The client was a leading conglomerate group operating across a number of markets with a significant physical footprint locally and abroad.
With a strong asset-base and a leading market positioning the group was experiencing a plateau in revenues, hence triggering the strategic review of diversification routes and highly capital intensive programmes. With its first generation still at the helm, the second generation was gradually taking on leading responsibilities in the operation, injecting fresh ideas but also a dose of friction arising out of divergent views on key management decisions.
Our engagement was driven by the design and leadership of the execution of a growth strategy for the group, gradually transitioning it towards a stronger margin and return on capital employed. This necessitated the creation of a streamlined corporate structure paving the way for a smooth and effective transition to the second generation, minimising potential sources of conflict and creating new areas for stronger collaboration.
The Challenge
Effective succession and smooth directional transitions are always significantly challenging processes. The complexity increases exponentially in family-owned businesses such as the one of this client. The business was a thriving one but was facing major challenges in terms of competition, growth prospects, talent retention and most importantly adequate rates of return on capital employed. The timing of the generational transition was considered to be a very sensitive matter. The first generation was not keen to rush the process to ensure the transition is smooth and harmonious. The second generation was eager to take on the executive decision-making in the company to steer towards the direction they believe works best.
Within this context, our brief was to facilitate the succession whilst strengthening the business and constantly aligning the organisation to the new directional landscape. The key to the successful outcome was our complete engagement and take over of ownership of the process, forming part of its direction and gradually serving as a bridge between divergent views. We succeeded in creating a common goal and a shared vision which converged the efforts of all the stakeholders and sparked their commitment to achieve newer and higher heights for the next generations of the group.
Execution
The first step was to create a radically new business strategy that was built on a consolidation platform but inspiring enough to stimulate the engagement of the second generation to achieve it and transform it into value for their business. This strategy was reflected into a new organisational framework and a stream of new projects which carved out a role for each key player in the organisation, hence ensuring widespread ownership for the process.
In parallel, we worked with legal and financial advisors to review the company structures and develop a group structure which set the landscape for the transfer of ownership from the first to the second generation over a period of time within a smooth and outcome-driven transition.
Outcomes
· Succession brought about the convergence of efforts towards the implementation of an ambitious business strategy which would have been difficult to attain in normal circumstances.
· Through the consensus reached between stakeholders the potential for disputes and disruption at succession stage has been drastically minimised, ensuring that the main pitfall of succession processes was avoided.
· New roles and responsibilities have been delineated and mutually agreed linking the organisational evolution to heightened levels of motivation .
· The creation of new business streams and major projects triggered a degree of internal competition to ensure all key stakeholders stretch their efforts to deliver stronger contribution to the group’s consolidated results.