Profit and Leadership : March 2015

Monday, March 30, 2015

Time Spent On iOS and Android Connected Devices

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Thursday, March 26, 2015

Real CEOs exude confidence. Radiate certainty. Act decisively. Or so popular mythology has it. (Think Don Geiss, the fictional chief executive of General Electric played by Rip Torn on NBC’s comedy 30 Rock.)

In fact, the overwhelming majority of CEOs confess that they have doubts. That’s one of the striking findings of The CEO Report, the product of a yearlong global research partnership between Saïd Business School at the University of Oxford and Heidrick & Struggles. Of the more than 150 CEOs who sat down with us for confidential, in-depth interviews, 71 percent not only admit to doubt but also embrace it as a basis for better decisions.

“If you don’t doubt yourself in a constructive, positive way,” said one participant, “you are borderline dangerous for your company.”

Doubt is a challenge of both knowledge and emotion. Knowledge can fall anywhere on a continuum from full not knowing to full knowledge. Feelings of doubt can fall anywhere between anxiety and fearlessness. How much knowledge do you have when you face a difficult decision? How anxious do you feel? How might you use your uncertainty as a tool?

Thinking about doubt along those two dimensions, with their four possible combinations, provides a systematic way — for CEOs and other leaders alike — to manage doubt and even use it as a competitive advantage:

Low knowledge/no fear. This is perhaps the most dangerous combination of all. The risk is hubris — charging blindly ahead, despite what you don’t know. The remedy is preparation. The means, say the CEOs we spoke with, lie in risk management to increase the odds that what you don’t know won’t hurt you. Techniques can include scenario planning, worst-case scenarios, long-term planning, contingency planning, and more. The goal, as in all instances of doubt, is to find a comfort zone in which you can act decisively despite not having full knowledge.

High knowledge/no fear. Of all the possibilities, this one would seem to entail the least doubt. Even so, there remains the risk of myopia — the chance that a false sense of security has led you to overlook other important choices. The remedy is challenge. Diversity of thought provides the means to get there. As one CEO put it, “One of the most important things is having people around you that tell you how wrong you are.” You can seek diverse points of view from your management team, your board, and a wide variety of other people inside and outside the company. You can also use techniques such as war gaming or a devil’s advocate to surface contrary views, and you can foster a culture of constructive dissent.

High knowledge/high anxiety. The risk here is angst — not just another word for anxiety, but a deep-seated fear that could prevent you from pursuing a course of action you are convinced is right. The remedy lies in validation. You can seek it from mentors and the board, from other internal sounding boards, and through benchmarking. And if you don’t get validation, you can at least learn that your fear was justified.High knowledge/high anxiety. The risk here is angst — not just another word for anxiety, but a deep-seated fear that could prevent you from pursuing a course of action you are convinced is right. The remedy lies in validation. You can seek it from mentors and the board, from other internal sounding boards, and through benchmarking. And if you don’t get validation, you can at least learn that your fear was justified.

Low knowledge/high anxiety. This is the worst of both worlds and the condition likely to generate maximum doubt. The risk is paralysis — an unaffordable risk when a decision must be made despite the state of your knowledge or your emotions. The remedy is awareness, encompassing the cognitive and the emotional. You can constructively harness doubt in this situation through continual learning, including wide and deep reading, data collection, expert advice, and conversations with a wide variety of people about both dimensions of your doubt.

Understanding the risks and remedies for doubt enables leaders to mitigate their discomfort, whether its source is cognitive or emotional, and return to a zone where they can make more productive and well-considered choices, turning doubt into a powerful decision tool.

But what of the nearly 30 percent of CEOs who were reluctant to admit that managing doubt was a part of their job? Are 3 out of 10 companies led by chief executives who rarely have second thoughts? Probably not. In fact, around 10 percent of the interviewees who denied having any doubts went on to describe how they reduce uncertainty and gain clarity — in other words, reduce doubt. Like their peers who approach doubt more consciously and systematically, they recognize that certainty can be not only an illusion but also a dangerous one.

