Economics and succession: An analysis of Kenya’s achilles’ heel

XN Iraki

We all dream that one day we shall start businesses, and become rich and famous. But only a few realise such dreams. And we know them by their names; from Bill Gates to Njenga Karume, and other Kenyans who count their money in large denominations.

Majority have deferred their dreams, while some have put them on hold indefinitely. It will remain a mystery why so many dream of becoming rich, but never become rich.

Some blame themselves, others blame their genes, and a few others blame dark satanic forces.

And even after years studying entrepreneurship, it is unlikely we shall ever have get a formula that ensures we get rich.

For those who prosper, they earn lots of respect, and hopefully, live a happy life. However, psychologists contest that argument, saying once we get something we want it no longer motivates us.

As the "lucky" prosper, they share the benefits with the society through taxes, and for some through philanthropic activities. But that great prosperity is eventually threatened by the specter of succession, when one generation must take over from the previous one.

Some entrepreneurs manage their succession well, while others refuse to do so, leaving it to the forces of nature, when they finally find make their exit, leaving chaos in their wake.

Big issue

It is no doubt that in Kenya, succession is a big issue, from the State House to our homes. In fact, one of the drivers of the constitution debate is succession in 2012, when the house on the hill will get a new tenant.

But succession is one of the biggest challenges facing Kenyans everywhere.

In our homes, men fear writing a will is planning an early exit from this planet. In businesses, particularly private ones, owners find it hard to let go, setting off a conflict between the founders and the next generation, who either feel energetic enough to take over, or impatient enough to squander wealth whose origins are a mystery to them.

In the public sector, the expiry of every big job’s contract is always surrounded by succession controversy, with old CEOs trying to influence the successor, or at times, extend their tenure.

In the private sector, anxieties over the end of a CEOs tenure often affect the share prices. For example, in Kenya, we would want uninterrupted success in Safaricom after Michael Joseph, or Equity Bank after James Mwangi.

The two firms are Kenya’s success stories, and they must not be allowed at any time to fall victim to unmanaged succession.

Manage succession

Frankly, just like great empires, no great corporation can be built without paying attention to succession.

Few can contest that all successful families, nations and firms manage succession well. Think of the Ford in the USA, Quandt in Germany, or Ndegwa’s in Kenya.

Some have observed that the success of Asian entrepreneurs in Kenya hinges more on their focus on succession among other factors, specialising in one line of business.

Great nations become so by managing their succession well, vis-‡-vis all the firms we admire in the Fortune 500. So, why then do we fear succession so much, and what can we do about it?

Our failure to manage succession is driven by our cultures. Many fear that managing your succession is managing your early death. We are still prisoners of our cultures, despite going to school.

Ask your friend if she or he has a will, and let him explain why he has none.

But our cultures had very strong succession plans even at political level, with one generation successfully handing over the baton to the next when it was time for a change of guard.

Moreover, we teach a lot about successful businesses in school, but rarely about their eventual fate when founders exit. Even awards like the Company Of the Year Awards (COYA) do not fete great succession.

Some boldly argue that we fail to plan for succession because a majority of us never come to terms with the hard reality that we are all mortal after all, and some day nature must have its way. Why else are we so reluctant to reveal our dates of birth or age?

Where do we go from here?

In the political arena, we need to institutionalise succession. Keen observers will admit that one of Moi’s greatest legacies is managing his succession and ensuring there was no bloodshed.

He did it so well, that he has remained relevant to date, with his political utterances carrying lots of weight. While the constitution contains statutes on succession, making succession part of our political culture is better way to deal with the ghosts of succession.

This battle is also being fought in the public sector, where boardroom wars over the picking of the next CEOs are common.

But there is nothing wrong with grooming the next CEO. In fact, in some firms, being appointed to certain positions signals to the market that you are heir apparent. Some CEOs however, fight bright stars, who end up leaving and making the succession harder.

In private firms, we can manage our succession by roping in the next generation into business early, giving them a stake so that they can understand the business, and remove the threat that they will ‘steal’.

Great nations are built through great institutions, which are ‘people invariant", ours is no exception.

We must build our political institutions; our business systems should be institutionalised to outlive individuals.

In our homes, we must ensure that the next generation is made responsible early enough.

Our lifelong sweat should not be wasted by failure to plan succession. Instead, it can be leveraged several times by careful succession. After all, longevity is one of our dreams, but too often deferred by nature, as obituary pages remind us every day.

That reality is not about to change, but nothing is more satisfying than ensuring our immortalisation by equipping the next generation. Your progeny will always pay tribute to you.

It is only by managing succession that we shall achieve our Vision 2030, and build Kenyan multinational corporations that are in short supply.

The writer is a lecturer at the University of Nairobi, School of Business. xniraki@aol.com