Over the years our consulting firm has received many calls from second generation CEOs of advisory firms. They have recently taken over the helm of their firms, and usually tell us they “don’t know what to do” and need direction.
As we explore the details of each firm, we find that the advisory industry is doing a poor job of training the next generation of advisory firm leaders. From our perspective, most new CEOs and other firm executives haven’t been trained — at all.
We’ve also come to realize that this situation is not the fault of most firm owners. Training leaders is a challenge in most industries. And because most first generation advisory firm owners were never trained at leadership, they are at a disadvantage.
Here’s the Problem
Business school wisdom that many of today’s firm owners have gained has come primarily from the perspective of starting a business, as opposed to taking the leadership role in a successful, mature business. Consequently, training new leaders and relating to the challenges that they face as CEOs and other executives is hard for founding owners to wrap their brain around.
The crux of the problem is the skills required to launch and grow a business are different from those necessary to improve a successful business. Therefore, it’s difficult for most advisory business owners to train their new leaders as executives.
Here’s a common example: Due to the founding owner’s experience starting a firm from scratch, many of today’s leadership training programs tend to focus on business development and vision, mission, values and growth goals — because that’s what founding owners had to do to launch their firms.
But in mature businesses, bringing in new clients and setting goals is only one problem that needs solving. Other facets of the business need attention and balance, such as, employee management, financial strategy, allocating capital resources, operational process and sales strategy.
Further, the challenges many mature advisory firms face today revolve mostly around providing consistently and competitive high-quality client services and client experiences, while maintaining and growing profitably. To learn all these areas at once can be overwhelming for the next generation leaders.
Most founding owners teach new CEOs from their personal perspectives because it’s all that they know. And, when confronted with the suggestion that their next generation CEOs need different skills, they often respond: “that’s not the way I did it.” This isn’t the recipe for success in transitioning a company to new leadership.
Training Future Execs
So, how do you train the next generation leadership?
If you take the business school approach to training CEOs, it means training in the technical skills of business management: allocating capital, monitoring cashflow, quality control, management, etc. There’s much written about these skills and they can be learned with a library card.
But here’s the kicker: We have learned that starting a CEO’s training with technical skills often overwhelms them more. They become fully aware of what they don’t know and thus, get scared to make decisions in the business without the counsel of others. In other words, they feel they have to have validation to make any move on their growth goals.