How and when do you best prepare to run your family's business? For Eric Babolat, the question came unexpectedly and tragically early.
Eric belongs to the fifth generation of the Babolat family, which owns and runs the oldest tennis company in the world. Some 140 years ago, Babolat invented racquet strings about the same time the game of tennis itself was born.
Eric joined the company in his early twenties after his studies as a product manager and was committed to learning about the tennis business from the bottom up. He thought he had plenty of time to prepare to take on a leadership role.
But when he was 28, his father Pierre, the CEO of the family business, was killed in the crash of Swissair Flight 111 off Nova Scotia while returning from the US Open tennis tournament.
"We all were totally caught by surprise," Eric says. "My sister and I had to instantly take over the responsibility for the business and on top of it manage ownership and governance issues."
Besides having to cope with grief and a changing life, Eric and his sister had to help steer the business through a crucial period. Babolat had just launched its first line of tennis racquets in Europe and required strategic leadership to grow into the US market.
Could Eric and his sister have been prepared for this situation? "Probably not," he says. "We wished at the time that we had been trained in what it really means to 'stand in' and take over as a business leader and an owner and a family successor."
Although Eric's case is exceptional, it highlights two important issues. One is the need for family businesses to build and train a critical mass of potential successors to secure a sustainable competitive position into the next generation. Second, what questions should next-generation members ask themselves before joining the family firm? We would suggest four:
Do I want to join my family business?
Belonging to the next generation of a family in business is often seen as a great privilege for a young adult: it's a chance to develop personally and become financially secure. But it is also a huge responsibility, and some next-generation members prefer not to make such a fundamental decision early in their lives. Not everybody intuitively knows like Eric and his sister that they want to own and lead the family firm.
Parents might not openly discuss the question of the next generation joining the family business, because they don't want to put pressure on them. But children can intuitively sense their parents' expectations. Potential next-generation successors are observed and compared to their predecessors, both within the family and by outsiders, to see if they can step into their shoes. Next-generation members need to not only develop their executive leadership skills but also have a fine sense of "family acumen" to manage their relations inside the family system.
What role should I play?
There are many ways to find a place and add value to the family business. Ambitious family members may aim to become the CEO or board chairman of the family firm, but only a few are up to the task. Others prefer to pursue professional careers and interests outside the family firm.
In between these two extremes are many possible paths, such as the family strategy committee, family to business advisory board, family assembly, next-generation committee, head of human resources, family council, social responsibility and sustainability committees, family investment committee, entrepreneurial fund and non-core projects, family office, overseer of the family mansion and archives, family foundation and philanthropy, head of an "information circle" and "study groups" to educate next-generation owners, social events chair, and leader of a "memory project" to record the history of the family firm and individual contributions to it.1
When should I get involved?
[This article has been reproduced with permission from IMD, a leading business school based in Switzerland. http://www.imd.org]