When the topic of generational transition arises, many people immediately think of finding a successor. Who will run the business? Who will replace the founder? Who has the capability to continue leading the company? However, after years of observing manufacturing and family-owned businesses in Vietnam, it is evident that the successor is only one part of the equation. The greater challenge lies in how the business can shift from a growth model that succeeded in the past to one suited to the new landscape.
Business succession often begins with a single question.
“When are you coming back to the company?” This is a scenario that plays out in countless family businesses.
Some businesses prepare for this transition well in advance.
Others only begin to consider it when the founder wishes to retire.
In some cases, the next generation takes the initiative to return.
In others, it may take years for the two generations to find common ground.
Regardless of the approach, these discussions almost always center on the people involved.
Who will take the helm?
Who will oversee operations?
Who will step in to make critical decisions in place of the parents?
These are essential questions, yet stopping there means the business has likely solved only part of the succession puzzle.
What gets handed over is not merely a job title.
One might inherit the role of CEO.
One might take over the authority to sign off on decisions.
One might inherit the team.
One might take over the factory.
Yet, there is something else—something less frequently discussed: the way the business generates growth.
Every enterprise has its own unique growth model.
Some businesses grow through a network of distributors.
Others expand thanks to customer referrals.
Some thrive on long-term contracts.
Others focus on contract manufacturing for a few major clients.
These models have fueled the company’s growth for years.
The question is whether they remain suitable for the next phase.
A successor might not struggle with day-to-day operations.
However, generating growth can prove challenging.
This is a significant distinction.
Managing a business that is already running smoothly is one thing.
Finding new drivers for growth is quite another.
Many businesses still possess excellent facilities, an experienced workforce, loyal customers, and stable production processes.
Yet, their growth rate begins to slow down.
At this juncture, successors often find themselves in a dilemma: sticking to the old ways makes it difficult to achieve a new phase of development.
Conversely, changing too rapidly raises concerns about undermining values built up over many years. This is the challenge facing many “second-generation” (F2) leaders—not due to a lack of competence, but because the business landscape has changed..
Each generation grows up in a different market environment.
Founders often start their businesses when the market still has plenty of untapped potential.
It was a matter of simply making a better product.
Maintaining credibility.
Investing in more machinery.
Expanding production.
This paved the way for business growth.
In contrast, the next generation takes over when the market has matured.
Customers have more choices.
Information is more transparent.
There are more competitors.
Competitive pressure is greater.
This necessitates a different approach to decision-making for the second generation.
It is not because they want to do things differently from the previous generation.
But rather because the market demands new capabilities.
There are things founders never had to do.
Many businesses grew without needing to build a brand.
They didn’t need to invest heavily in marketing.
They didn’t need to focus on customer experience.
They didn’t need to track market data on a daily basis.
That does not mean those things are unimportant.
It simply means that, in the context of that time, the business could still grow without them.
Today, the story is different.
Customers seek out information before ever interacting with a business.
Competition has intensified.
Traditional markets are becoming saturated.
Businesses seeking to expand must find new approaches.
These are the things that many second-generation leaders (F2) will have to learn, even though the previous generation never needed them.
Passing on a mindset can sometimes be more challenging than handing over the reins of management.
Many people assume that the greatest gap between the first generation (F1) and the second generation (F2) is age.
In reality, the more significant gap often lies in their perspectives on the market.
The founder relies on experience proven over many years.
The successor sees the rapid changes taking place.
Both have valid reasons for their positions.
One side seeks to safeguard the values that built the business.
The other aims to prepare for the changes ahead.
If viewed merely as a generational conflict, the business will struggle to find common ground.
However, if viewed as a transition from one stage of development to the next, the narrative changes—both parties are essentially solving the same problem; they simply approach it from different angles.
A business need not cling to every practice of the past.
Every enterprise possesses values that should remain unchanged.
Credibility.
Quality.
A sense of responsibility.
Commitment to customers.
These are the elements that must be preserved; yet, alongside them, certain practices require adjustment.
Market approach.
Team building.
Customer development.
Strategies for growth.
It is not that the old ways were wrong, but rather that the business is entering a new landscape.
Perhaps the most important aspect of the handover is not finding the right person.
Rather, it is about preparing the business for a new phase of growth.
A capable successor might manage an existing business model effectively, yet the company will still face significant challenges if that model is losing its efficacy. Conversely, a model aligned with the new market landscape offers both the incumbent (F1) and the successor (F2) greater opportunities to leverage their respective strengths. Perhaps that is why, when discussing generational succession, the question should not simply be: “Who will be the next CEO?”
It should also be: “How will the business generate growth over the next decade?”
Ultimately, what is being handed over is not merely an executive role; it is the future of the entire enterprise.
