Managing a Family Business for Success and Succession

Full Transcript

Naomi Kipkorir: We are not just a family business that is by blood. Even the way we relate with our customers, the way we relate with our suppliers, the way we relate with each other, we came to realize that it was a strength and not a weakness.

Darius Teter: Naomi Kipkorir is the proud CEO of a family business, and she’s been on quite a journey with her company.

Naomi Kipkorir: I used to tell them, “Whatever brought us here won’t take us where we are going. So you have to accept change.” And they are telling me, “Now it’s not change, it’s even transformation.”

Darius Teter: For family businesses, planning for leadership change presents many challenges. But could the act of family succession itself give your business the tools to re-imagine

I’m Darius Teter, and this is Grit & Growth with Stanford Graduate School of Business, the show where Africa and South Asia’s intrepid entrepreneurs share their trials and trials, with insights from Stanford faculty and global experts on how to tackle challenges and grow your business. Today, we meet the mother-daughter team of CEO, Naomi Kipkorir, and managing director, Annette Kimitei, of Senaca East Africa, to hear about how they are facing family succession and board governance issues head-on.

Our story begins in the Republic of Kenya. Here, the traditional economic bases are agriculture, trade, and tourism, but in recent years, tech, manufacturing, and construction industries have accelerated. At the same time, the threat of terrorism and insecurity has spurred the rapid growth and diversification of the private security industry, and that’s where family business Senaca East Africa got its start. Here’s founder and CEO, Naomi Kipkorir.

Naomi Kipkorir: Senaca was started in the year 2002 by my husband who was an ex-policeman. We are in the business of ensuring that the country, families, and businesses are safe as we offer private security. My husband started the company. By that time, I was in full-time employment in a government parastatal. I didn’t join him immediately because initially, it was just a side hustle. Later, I saw the passion and the seriousness he put in the business, and after five years I resigned and I joined him full-time.

Darius Teter: You came onto the business within about a year of your husband’s starting it, and then quite quickly, he handed increasing authority and control over to you. Who else is in the business from the family?

Naomi Kipkorir: I was blessed with three daughters. Annette is my firstborn. She’s in the business now as the managing director. My second born also did finance, a CFA, and she’s also in charge of finance. And my third born, who is the last born, she did legal, and she also takes care of the support services in the business. So all of them are working together.

Darius Teter: Naomi and John’s three daughters all found their place within the family business, and Annette, the oldest, joins us today.

Annette Kimitei: Annette Kimitei, and I’m the MD of Senaca East Africa, a woman very passionate about private security in the East African region.

Darius Teter: What were the security issues like in Kenya when your father started the business?

Annette Kimitei: I do recall private security was not common back then. The Kenyan scenario of a security officer was probably someone who couldn’t speak proper English or Swahili, which are the two national languages. So it’s just someone you get from the village and you put a couple of sweaters with a logo, and that’s it. And then you give them instruction. So yes, security was not really much of a need, but what happened is as a growing economy, of course, people started building homes. There was a little bit more urbanization. Factories started to come up, and then thefts also came in. Right now, the biggest threats we face, for example, are the threats of terrorism, the threats of cybersecurity, technological threats, reputational threats, and risk management. But then that was not the case.

Darius Teter: You’ve grown up in the business from childhood. I’m curious, what are your earliest memories of it?

Annette Kimitei: Well, I didn’t like it, to be honest. When my father was growing up, being a policeman was really cool. That was the career everyone wanted to aspire to. But by the time I was growing up being a lawyer, being an engineer, those were pretty cool courses. But what happened is when dad started the business in 2002, by the time he started growing in 2004, I joined university. So just to keep busy and probably not be naughty around the home, Dad would carry me to work and then just help me help him with filings. So my first encounter with the business was actually helping Dad and mostly was in registry. But I’m really grateful for that opportunity because I believe it’s through registry, through working in the file room, which is not something that many people, particularly family businesses, would appreciate, I actually learned how to do tenders, for example, official letters to customers, appointment letters, promotion letters. And that’s what actually changed my career.

