what came before you and growing what is currently there.

A good way to do this is through the concept of continuous innovation. This in no way means tearing down what’s there and starting over, it means taking what is already there and growing upon it. Successful CEOs who own 100 year old Japanese companies often don’t think of their ownership, they are actually surprisingly humble about their “possession”. Instead, they think of themselves in the line of successful business succession, that they have the responsibility of maintaining the company in the way previous owners did before, and a responsibility to grow the business enough to pass everything on to the generation that comes next.

Businesses that last multiple generations don’t do it without lots of care and thought put in to what came before for their business and what the future may hold for it.

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Written by PH

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