In my work as a family business consultant, one of the biggest challenges I encounter in succession planning is navigating the inevitable tension that arises when leadership transitions from one generation to the next— particularly in companies moving from Gen 2 to Gen 3. In a family business setting, the next generation faces an uphill battle—they must prove themselves to their family, the team, and most importantly, themselves. The main issue is often the differences in the path each generation took to get to the top. Many Gen 2 Baby Boomer leaders often worked with their parents who founded the business. They grew up in it—learning “on the job” from a young age. But two generations of success in the family business often means that Gen 3 have had a formal education outside of the business. This can be a positive, but new ideas and new ways of doing things can often clash with the existing leadership. For Gen 3 this can lead to feelings of self-doubt about their ability to do the job the way their grandparents and parents did and the way they are perceived by the team which can fester to the point of self-sabotage. But by cultivating the following five traits, the next generation can turn into great leaders themselves.
The Five Essential Traits of Successful Family Business Leaders
Subject Matter Expertise
If you’re going to be a great leader of a business, you’d better have deep knowledge about the business, or at least deep knowledge of a skill set directly related to the business. One of the best things incoming Gen 3 leaders can do is hone a specific skill set over time. Practical knowledge about the business can gain you credibility quickly. Think of the young leader who spent their formative years in the lower levels of the business, where the action happens. Those leaders will be far better suited to take over than if they were simply financial experts.
Confidence
If you’re not confident in yourself and your abilities, your team won’t be confident in you either. Confidence can come from a variety of places. Some are born with it. Some develop it over time and practice. But the best way to develop confidence, in a business sense, is to learn as much as possible about the inner workings of the business. This knowledge will give you the confidence to make the big decisions—and will gain you the confidence of the team as well.
Competence
Gen 3 leaders must learn the business, inside and out. And I’m not talking about credentials. Credentials are great, but you must prove it. Results demonstrate competence. And with competence comes confidence.
Humility
Gen 3 leaders are often younger than most of the leadership and employees at the business, and thus must earn trust. Arrogance will alienate the team. Stay humble. Know that you don’t know what you don’t know. Be open and willing to learn from those who have been there and done that. You’ll grow as a leader in all facets when you display humility.
Executive Presence
When you possess all the traits above, you’ll demonstrate executive presence—and true leadership. With these traits, you’ll be able to get real results and inspire real confidence.
How Do We Get There?
I always counsel Gen 3 leaders to start building a leadership brand—like a personal brand but focused on who you want to be as a leader.
Your leadership brand will determine how you are perceived by employees, family, clients, and the community. To create your leadership brand, start with these key elements:
- Clarify your value proposition. What is it that you want to be known for?
- Align your actions with your values. Do what you want to be known for. And be consistent.
- Visibility. Protect and manage your image online and off—but never stop communicating your message.
- Build relationship capital. Grow your influence by cultivating a large professional and personal network. Do this by adding value, and giving as much as you get.
- Create a feedback loop. Seek honest input from trusted confidantes. Be open to criticism.
Whether you’re creating your leadership brand or honing your leadership skills, it’s best to start early. Skill and knowledge are not developed overnight. Learn, constantly. Be intentional with your plan and your actions. Ask for help! Over time, you’ll gain the necessary skills and confidence to become a successful leader.
