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FBCG Interview: Succession Isn't an Event, It's a Process

January 20, 2020
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The Family Business Consulting Group has navigated many of the same challenges our clients confront in designing our own leadership succession. Executive editor of The Family Business Advisor Otis Baskin interviewed former managing principal Drew Mendoza and new president Kristi Daeda about their experiences of the transition process.

Drew, when did you first start thinking about succession for your role?

Drew: Ten years ago. I was 55 and told the board my intention was to step down as managing principal when I turned 65. I explained to the board that within 12 months of my exit from leadership, I planned on developing two internal candidates to the very best of my ability. The board could then consider both candidates and/or turn to an executive search firm. We also agreed on my post-managing principal role as a senior advisor focused entirely on pairing prospective client families with the most suitable consultant or team for their needs.

How did FBCG work to develop Kristi as a potential successor?

Drew: By purposefully giving Kristi (and the other internal candidate) increasing levels of leadership and profitability responsibility and authority. That included inviting her to regularly make presentations to the board and all members of the firm, encouraging her to become visible throughout the field of family business consulting, and having weekly private meetings with me to discuss strategic, tactical, governance, staffing and financial matters. The icing on the cake was inviting Kristi to lead our revisiting of our strategic plan.

Kristi: It’s been a great experience to be in a firm that empowers its team to take on challenges and values learning. From day one, I had involvement in a wide variety of operational concerns, and I’ve learned about our consulting work through participation in our many learning opportunities, including our quarterly all-firm meetings and as a participant in developing the firm’s intellectual property and client resources. My development has been supported all along.

FBCG frequently counsels families on effective processes for major decisions like leadership succession. How did that perspective inform the process for succession at FBCG?

Drew: We decided shortly after forming the company in 1994 that our vision was to continue in perpetuity as the best-in-class firm in the field. With that vision in mind, the rest began to fall into place. As the firm’s managing principal, I knew we needed to always pay attention to some key areas to fulfill that vision: strategy, organizational design, the need to be highly selective in who we invite to join FBCG and a commitment to our culture of ongoing professional development, collegiality, transparency and trust throughout the organization. Just as we see with clients, being crystal clear on our vision, purpose, mission, values and strategy created more clarity on what our future leadership needs would be and contributed greatly to the design and implementation process for selecting our next leader.

Kristi: It was neat to see good processes in action as a participant — in my case, as a candidate. I appreciated the board’s focus on reflecting on the firm’s successes to date and looking at the future with fresh eyes. There were opportunities for the consulting and management team to share their perspectives and inform the process. While we ultimately concluded that FBCG rests on solid footing for the future, we also developed thinking in the process that continues to be used to inform strategy and tactics.

What commonalities did you experience between FBCG’s succession process and those that you see in family businesses?

Drew: My mentors instilled in me a philosophy that transparency in business has great merit. I have always held to the view that business continuity demands transparency throughout the organization. Employees have eyes. They see us beginning to show our age and they naturally will wonder what the future holds for them. In most cases, those employees and stakeholders are counting on ownership to be forthright and transparent. In other words, a work environment with reciprocal trust.

I recall learning early in my career that if done well, the announcement of the company’s next leader should not be a surprise to anyone. In fact, it should be self-evident system wide. For the past three years, our company’s board, the Leadership Continuity Committee which led the transition planning process and I did all we could to keep the entire company informed about our progress. This parallels what I see in family firms that manage leadership transitions well. Fair process, transparency, commitment, professionalism, and not being afraid to set a high bar.

Kristi: It was interesting because we recognized that for all our work with other firms on succession matters, FBCG had never been through this process before. Like our clients, we could only predict so far how the process would unfold. We used that awareness to recognize when important questions needed to be asked and answered. As Drew said, we focused on being transparent and professional while trusting the process to help us navigate the bumps.

Like many leadership transitions, Kristi is stepping into a role that Drew has held for much of the history of FBCG. And, as often happens in family businesses, Drew will remain in the company and continue to advise families and facilitate their engagement with the firm. What do you think will make this plan successful?

Kristi: Drew and I have worked closely together throughout my tenure and have great respect for each other’s skills and experiences. I’m thrilled that he’s staying on so that the firm can continue to benefit from his talents. With clients, we often talk about “letting go” as an important challenge. Drew has been purposeful over the last several months to pass as much responsibility as possible my way. We’ve also had the time to renegotiate our respective roles and share that thinking with the board so that we’re all clear on how things will function. We’ve shuffled the deck a bit, but for the FBCG team and for clients, we’re both still here. So far, it feels pretty seamless.

Drew:  Kristi, the board, all our employees, myself and all of our consultants are 100 percent behind this move. I believe the plan will be successful because (a) Kristi most definitely embraces the firm’s culture, appreciates its importance to our strategy, and is very smart and very capable; (b) she has built a respected reputation among other service providers who are often the source of leads for us; and, (c) she is intellectually ready to take on the leadership role. And after 20 years, I am prepared to pass leadership to our next generation and focus on a bucket list my wife and I have been working on for many years.

Kristi, as you begin this new role, what are you focused on?

Kristi: There’s good advice about not changing things up too much as a new leader, and I plan to stick by that. I’m focused now on being purposeful about the kind of leader I want to be, learning the areas of my job that are new to me, and working with the board and the team on long-term goals we can all share. I plan to stay engaged talking to the families we serve through our events and conferences and general involvement in the family business community. Some of the expertise I’ve built over my career is in good management discipline, business systems, talent and team building, and bringing a strong brand to market. I’m particularly excited to focus more of my time on building and developing the team, both the amazing folks we already have and future talent that will support our vision of continuity and our mission of serving families.

How is FBCG defining and monitoring success as relates to this transition?

Drew: FBCG management and our board have relied on strategic metrics, key objectives, dashboards and annual satisfaction surveys of all the firm’s practitioners for years. Kristi’s success will not only be self-evident, it will also be measured so that any areas requiring further support or development will be quickly identified.

Kristi: I can count on my colleagues to provide me feedback as we go. They’re generous with their perspectives on firm operations and our outcomes are better for it. So, in addition to the metrics and objectives I’m committed to pursue, I’ll be measuring my success by another softer measure — the quality of dialogue and relationship with the team.

 

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