How to achieve a successful generational change
What is the secret of successful company succession? The editorial team explored this question in an interview with Prof. Dr. Mark K. Binz. The Stuttgart lawyer has not only resolved high-profile disputes involving well-known business families, but has also been and continues to be active on various supervisory boards of large family businesses.
You have experienced, in some cases first hand, many successions in large family businesses, including as a member of the supervisory board and as a lawyer. Which of these generational changes do you think was particularly exemplary?
The textbook case par excellence is undoubtedly the Fielmann optician chain. Why? Because here all the circumstances fit together perfectly like a puzzle: an entrepreneur of the century like Günther Fielmann, who revolutionized the optician industry. His 35-year-old son Marc, who inherited his father’s genius but still remained down to earth. And who was ready to get into the business himself, first selling thousands of pairs of glasses himself before being appointed to the management board by unanimous decision of the supervisory board at the age of 24. There he devoted himself primarily to digitization and globalization. Today, the Fielmann Group is number 3 in the world with 22,000 employees and more than 1,000 branches in 13 countries. The secret of the success of the generational change? Father and son did not have the classic conflict, but formed a rarely successful and harmonious dual leadership for years. The 16-member supervisory board, with equal co-determination, closely monitored the change of leadership under my leadership from the very beginning.
Do you have any other positive examples?
The generational change was similarly successful and smooth at Viessmann, Sixt, the dm Group and, at least in the final phase that I was responsible for, at Haribo and Tengelmann. This also includes our largest client, the Würth Group in Künzelsau. More than 30 years ago, we set up a family foundation that owns the entire group of companies with a turnover of more than 20 billion euros and a group profit of more than one billion euros. The foundation is still the highest management body of the family business, and daughter Bettina has chaired the advisory board for many years. Reinhold Würth himself withdrew from operational responsibility many years ago and transferred responsibility to a board of directors made up of external, highly qualified top managers. We also find this model of the family-controlled company at Festo AG, an international company in the automation sector. Here, the family is not represented on the board of directors, but exercises its influence through the supervisory board, of which I have been a member for more than 20 years.
What do you think are the key success factors for a successful succession?
The key success factors are a successful business model, a father or mother who can let go and entrepreneurially gifted children who do not see succession as a duty but as the opportunity of a lifetime. And who do not argue! Succession does not necessarily mean joining the management team yourself. Many descendants know exactly how difficult it is for someone who does not have the same name to one day reach the top of the company and what selection processes they have had to go through to get there. And then to stand up for themselves in a 60 to 80 hour week. Isn’t it much more tempting to entrust operational responsibility to a highly qualified external managing director or board member and limit yourself to setting the right strategic course on the supervisory board and determining company policy?
Prof. Dr. Mark K. Binz has already initiated the generational change in his law firm. His daughter Vanessa is to succeed him. Binz & Partner
Anyone who has ever experienced what goes on in a supervisory board meeting in a well-run large family business as a family member at a young age will quickly realise that they can have more influence on the company’s strategy from the supervisory board than if they were exposed to the daily stress of being a managing director or board member who is only responsible for their own department. Nevertheless, only a few, such as Marc Fielmann or Nicola Leibinger-Kammüller, were keen to play an active role in shaping the family business themselves, and at the forefront, where the buzzword work-life balance is literally a foreign word.
Which generational changes could have gone better or ultimately failed?
There are many examples. More recent examples include Knorr-Bremse, where Heinz Herrmann Thiele was apparently surprised by his death and, despite or because of the execution of his will, chaos and conflict shaped the public image. Darboven is also not a glorious story. Everyone here still remembers a successful old-school entrepreneur and his rebellious son having a public falling out, whereupon the father revoked the gift and wanted to adopt his former competitor Jacobs in order to keep his biological son away from the company. But the Meggle and Dumont-Verlag cases, which have repeatedly been in the headlines, can also be safely classified as failed, even tragic, succession cases.
Why do succession processes generally fail?
As a rule, it is the lack of qualifications of the successors, power struggles between siblings and the father-son conflict already mentioned.
At what point did you consider a succession plan to be a failure?
It will not be possible to define an exact point in time. Just take the cases of Haribo and Tengelmann from my client base. At Haribo, an ingeniously talented but childless 80-year-old Dr. Hans Riegel had not arranged his succession and had rejected his nephews. At the time, no one would have bet a penny that this successful family business would not be sold like so many others. But then I finally persuaded the senior manager to give his highly motivated nephews a chance – and he succeeded!
Tengelmann was similar: after the tragic accident in 2018 in Zermatt, where long-time CEO Karl-Erivan Haub had presumably fallen into a crevasse. The years of family feud that this triggered seemed to make an agreement hopeless, and breaking up the company was the obvious solution. Only at the last moment did my colleague Peter Gauweiler and I manage to reach an amicable separation, which can only be described as the best way forward. Since then, the youngest brother Christian has been running the business as CEO with remarkable success, and has now reached an agreement with his brother on taking over his shares, thus guaranteeing the 70,000 employees, including those at Kik and Obi, a secure job.