Written by

Bonnie Gwin

Vice Chairman, CEO & Board Practice, Heidrick & Struggles

7 Tips for Managing Your Schedule Like a Pro

Something Lou Gerstner, former CEO of IBM, once said has stuck in my head: "Never let anyone own your schedule." It's simple and obvious, yet genius.

Over the years, whenever I didn't follow this advice, I was stressed and unproductive. Gradually I learned that planning and following a routine makes a huge difference in how I feel and what I get done. Here are some of the things that help me manage my schedule that you may find helpful:

1. Create a routine

No matter what you are working on, create a routine. Block times for specific activities, and stick with the plan. Turn your calendar into a bunch of blocks, and put activities into those blocks. Whatever is not planned, you don't do. If you want free time, plan it.

Your routine may change through the year, but at any given time it's better to have a plan. For example, if you are working on launching a company, and need to do customer discovery, coding and hiring, then prioritize and block specific times for each activity.

Here is a sample calendar I made that illustrates some of the concepts and ideas from this post.

2. Group meetings and calls into blocks

For example, if you need to have outside meetings, block two and a half days a week for those meetings, and go to the outside meetings only during those times. Do the same thing for in-office meetings. This way you are not only creating a chunk of time for meetings, you are also creating other blocks of time that you will be able to important work. Do the same thing with calls, and book them all back to back.

3. Optimize time for different meeting types

Personally, I am now a big fan of 30-minute meetings and 10-minute calls. I think 10-minute calls are a great way to initially connect with someone or give someone quick advice. You can do a Google Hangout or Skype if you prefer to see the person instead of just hearing them. The reason 10-minute calls work is because people skip BS and get to the point. Try it. Ten minutes is actually a lot of time, if you focus. I prefer to do these calls on Fridays, when I am usually working from home.

I am not a big fan of introductory coffee meetings, lunches and dinners. I am a huge fan of coffee and meals with people I already know. Those meetings are typically productive and fun, but the first time you are meeting someone, it's more productive to do a call or an actual 30-minute meeting in the office.

Here are the types of meetings you might want to book:

30-minute meeting in the office to get to know someone or catch up
45-minute meeting outside of the office. Allow 15 minutes for travel.
10-minute call to help someone who needs advice
15-minute daily standup -- great for startups and engineering teams
30-minute weekly staff meeting

Whatever meetings you hold, group them into blocks depending on your particular schedule. If you feel like a particular type of meeting needs more or less time, then adjust the block accordingly.

4. Use appointment slots

There is a great feature in Google Calendar called Appointment Slots. It allows you to book a chunk of time, and then split it into pieces. For example, I can book three hours of outside meetings and then split it into three meetings -- one hour each. Or I can book one hour of calls and split it into six calls at 10 minutes each. There is also a bunch of specific tools, such as doodle, that do that too.

The next step is to create bit.ly links for different blocks of time.You can have a link for your outside meetings, another link for 30-minute inside meetings and yet another one for 10-minute calls. You then share these links, and they can book the time with you. I've done this with Techstars candidate companies and it was amazingly effective. It minimized the back and forth on email and saved a ton of time for me and the companies

This won't work with everyone, because some people may find this rude. In any case, if you are not comfortable sending the link to a someone, then you can use your own appointment slots, suggest a few meeting times, and then book the specific slot yourself.

If you are asking someone to meet, always propose several specific alternative times such as Tuesday at 4:30 p.m. or 5 p.m. on Wednesday. David Tisch gave a great talk that covers scheduling meetings and many more basics of communication.

5. Block time for email

This is the most important tip in the whole post. Email will own you unless you own it. To own your email you must avoid doing it all the time. To do that you need to schedule the time to do your email. It is absolutely a must. In fact it is so important that I wrote a whole entire post about managing email.

