BY PROF. Enrique Soriano
IN FAMILY businesses, leadership succession is often viewed as a simple passing of the baton from one generation to the next.
However, focusing solely on succession — merely identifying who takes over — without cultivating true leadership can be a pitfall that endangers the long-term viability of the business.
I am in Vietnam now for Board and next generation governance work and I cannot emphasize this statement enough, “the next generation may inherit control, but they may not always possess the skills, vision, or character required to lead. This is why developing leaders, not just successors, is critical for the future success of any family-owned enterprise!”
The Difference Between Successors and Leaders
A successor is someone who takes on the role of leadership — often due to bloodline, familial obligations, or company bylaws. However, being a leader requires much more than simply being the designated heir.
A leader is someone who can inspire, motivate, and steer the business through changing landscapes, while fostering a shared vision among the entire family and the management team. Leaders must be adaptive, visionary, and capable of making decisions that not only preserve the legacy but also push the business forward.
The key difference between a leader and a successor is that while successors may be appointed, leaders are made. Leadership is not a birthright but a learned set of skills that must be honed over time.
Why Leadership Development Matters in Family Businesses
Family businesses face unique challenges that make leadership development especially important. These include balancing family dynamics with business performance, navigating succession planning, and maintaining long-term vision across generations. Without strong leadership, the family business can become a victim of internal conflicts, a failure to adapt to changing markets, or the erosion of family unity.
A Harvard Business Review study found that family businesses that emphasize leadership development across generations outperform those that do not. Yet, in many cases, family business leaders often focus on the short-term goal of identifying a successor, neglecting the need for a strategic and intentional leadership development process. The costs of overlooking leadership development are steep: mismanagement, missed opportunities, and eventually the demise of the business.
My Mentoring Approach: Focusing on Leadership, Not Just Succession
In a recent Governance Event, I was asked about my role in mentoring next-generation successors in Asian family businesses. I shared that, as a mentor, my primary role is to be an enabler — helping shape young men and women to embrace core values such as integrity and hard work, while also ensuring they are mindful of their stewardship role. It’s not enough for them to step into leadership positions merely by virtue of bloodline.
My goal is to guide them to become true leaders — individuals who are driven by purpose, who can make informed decisions, and who understand the weight of the legacy they carry. By emphasizing this mindset, I help them move beyond being just successors and encourage them to adopt the responsibility and vision necessary for long-term success.
This philosophy underpins my approach to mentoring in family businesses. Leadership is not inherited; it is earned through experience, hard work, and the deliberate cultivation of the right values.
Developing Leadership Skills: The Critical Components
1. Education and Exposure: Developing future leaders in family businesses requires a mix of formal education and real-world exposure. Many successful family businesses invest in the next generation’s business education, sending them to top universities or industry-specific training. However, classroom learning is just the beginning. Equally important is exposing future leaders to the daily challenges of the business. They need to understand the business not only from the top but also from the ground up, learning the importance of every role and department. (To be continued)/PN
