Making of an entrepreneur

Developing capable leaders and owners is one of the most challenging tasks for any organisation and even more difficult for a family enterprise in the Middle East because it faces additional complexities from often conflicting business and family goals, and different generational expectations.

Environmental forces including changing social values, new technology, increased competition, political threats and physical constraints also create additional demands on the family firm and its future leaders.

And, this means that next generation of family members face obstacles as they work to become entrepreneurial leaders and capable owners. First, they need to perform at a high level. Next generation family members must demonstrate leadership and perform as well as any non-family employee to avoid causing resentment and eroding respect for family management.

Second, they must earn the respect and trust of their parents and siblings, who are often amongst their toughest critics. Third, the next generation must manage change effectively so that others, especially other stakeholders, do not view the change as an indictment of their predecessors or a challenge to the traditional practices and relationships.

While these three obstacles remain challenging for any next generation family member, they can be particularly difficult for next generation members of a Middle Eastern family business.

In the 21st century, the rules for managing global business have changed dramatically. There are four key management skill sets (see box) for the new millennia. Businesses will need all four skill sets to prosper in the 21st century with the leadership skill set, in particular, being crucial to developing organisational talent and managing global business ventures.

In addition to following the blueprint for managing global business, Middle Eastern family businesses can do several things to prepare the next generation.

First, ensure that the next generation family member has the individual characteristics that provide a personal fit with the business in terms of ability and motivation.

Second, provide challenging life and work experiences to develop the talents and capabilities of the next generation. This includes internships and work outside the family firm early in the career, and later meaningful work assignments within the firm.

Third, social support that includes nurturing and coaching the next generation by introducing the next generation of family members to business and professional networks, mentoring and coaching on the challenges they face, and offering your personal encouragement. High performing executives are not born; the family business creates leaders who can successfully take over the reigns of the company.

Fourth, provide the next generation with the best possible education and training. This not only includes undergraduate studies and graduate education such as an MBA or other executive education programmes but also in-house or industry training.

Many next generation family members find that an Executive MBA, which allows them to continue working, is ideal for family businesses where the goal is not career change but rather continually improving and building leadership capabilities.

The final critical developmental factor that is often missed in the Middle East is providing actionable assessment and feedback; these final steps are crucial, but also challenging. It is always difficult for a company to give feedback to the next generation, in Middle East and everywhere. While it is always hard to assess family members, it's important that they receive concrete feedback, developmental plans, and when successful, recognition of their efforts so that they may become more aware of their strengths and weaknesses.

Finally the yardstick by which the next generation members are measured can be a long one, especially for members of a Middle Eastern family business. Smart, charismatic entrepreneurs who spent decades building their companies, created many of today's Middle Eastern family businesses. This older generation now looks at the next generation and complex organisations that have developed with unrealistic expectations.

It's important to remember that each Middle Eastern family business is unique; therefore, to successfully develop the next generation, a family business needs to think about best processes, not best practices. Knowing the family's approach will help all family members understand themselves and the business better as well as make necessary changes to ensure a successful transition to the next generation.

A final advice for Middle Eastern family businesses: "Look at the whole range of capabilities in the next generation; identify your children's strengths and weaknesses; and use the strengths to help the company as well as the next generation perform successfully."

In the Middle East, a strong family business culture, and an emerging global economic influence the critical success factor remains: "What is your family doing to prepare the next generation of family leaders and owners?"

Randel Carlock is the Berghmans Lhoist Chaired Professor in Entrepreneurial Leadership and Director of the Wendel International Centre for Family Enterprise at INSEAD.

Management in a nutshell

Entrepreneurial skills

Identify and share your business vision.

Communicate your vision and goals.

Develop new products, services, relationships, organizations, and channels.

Executive skills

Manage complex relationships between the organization and its network of stakeholders.

Install control and information systems.

Continuously plan, solve problems, and make decisions in real time.

Strategy skills

Craft strategic plans.

Secure and allocate resources.

Assess results and reward performance.

Strengthen governance and ensure accountability.

Leadership skills

Align and empower people around their shared values and vision.

Rigorously manage intellectual and human capital.

Encourage a culture of risk taking, innovation, and social responsibility.

Develop people and teams throughout the organisation.