6. Plan your exercise and family time

Unless you put it on the calendar, it won't get done. Well, that applies to your exercise and time with your family. Whether you go in the morning, afternoon or evening, do it three times a week or every day, put exercise time on the calendar. My friend and mentor Nicole Glaros makes it very clear that her mornings, until 10 a.m., belong to her. She hits the pavement or the gym, depending on the weather, and rarely deviates from her routine.

The same applies to planning time with your family and significant others. If you are a workaholic like me, you will end up stealing time from your family unless you book it in advance and train yourself to promptly unplug. Many people in the industry have talked about planning family time. My favorite is Brad Feld, who talks about it a lot.

7. Actually manage your time

I think about my time a lot. I think about where it goes. I think about where can I get more of it, and how to optimize it. When I was running GetGlue, I had an assistant who was managing my time. She was awesome. But when I joined Techstars, I decided that I will manage my calendar myself. I have to confess that I am happy about this decision.

I find myself thinking about what I am doing, who am I meeting with and why a lot more. I meet with a lot of people every week. My schedule is particularly insane during the selection process. Yet, because I manage my calendar, follow a routine, plan meetings in blocks and use appointment slots, I find myself less overwhelmed and less stressed.

Taking ownership of my calendar and planning my days and weeks made me a happier and more productive human. I hope this post helps you get there too.

I would love to hear your productivity tips. How do you manage your time? How do you handle your calendar? What tools do you use? Please share in the comments section below.

This article was written by a member of the AlleyNYC contributor network. AlleyNYC is one of the world’s largest innovation hubs, helping foster the growth of startups in its flagship location in New York City. Entrepreneur Media is a partner and investor in AlleyNYC.

walk out of your bad mood

Are You an Attacker, a Defender, or a Sitting Duck?

The time has come to make your own preparations for leading your business. Conditions are changing, and so too are the capabilities demanded of leaders. Management training programs and career paths that move you up step by step in a functional silo don’t cut it. They were designed in earlier times when external conditions were more stable. They do little to prepare you for an environment in which industries and market spaces can get obliterated practically overnight. Nor do they help you develop the large-scale entrepreneurialism that underlies many recent successes, from Facebook and Google to Netflix and Twitter.

What matters now is how quickly you can spot the opportunities that are emerging and mobilize the organization to pursue them. You need to be on the offense, ahead of the curve, creating a bend in the road that other players have to negotiate around.

Think of how Apple changed the game for the music industry with the iPod and iTunes, putting a permanent chink in the profitability of the big music producers. Or how Amazon undermined the big book retailers Borders and Barnes & Noble when it was first to sell books online. Now AirBnb is attacking the hotel business, while Uber and Lyft are taking on taxi’s.

The truth is that few leaders are attackers. Many more are defenders, who struggle to maintain their existing business when shifts in the competitive landscape and money making have already begun. Still others are sitting ducks, unaware of the changes that are underway until it is too late to recover.

Where do you stand? Answer the following questions to rate yourself on a scale from 1 to 10, where 1 is “not at all true” and 10 is “very true.”

I am aware that structural change is occurring more frequently and that it is my job as a leader to detect it.
I frequently scan the external landscape looking for developments that might impact my business.
Instead of ignoring, fighting or worrying about structural change, I look for opportunity in it.
I consider it part of my job as a leader to create structural change that benefits my organization.
I regularly look beyond my industry to monitor the geopolitical and other macro factors that can impact the global economy and business landscape.
I have created disciplined routines for myself and my team to rise above the daily details and sharpen our ability to detect and predict structural changes.
Whenever operating problems arise, I check to see if they are related to any signs of structural change.
I track companies that are using mathematics and advanced computing power to transform their businesses—even if they are outside my industry—and imagine how some of them might destroy our industry and reshape our market space.
I accept the fact that uncertainty is here to stay, and that I may need to make bold decisions even when some of the deciding factors are still not clear.
I am psychologically and organizationally prepared to recognize structural uncertainty and convert it into breakthrough opportunities.

