THREE PATTERNS OF INEFFECTIVE SUCCESION:

Conservative: Although the parent has exited the business, the parental shadow remains, and the firm
and its strategies are locked in the past.

Rebellious: in what is often an overreaction to the incumbent generation’s control of the firm, the next
generation launches a clean-slate approach to the organization. As a result, traditions, legacies, and
even the business model or its “secret to success” are destroyed or discarded.

Wavering: the next generation is paralyzed by indecisiveness. Unable to adapt the business to current
competitive conditions, it also fails to make its mark and assume leadership effectively.

Participation: nature of involvement of family members in the enterprise, whether as part of the
management team, as board members, as shareholders, or as supportive members of the family
foundation.

Control: right and responsibilities family members derive from significant voting ownership and the
governance of the agency relationship.

Strategic preferences: refers to the direction family members set for the enterprise through their
participation in top management, consulting, the board of directors, shareholder meetings, or even
family councils.

Culture: collection of values defined by behaviors that become embedded in an enterprise as a result of
the leadership provided by family members past and present.