WHY THE BIG BUSINESSES OF IGBO MEN COLLAPSE SOON AFTER THEIR OWNERS' DEATH
The collapse of businesses after the demise of the founder is a global occurrence not limited to Igbo people, but the rate at which the businesses of wealthy Igbo men and women fail immediately the founder dies is becoming alarming and requires an intervention. It is heart-rending to see a renowned business empire collapse so soon.
I took an interest in ascertaining the principal cause of this unfortunate occurrence during my postgraduate studies and, in the course of my corporate and investment banking career, on the leading causes of this phenomenon. My findings may be well known to the readers. I shall also be recommending measures to stem this preventable occurrence.
My privileged position as a finance person has afforded me numerous opportunities to meet many Nigerian business persons. Some of them were from my home town, Nnewi, with the highest millionaires per extended family in Nigeria. This also happens in many other diverse societies. Many businesses were the pride of a town, state and a people that have now become history because the men that started the businesses either died unexpectedly or naturally at the ripe age.
Many successful people in business, especially of Igbo extraction, still live but have continued to make the mistakes made by the bourgeoisie before them and whose big empires would most likely end up the same way.
This has to stop!
CAUSES OF THE COLLAPSE
The following could be said to be some of the reasons why the businesses of rich Nigerian men do not outlive their founders:
- Personalization of the business by the founder: Most prosperous people in business started small and worked so hard to grow their businesses. Some of the notable businessmen are even addressed as or answer their companies’ names in place of their personal names. They are usually the sole signatories to all the companies’ bank accounts. They alone confirm all payments.
There is no problem with this if it ends here. However, in most cases, the founder begins to assume that he is the same as his company. He would refuse to put structures in place to drive the business. He does not separate his expenses from that of the business. The owner believes that nobody, including his children, no matter how educated, can run the business better than he. He will keep deceiving himself with immortality until he is struck by stroke or die as willed by God, and the business dies with him.
- Lack of Organisational Structure: Flowing from the business operations' personalisation, the founder would disregard all-wise counsel to put a proper management structure in place. A formal business system means creating functions and hiring competent staff with clear job descriptions to man those functions. A smart businessman values the contributions or suggestions of his management employees. He knows that many paid people can voice out inspirational ideas that can change his company's fortunes.
Examples of structure include setting up separate units in charge of Accounts, Internal Control, Audit, Marketing, Admin, HR, etc. It also entails creating management levels, e.g. Board of Directors, Executive Management and Heads of Departments. A good structure also entails having clear policies on how the business of the company is conducted.
The founder of a typical big Nnewi man’s business would surround himself with unqualified personnel, mostly relations who specialize in eye service and gossiping with a great propensity to feed fat on the company. This group of people quickly milks the company dry whenever the founder is terminally sick or dead. They tactfully ensure that the founder does not define roles or hire experienced administrators who could help organise the company, therefore rendering them redundant.
Most unqualified employees related to the business owner would instigate any manager's sack in the company that dares moot a transformational idea to the founder to put a proper structure in place.
- No Clear Succession Plan and Founder's Feeling of Immortality: Many successful people in business deceive themselves and have refused to learn from history. They think that they would never die. Some of them spurn the idea of writing a Will or training a successor. They do not see any competent person in their children or staff and carries on in self-delusion until death calls and the cookies crumble.
- Resistance to Diversified Ownership: Many of our wealthy businessmen are egocentric. They have a bad temperament or no sense of charity and are too greedy to share profit with management staff, which are vital to the business's success. They also want to own 100% of nothing than 51% of something.
The list of directors filed at the Corporate Affairs Commission is merely for registration purpose as the registered directors are usually members of their families or non-existent persons. There are no actual board members other than the founder, who is the same as its board and management.
The absence of sound and independent board members with equity is a serious threat to an emerging big business's sustainability. Two good heads, they say, are better than one.
- Refusal to Modernize or Embrace Technology: Some big companies that refuse to read the trend and modernize their operations shall surely die. Remember how LG and Samsung killed the almighty Sony TV. Also, the case of typewriters and desktop computers is still fresh in our minds.
Due to the lack of a competent management team and advisory board, a one-man managed big business cannot correctly read the trend all the time and can be run out of business, and it could happen so soon.
Some businesses had even died before the founders because they refused to heed the advice to innovate or change their methods or processes. There are founders who believe that an older woman does not feel wearied or aged in dancing a familiar tune.
- Unsuitable Education of the Children: It is customary in Igbo land and most Nigerian cultures that the sons, or particularly the first sons, should take over the management of their father's business once the founder dies. But a company can only continue operating at good levels if the founder had prepared the child for the role. But engrossed in the business, our people forget to effectively engage the possible successor-son to ensure that he understands the business's secrets.
Some send their heir apparent son(s) abroad to study without close interaction. Before they know it, the guy has developed an interest in other areas of life and would not be interested in returning to manage his father's business.
My research also revealed that a child who is always at loggerheads or does not agree with the dad might see the opportunity to study abroad as a ticket to freedom. He would marry a woman in his host country and would stay put. The worrisome aspect is when a son is given enjoyment abroad and returns home with an extravagant tendency and runs down the inherited company within a few years.
- Mother's Negative Influence: Some mothers, swimming in opulence, decide to spoil the children who mature into adulthood with an entitlement mentality without any modicum of desire for hard work. The big rich father would suddenly find out that his male children cannot manage his business and attempt to give his brothers the mantle of leadership, which would spark off a war that might even quicken his earthly exit.
- Non-Writing of Will or Acrimonious Contest of the Will: Unless the founder was lucky to have integrated his first son into his business very early and the son develops a good rapport with his siblings, the founder's death without a Will would be quite problematic. A legal contest of the Will by the dead founder's family members could grind a business to a halt. Some famous businesses that were the pride of Nigerians are currently mired in this kind of quagmire.
- Crass Incompetence of Successor or a Curse: The business may fail due to the successor's greed or crass incompetence, who could be the founder's son or a hired hand. The collapse of the giant empire of a man could also be in fulfillment of Proverbs 13:22 that says that "a good man leaves an inheritance to his children’s children, but the wealth of the sinner is stored up for the righteous."
Igbo man big businesses could outlive and even grow more extensive after the founder's death by adopting what many people had done in other climes. The following have been tested and have worked:
- a) Go Public: The founder of a big business should go public and sell part of his shares to interested members of the public. Becoming a PLC forces a company to a certain level of corporate governance. The founder must put verifiable management and control structures before his company is allowed to sell shares to the public. Investment bankers and stockbrokers can advise on what options to take.
Upon the founder's death, his children can only contest their father's shares while the company is running. We forget quickly that John Holt, A.G Leventis, Julius Berger were men who set up businesses decades ago. Because they did the right thing, their businesses are still alive many years after they have died.
- b) Clear Succession Planning: The founder should put in place a smooth succession plan known to the board of directors. If he desires that his son or relation would succeed him, he should ensure that the person must rise through the ranks or serves under the founder's immediate successor, which could be a hired hand to cut his teeth.
- c) Succession through Competence: The company's policy should state the required education and other qualifications for the CEO's job. This should be made known to all members of the founder's family. This would make anyone interested to get prepared.
We should find a way of impressing our leading industrialists to change their practices and to take steps in seamlessly bequeathing their companies to the next generation who can even take those companies to the next level.
They must do this because, like all created things, a founder of a business must die. He can become immortal by putting in place structures in his business that would keep his company alive many years after he is no more.
That is what is called an Enduring Legacy.