Now add your points. If you scored 90-100 points, you qualify as an Attacker.

Congratulations. If you scored 60-90 you are a Defender. You should up your game to keep pace with the speed of external change. If you scored lower than 60, you are a Sitting Duck, at risk of being blindsided by an attack you don’t see coming.

Here are some steps you can take to better prepare yourself for going on the attack:

Reflect on your attitude about structural uncertainty. Think of structural changes you have witnessed in recent years and consider who created them and how others responded to them. As you reflect on leaders who created a structural change for other companies, think about what they saw that others didn’t see.
Commit to widening your lens, scanning the environment broadly for things that are new and different, from technology developments to social trends. Seek ways to turn them to advantage. How might these transform the consumer experience?
Decide on one or two new habits you will adopt to stay better attuned to external change, particularly outside your industry. These could include a daily practice of reading the newspaper--for example, the Lex column in the Financial Times--or setting aside ten minutes at the beginning of every staff meeting to discuss with others what they’re picking up from the outside world and what it might mean for your business.
Recognize that in today’s world total clarity may come too late. Go beyond hard facts to make judgments about what is unfolding and encourage others to do the same. Test your hypotheses, then muster the courage act on your new insights.

Ram Charan is the author of the new book, The Attacker's Advantage: Turning Uncertainty Into Breakthrough Opportunities. Read more at Ram-Charan.com.

Wednesday, March 25, 2015

Leadership Lessons from Great Family Businesses

It’s no secret that family businesses can struggle with governance, leadership transitions, and even survival. Consider a few high-profile examples: Banco Espírito Santo was rescued by the Portuguese government last year following the resignation of its CEO, the great-grandson of the bank’s founder, amid allegations of financial improprieties. The Doosan Group, a South Korean conglomerate, was thrown into turmoil when the clan that runs it replaced one brother with another in the chief executive role. Fiat, the Italian auto group run by the heirs of Gianni Agnelli, went through five CEOs and three chairmen in two years before bringing in an outsider to lead it. And in the United States the New England grocery chain Market Basket faced employee protests and lost $583 million in sales as two cousins—one a board member, the other the chief executive, both grandsons of the founder—publicly vied for control of the company.

Although we’ve also heard numerous family-enterprise success stories, cases of harmony, health, and longevity seem to be exceptions to the rule. According to the Family Business Institute, only 30% of these organizations last into a second generation, 12% remain viable into a third, and 3% operate into the fourth generation or beyond. Even those that do continue often see their value decline significantly when power changes hands at the top. Joseph Fan, a professor at the Chinese University of Hong Kong, tracked the market performance of 214 family-run firms in Taiwan, Hong Kong, and Singapore; he found that on average their shares dropped by almost 60% in the eight years surrounding a change of CEO. Leaders of family companies acknowledge the problem. In a survey conducted by the Harvard Business School professor Boris Groysberg and the researcher Deborah Bell, directors of family business boards gave themselves much lower performance ratings than members of nonfamily boards, especially in the area of talent management. Fewer than 10% said their companies were effective at attracting, hiring, retaining, or firing employees or at leveraging diversity in the workforce.

Only 30% of family businesses last into the second generation; 12% are viable into the third.

And yet family-owned or -controlled businesses play a key role in the global economy. They account for an estimated 80% of companies worldwide and are the largest source of long-term employment in most countries. In the United States they employ 60% of workers and create 78% of new jobs. These aren’t just mom-and-pop shops either: In one-third of S&P 500 companies, 40% of the 250 largest firms in France and Germany, and more than 60% of large corporations in East Asia and Latin America, family members own a significant share of the equity and can influence key decisions, particularly election of the chairman and the CEO.

Imagine the benefit, then, if more of these companies mastered key people management, leadership development, and succession practices. How? By learning from the best in their class: large family-owned or family-controlled organizations that have prospered for decades, if not centuries.

