IN A recent Bloomberg article written by Ian Sayson and Tom Redmond, Jaime Augusto Zobel de Ayala II, the chairman and chief executive officer (CEO) of Philippine-based conglomerate Ayala Corp., said that a CEO from outside the family is one option when the group passes power to new leaders.
Part of his legacy, he said, has been paving the way to make such move possible. “I like to think the team we have in place could provide leadership at any point for Ayala if my brother and I were to disappear.”
Business beyond self
In an earlier interview by Dhanin Chearavanont, Southeast Asia’s richest man and senior chairman of family-owned conglomerate CP Group, he once remarked that in the future, “professional” leaders in various fields should run the group together, including those from outside the family.
He also said that he has “forbidden the children of any of our families from entering CP’s core business, namely agricultural and food products. Of course, this included my own sons.”
With estimated overall earnings of US$400 billion from the 19 companies listed across stock exchanges in Bangkok, Shanghai and Hong Kong, Dhanin must have a compelling reason for disallowing the assumption of family members in critical and sensitive positions of the group.
So what do the two leaders have in common?
It all boils down to powerful values: leadership, competence and qualifications. These are values worth embracing by any family-owning business and their leaders in their desire to anoint the most qualified and deserving successor that can lead their conglomerates to the next cycle of greatness!
Sadly, this legacy building mindset of anointing the most qualified and deserving successor (not necessarily a family member) is more of an exception to the norm. Traditional founders and business leaders still insist on appointing their own flesh and blood regardless of qualifications. To a sane mind, it is a recipe for disaster and a bad case in point is the story of Dr. Wang.
“He is my son. He can do it.”
Let me share the story of Dr. Wang, the founder of a once distinguished global giant and New York Stock Exchange publicly traded Wang Laboratories. Long before Apple became a household name, Wang Lab, founded in 1951, lorded over the technology landscape.
In 1982, Wang generated revenues of more than a billion dollars, and by 1989 sales registered US$3 billion. The growth also produced 24,800 dedicated employees but in just a matter of three years, the group filed for bankruptcy protection.
The group’s fatal flaw?
Its founder thought it was a family business, until it was too late. One of the major causes that contributed to the company’s failure was Dr. Wang’s insistence that his ill equipped and unprepared son succeed him.
A 1992 Computerworld piece about Wang Laboratories’ demise pinned the problem on a strong desire to build a company with a family lineage. And when Dr. Wang made his son Fred, the president, the report noted that many people within the company had concerns:
“For years, there had been quiet concern about Fred. Members of the board of directors had worried that Fred did not have the experience, the judgment—the overall heft—to lead the company. Ever since the middle of the 1980s, outside directors had made repeated efforts to persuade the doctor to bring in a professional manager—to give Fred an impressive title if needed but to avoid placing the young man in operational control of this sprawling, worldwide corporation in the thick of the most competitive industry on earth.”
Dr. Wang would not yield. To the directors he said: “He is my son. He can do it.”
To be continued...