Darius Teter: In time, Annette progressed from administrative tasks all the way to her current role as managing director, and we’re going to explore that succession process later. But to understand the unique dynamics at play here, I wanted to speak to someone with deep knowledge from both inside and outside a family business. Here’s Stanford Graduate School of Business lecturer, Peter Francis.

Peter Francis: My name is Peter Francis. I am a member of a family that has a rather large family business; it’s in the sixth generation. I ran that company as a chairman and CEO for 16 years. Currently, I am investing in small businesses, and I also teach at Stanford at the business school. I teach a course on family business transitions called the Yin and Yang of Family Business Transitions.

Darius Teter: So in Africa, our research has told us that something like 30 to 40% of the largest companies in Africa are family businesses, but I want to start with how would you define a family-run business?

Peter Francis: As far as I’m concerned, there are two key things. The first is that a family needs to have sufficient strategic control, if you will, over that business so that they can make key decisions such as who’s running the business or have very, very strong input to those decisions. And then the second characteristic is they have to have the intent to take their family ownership and move it from one generation to another.

Darius Teter: Interesting. Can we talk a little bit about the advantages and disadvantages of being a family-run business?

Peter Francis: It surprises people oftentimes to hear that family businesses actually perform better than their public counterparts. And it strikes me that there are four really important things. The first is what I call patient capital. The median tenure of a CEO in the Fortune 500, S&P 500 is something around the range of five years. The incentives for an individual who’s in that position, therefore, are on a very short timeframe, and yet investments often pay off over the long term. So what creates the incentive to pursue those things where you have to be patient about the capital, but you can end up with higher annual returns because of it.

The second is speed of decision-making. Oftentimes, people think of family businesses potentially being slow. However, that doesn’t have to be. Indeed, they can make decisions extraordinarily quickly because they may have a smaller shareholder base. The third is the ability to pursue unconventional strategies. You’ll find many family businesses over time end up in what I’m going to call a conglomerate, a multi-business structure because they can mitigate some risks by investing in other places. And the fourth is values-driven, pride of ownership if you will.

Darius Teter: So that’s patient capital, speed of decision-making, unconventional strategies, and values. Four advantages that we’re going to hear play out in Naomi and Annette’s story.

I’m interested in exploring the separation between the mother-daughter relationship and the boss-subordinate relationship. How does that work out for you Annette?

Annette Kimitei: I think with years of practice it switches automatically. The minute I get into the lift in the office, she becomes Madame Naomi. And my dad, even my kids call him chairman as long as they’re in the office. We learned that a lot. And then when you get into the car, she can switch back to mom.

Darius Teter: So you get in the elevator and now you’re in a professional relationship with your mother, with your siblings. You go home, and it’s back to being family. I don’t imagine that happened overnight. What was the effect of working with your sisters? Was that easy? Was it hard? Is it changing over time? I’m really curious.

Annette Kimitei: I came into the business very young, and despite the fact that I had gone to university, I still went and did the very clerical roles for nearly three years. Grew to HR, became an HR assistant, became an HR manager. Again, got HR and training manager, then again became general manager, again became a HR director. So my role changed. What happened is the business no longer remained a family business. As the family was growing, we were hiring professionals, professional accountants, and professional people in operations. So you’re not going to call mom, mom. And believe me, when it comes to work, if I don’t perform, she might look nice and cute right now, but she can bite. And she bites the same if it is myself or at the general manager who’s non-family or another manager or my sisters. There’s no discrimination when it comes to issues of performance.

Darius Teter: I think that’s fascinating. So part of what’s going on here is that for you, Naomi, it was important for you to treat all your staff the same and not to distinguish between family members of staff and non-family members. Is that your philosophy?

Naomi Kipkorir: Annette joined the company even before me. And as the other siblings also joined when I was there, they still had to learn that there’s a difference between being at home and also being in the office. Like now, what I’m doing with my grandchildren, I allow them to come to the office, and they know when you come to the office, if there’s a meeting, you sit and keep quiet. I’m training them when they are still young because that is the opportunity I didn’t have when I was bringing up my children. It is not very easy for us even to hold our board meetings and for them to be purely business issues discussed. So many times my husband has to keep on reminding us, “This is a board meeting, no mom, no dad. Let us be serious.” So it has been a journey. I say that where we have reached it is because of what we have gone through and even the training that we have also undertaken.