With advice from Sabine Rau, a professor at King’s College in London, our firm, Egon Zehnder, partnered with Family Business Network International to analyze 50 of these leading family firms. Each had annual revenue above €500 million, and together they represented all major industries in the Americas, Europe, and Asia. Although we did find a few cases of subpar governance and undisciplined succession at the top, most of these companies offer valuable lessons for unlocking great leadership in family businesses. Through our interviews with both family and nonfamily executives, we uncovered several best practices: The most successful family firms establish good governance as a baseline, preserve “family gravity,” identify and develop both family and nonfamily talent, and bring discipline to top-level succession.

A Governance Baseline
Family businesses cannot hope to manage internal talent (both family and nonfamily) or attract the best outsiders without establishing good governance practices that separate the family and the business and ensure oversight from a professional board. Even among the leading companies in our study, a quarter of the nonfamily executives we interviewed said they originally had governance-related concerns about joining a family business: uncertainty about levels of autonomy, hidden agendas, lack of dynamism, and the potential for nepotism and irrational decisions. “What would have absolutely stopped me from coming,” said the CFO of a British investment trust, “would have been if I had a feeling that I could not be independent and the family was running the business rather than it being professionally run.” The CEO of a U.S. consumer business who also proceeded cautiously before signing on told us, “I was making sure there was a level playing field in terms of future possibilities, growth, and advancement.”

Only a small minority of the companies in our study had no advisory or supervisory board, but all those were entirely family-owned, and some were considering instituting a form of independent oversight in the future. Meanwhile, 94% of the surveyed firms were controlled by supervisory or advisory boards of about nine members, on average. Family representation on these boards averaged 46% in Europe, 28% in the Americas, and 26% in Asia, but a clear separation between family and business existed in most cases. “We have an official governance structure, and this codifies the boundaries,” reported the nonfamily CEO of a well-known consumer company in the UK. And the CEO of an American maker of high-performance materials explained his firm’s explicit rules: “We have a supervisory board, and each branch of the family tree is allowed to send one member, unless the branch already has a member as part of management. For every family member on the board, one external, nonfamily member is also nominated.”

Good governance is an obvious first hurdle for family businesses that want to hire and keep the best people and compete successfully over the long term. Committing to sound decision-making and management practices is thus essential, whether a company is publicly traded, partly owned by professional investors (such as private equity firms), or completely under family ownership.

"Family Gravity”
Although family businesses should match nonfamily ones in their governance structures and opportunities for professional growth, they must also be careful not to lose what makes them special. We call this “family gravity,” and our research shows it’s another critical factor in achieving long-term success.

The firms we studied usually have one key family member (but up to three) standing at the center of the organization, like the sun in our solar system. These people personify the corporate identity and align differing interests around clearly defined values and a common vision. They focus on the next generation, not the next quarter. They tend to embrace strategies that put customers and employees first and emphasize social responsibility. And they have strong personalities that draw talented people into their orbits and keep them there. One nonfamily CFO of a Japanese education company told us, “I decided to join because I fully respected [the family patriarch] from my heart.” The nonfamily CEO of a Swedish media business expressed similar sentiments: “I liked the family. They were somehow real people with personalities that were exciting to manage.” Other executives said, “My shareholders have faces” and “The beauty is that we think long term, about the legacy we will leave behind.” When a single family member (or a few who are completely in sync) maintains the right presence in a family business, recruitment, retention, and results clearly benefit.

Finding Future Leaders
Companies with sound governance and gravity should have no trouble attracting managers—from within or outside the family. But how do you decide who is right for the highest-level positions in your firm? All talent, and especially family members, must be assessed on competencies, potential, and values.

