Li Ka-shing\u2019s son Victor has a lot to live up to. Here\u2019s how he, and any successor to a family business, can make a success of keeping it in the family<\/p>\n
\u201cIn the traditional Chinese way of doing things, control of the business is always passed on to the first-born son,\u201d says Roger King, an adjunct professor of finance at HKUST and founding director of the Tanoto Centre for Asian Family Business and Entrepreneurship Studies.<\/p>\n
But according to Professor King, first-born children don\u2019t always make the strongest successors. \u201cFirst-borns are typically very obedient and structured because parents tend to spend a lot of time with them; they usually do well scholastically, but one of their shortcomings, especially among sons, is they are risk-averse. They don\u2019t want to take chances. Most successful entrepreneurs are not first-born. A lot of them tend to be last-born, because they\u2019re usually given more freedom to do what they want.\u201d<\/p>\n
In a bid to help tycoons choose the most suitable successor for their family business, Professor King developed a model called CCKP\u2014\u201ccommitment\u201d, \u201cconfidence\u201d, \u201cknowledge\u201d and \u201cpassion\u201d. Those who possess these qualities, says Professor King, are most likely to make a successful successor. Here\u2019s why.<\/p>\n
Commitment: \u201cMany in this generation are educated abroad, so their perspective is very different from the traditional Chinese way of doing things. This is one of the major challenges facing family-owned businesses. The younger generation are under a lot of pressure\u2014they think they should take over the family business, but they have their own interests. Whatever the case, they need to be truly committed to the business to succeed.\u201d<\/p>\n
Confidence: \u201cAs life expectancy increases, the older generation is around longer to observe how the successor runs the business. They usually continue to go to the office and are prone to criticise their child, never really letting go and ultimately micro-managing. If the successor is being told every day that whatever they do they\u2019re not doing it properly, it\u2019s easy to lose self-confidence<\/p>\n
Knowledge: \u201cBusiness lifecycles keep getting shorter because of the number of disruptors out there. Today, it\u2019s not just knowing what your existing business is all about, you also have to think how the disruptors in the industry are going to change your entire business model. You need a successor who knows enough to think beyond the next few years. The next generation has to understand the industry, where it\u2019s going and what the business will look like 5-15 years from now. They need to have knowledge and a clear vision.\u201d<\/p>\n
Passion: \u201cSome people think passion and commitment are the same, but they\u2019re quite different. You can be committed without having passion. Shanghai Jiao Tong University did a survey of family-owned businesses and reported that close to 80 per cent of the next generation didn\u2019t want to join their family\u2019s business. This is perhaps because many family-owned businesses are in sunset industries, and not seen as very sexy or exciting. They see the Pony Mas and the Jack Mas of this world and that\u2019s what they want to do. If you\u2019re going to successfully take over the family firm, you need passion for that business.\u201d<\/p>\n