The second of seven stages of succession we have identified is that of knowledge and the conversion of theoretical to practical proficiencies.
Incumbent leaders often struggle with letting go because they feel their successors do not know enough to run the business. Trust and respect for their leadership abilities has been inadequately developed. Are they proficient in the knowledge and skills to lead the business? The next generation may have learned a lot over time, and have undertaken formal education that helped, but the transition from theoretical to practical knowledge takes patience and mentoring. The transition of knowledge and wisdom from elders may have been sporadic.
It is critical that the succession planning process include an assessment of what competencies and knowledge a leader will need to take the company where it is going rather than where it has been. In our experience the proficiencies that family business leaders need to develop is dominated by self-management, people skills, practical knowledge, and on-going learning. These generic skills ranked ahead of technical knowledge of accounting and marketing. For aspiring leaders the development of these generic skills is generally best commenced by some time working outside of the family business.