The competencies most frequently required for success at the top of any sizable business include strategic orientation, market insight, results orientation, customer impact, collaboration and influence, organizational development, team leadership, and change leadership. In family businesses you should also look for people who understand the company’s ownership dynamics, accept that responsibility for multiple generations comes with the job, and are able to manage social ventures and sustainable growth. Along with competencies, candidates must demonstrate potential—the capacity to change, learn, and grow into increasingly complex and challenging roles that we might not envision today.

But in the family businesses we studied, values seem to be the acid test. When we reviewed the transcripts of our interviews, we found a 95% overlap in the language that each firm’s family members and nonfamily executives used to describe their corporate ethos: words such as respect, integrity, quality, humility, passion, modesty, and ambition. “We are working on the same page, in the same way, and he understands my commitment to bring the company forward,” the nonfamily CEO of a German retailer said, referring to the group CEO. The family chairwoman of a Chinese consumer company reported, “We have the same values, the same vision. We trust each other.”

Family members told us that when evaluating senior executive candidates, they considered cultural fit above all else: “He did not have all the operational requirements the board had asked for on paper, but he had so much more!” said the family chairman of an Indian consumer business, describing his nonfamily CEO. “He is the kind of person who just fits into our culture, and that is more important than the role spec.” The family chairman of an American beverage company echoed those sentiments: “We evaluate people on the basis of leadership qualities, which extend to the interaction with the family. That includes their values, which is very different from a résumé that says this person built up the Russian business.”

About the Research

The businesses we surveyed were among the top three in their respective geographic markets and industries, with at least 50% of voting rights controlled by family members, most of whom were in the third or fourth generation.

Seventy-seven percent of the European companies, 48% of those in Asia, and 33% of those in the Americas were more than three-quarters owned by the family. In most cases, we interviewed at least one key family member and one key nonfamily executive, including 34 family chairmen, 12 nonfamily chairmen, 12 family CEOs, and 31 nonfamily CEOs. The interviews, conducted in person in the local language by Egon Zehnder consultants around the world, were audiotaped, translated into English, and coded. To analyze succession processes, we carefully reviewed the most recent change in top leadership, including the method of identifying the anointed person, the evaluation criteria, the family’s role in the process, family members’ perceptions of the successor, the successor’s view of the family, the first 100 days of integration, and communication with the new leader.

With family executives, in whom cultural fit was more easily found, the key concern was development. More than 40% of the companies in our study included members of the next generation on their boards and committees in order to nurture their business and management skills. Younger family members also held positions such as head of U.S. sales, China country manager, and adviser to the CEO, and they filled roles at various levels in corporate strategy, innovation, product management, and the family office. At one U.S. consumer company, the CEO, a family member, told us, “We very consciously develop family talent with two to six interns every year. The culture used to be, Go out and make it on your own, and come in with a track record. Now there is more encouragement to consider working for the company [from the start].”

The best family firms find their future leaders early and invest in them—whether they are cousins and grandchildren, existing nonfamily employees who show promise, or outsiders with no previous connection to the firm. Likely prospects are carefully brought up through the business so that when they’re ready for more-senior roles, the values and competencies match is a sure thing. “I prefer to hire and grow,” the family chairman of an Indian consumer company told us. A top nonfamily executive at a Chinese business outlined his firm’s approach: “We created a corporate university sponsored by the family, not the company, and educated 100 people at MIT and Stanford to prepare them for management.”

Disciplined CEO Succession
The greatest threat to any large corporation is a failed CEO succession. In his analysis of once-great companies in decline, Jim Collins, a leading business thinker, found that all but one had experienced a problematic transition at the top, and Joseph Fan’s research confirms the value destruction often seen in such scenarios. If there is one area in which most family businesses could stand to improve, this is it. Even among our exemplary sample, nearly 30% considered only a single candidate for their top succession, and about two-thirds didn’t follow a properly structured selection process. Instead, a leading family member intuitively chose the successor, who was then formally approved by the supervisory and management boards and introduced to the rest of the organization. Sometimes the decision came about through inspiration or chance: “[Our CEO first] worked with us on a consulting project,” said a family representative from an Indian consumer company. “Over that period of four months, I got to know him and his style really well.” In other cases, recommendations were sought. At one Spanish company, a family member consulted a management professor he trusted and chose between the two people the professor recommended. At a Japanese consumer business, the board appointed a family member who had risen through the ranks. “He built up his career here and knows the daily operations and products very well,” a nonfamily director explained.

