Loyd and I have not had the opportunity to get together as much as I would like over the last several weeks. Between our work schedules and the fact that he had surgery, not once, but twice, we have not been doing our regular golfing or commiserating. It does not mean that we have not been jabbing at each other whenever we get the chance, we just have not been on the golf course or having dinner where we can just sit and contemplate the problems of privately held businesses as much as we like.
Talking to Loyd recently, the subject of leadership came up and we reminisced about what “leaders” have looked like through the years we’ve been working with them. We could not help but think about how much the roles have changed from what was in the 70’s and 80’s what seemed like a “good ‘ole boy” style to where we are today. To clarify, when I say “good ‘ole boy” what I mean is business owners having power and influence through their relationships with their various sources that touch the business.
Today, that mantra of leadership has long since passed. We can blame some of it on the economic turn in 2008-2009, but all blame does not fall entirely there. The downturn did cause manufacturers and franchisers and business owners to face the hard fact that relationships, although important, will not sustain your business in a downturn. So, you could say that what we experience then has probably helped us prepare for what we are experiencing today, but it is not the most significant change we are seeing.
Working with second and third generation owned businesses, we run into a common theme of trying to run the business the way it has always been run. But what is taking place is a rapid change of leadership due to the expansive retirement of Baby Boomers. Combine this with the next generation of leaders that require leading and doing business differently. I like to call this a paradigm shift. Not only are we being forced to change the way we lead due to market changes, but we are being required to change the way we lead due to how the up and coming leaders wish to lead.
Relationships are still important. But there is more emphasis on all relationships, not just those of yesteryear like the manufacturer or franchisor and lenders. Today, it is about having authentic relationships with your employees, and whenever possible, all of those with whom you do business inside your community or otherwise.
Knowledge of the business is still critical. However today you need to be more versed than just understanding the operational metrics and financial performance. You must be in touch with your employees and making sure you are grooming your next set of leaders. You have to understand how technology is changing how you do business and you have to embrace that knowledge of “soft-skills” is becoming a foundational part of leadership.
The leadership demands for today’s businesses have changed dramatically. One of the most significant changes taking place is that the owner must be the “real-deal” as my friend Loyd likes to say. Today, you need more than just your reputation and relationships. You need to prove your investment in the business, in order for others to invest in your growth.
Dealing with complex business, family, generational, recruitment or growth questions? Ask Dr. Merlot: drmerlot@rawlsgroup.com.
Sign up for our monthly e-newsletter to stay informed on how to overcome related succession planning issues.