However, ample research shows that CEO appointments are far more successful when they follow a disciplined search involving multiple candidates. The best family businesses in our sample addressed CEO selection proactively and strategically (see the chart “A Disciplined Succession Process”). In the initial stage, the supervisory board appointed a formal nominations committee to define the specifications for and conduct a broad internal and external search. This included outlining the ideal profile, developing a long list of candidates, and assessing all of them through behavioral interviews and reference checking. Next the committee selected a short list, agreed on a ranking, and presented it to the supervisory and management board members, who chose a finalist. Finally, the family members and the independent directors approved the selected candidate, although in most cases they had an informal yet significant veto power.

The former (nonfamily) CEO of a British construction company told us, “The process was handled very professionally. Initially, I was interviewed by HR and the third-generation family, then I had sessions with the leading family member, then with the brother, then with all five of the fourth generation together, and then I had one-on-one sessions with all the nonexecutive directors. All of them took references on me.” At the Swedish media company, the family chairman led a similarly comprehensive assessment process: “I decided that seven elected board members would each get some time to interview [the prospective CEO], either by themselves or a few together. Then we compared notes and came to a conclusion.”

Most of the companies followed a clear hierarchy when considering candidates, giving preference to family first, internal talent second, and external executives third. We enthusiastically endorse that practice, provided that the right assessment and development processes are in place. In family businesses, where culture and personal relationships are critical, internal hires stand the best chance of success. In the 50 firms we studied, 38% of CEOs were family members. Of those who weren’t, 54% were internal appointees and 46% external. In those cases, we found three basic types of executives. The sidebar “Three Nonfamily CEO Archetypes” describes them and their suitability for particular mandates.

Of course, the initial integration period can make or break any newly appointed executive. On the basis of our experience, we estimate that the right transitional support can cut the risk of a failed hire or promotion in half. Especially for nonfamily CEOs coming into family firms, major conflicts almost inevitably arise in this phase, as we heard from some of the executives we interviewed. “The owners say that I am responsible, but the next day they move into this field and make decisions, and sometimes they don’t even notice,” the managing director of a German business told us. “It is impossible to become part of their world,” said an executive from a different company. “I never got the feeling that it is my project.”

To avoid these problems, family firms must ensure that new CEOs are given adequate time to get to know the organization and its key players as well as to meet and bond with important family members. “When we get someone in, we accompany him like a personal scout,” one family CEO explained. “A director or board member introduces him, helps him, and talks to him regularly. The know-how is transferred personally.” The family chairman of a Belgian food and beverage company described a similar approach: “He will have lots of contact with me, and I will make sure that I can show him what the family wants.” A thoughtful onboarding process, along with a professional, fair selection system, can help a CEO succession unfold smoothly and effectively, creating value for the company rather than destroying it.

Leadership decisions, particularly at the very top, can be a minefield for family businesses. But our research shows that companies can navigate safely and prosper for generations if they establish good governance as a baseline, preserve family gravity, identify and develop high-potential executives both within the family and outside it, and bring the right discipline to their CEO succession and integration processes. The payoffs are clear: Research by Ernst & Young, the Family Business Network, Credit Suisse, and others shows that large, long-standing, publicly traded family businesses grow faster than nonfamily companies, are more resilient, and outperform market returns by several percentage points.

Claudio Fernández-Aráoz is a senior adviser at the global executive search firm Egon Zehnder and the author of It’s Not the How or the What but the Who (Harvard Business Review Press, 2014).