Darius Teter: Peter says that proactive engagement and training is key. In fact, although there’s no one antidote to issues that arise in family businesses, Peter believes that many problems can be addressed through three core practices; education, transparency, and communication.

Peter Francis: It’s so powerful for family members and owners to have a language to use so that they can communicate. If you’re having a conversation about the business at home, you might say, “You know what? We’re home, we should be wearing our family hat, not our business hat.” And then finally, communication. By that, I don’t mean just communicating but also learning how to communicate. That is a muscle that we can strengthen in the family. And so, that gives people a chance to be better at this as they go forward.

Darius Teter: Naomi and Annette have undergone training for everything from how to serve on a board, to how to differentiate between the family and the business. And it was during one of these coaching sessions that Naomi first heard about family succession planning.

Naomi Kipkorir: We have held workshops with consultants that are also experts in family businesses. I remember the first time we were told that I was running so many companies at the same time as the CEO, and I needed to let go of some of the responsibilities and the big sister was supposed to take over. I saw emotions arise. My two daughters, one of them was in tears. “Mom, you can’t leave. How is it going to be?” So emotions came and we were able to overcome that, but we took some time for them to digest and know that with or without mom, there at the top, a time had to come that I had to let go of some of the responsibilities.

Darius Teter: Tears from the family at the idea of Madam Naomi leaving might sound extreme, but the family had been through so much together. Senaca prioritized seeking expert advice because the business had been burned once before.

Naomi Kipkorir: There’s a time that we merged with an European company, and we had an independent board, and we had expatriates on the board. We were represented in so many countries, in Canada, in Europe, in Ireland. When it came to the board, we were so naive because we were just running as a small family business that now was almost swallowed by the big company from Ireland.

Darius Teter: They came in and bought a majority share, you are minority owners, but you had no representation on the board.

Naomi Kipkorir: Me, Annette, and my husband, the three of us were on the board, but we were toothless.

Annette Kimitei: It was a very painful lesson, but a lesson we needed to learn all the same because when we merged, we gave, we didn’t even sell, we gave majority shareholding, and we took a step back and some of us went to pursue other businesses.

Darius Teter: Senaca embarked on this journey because they were keen to explore new markets. In Kenya, residential security is less profitable, and late payments from state-owned companies led to cash flow issues. So they figured, “Why not find an international partner and start targeting corporate and multinational clients?”

Annette Kimitei: It started out very well. We started getting high-profile clients. We had expatriates working with us, but what happened is not everything that works in Europe is a copy-paste, that you can just cut it and paste it in Africa. And particularly even what we do in Kenya is not what we do in Uganda. The guards in Uganda we have are armed, in Kenya they are not armed. One of the mistakes we did as a board is we didn’t ask bold questions. We didn’t give that governance element to be able to ask, “Is this the right solution for this market?”

Darius Teter: The European company didn’t understand the local market, but you didn’t feel that you had the voice or the stature to stop these guys in the board meeting and say, “Hey, wait a minute. This idea is not going to work in Kenya.”

Annette Kimitei: We tried to highlight it. We did papers, we did comment, but again, what mom was mentioning was we either did not respect our positions as directors and probably took a backseat like employees giving a report, you know? So the result of all this was that the business ended up being overburdened financially. You have all these megaprojects, technology to run airports like the way it’s done in Europe. In Kenya, the airport is so tiny, and they didn’t care for technology at that time. So you’ve gone into heavy debt. And within no time, that debt caught up. So we were wondering because the management accounts are seeing profits, yet you can tell the cash flow strain is so bad. The clients are paying on time, and that was because we were recording losses. These partners from Europe, when they realized the debt was too much and what they owed the government, especially when it comes to taxes and loans and auctioneers were coming on board, they just packed their bags. Literally, this is a funny story, but they packed their bags and resigned on an email, and sold the shares at a very, very, minimal amount.

Darius Teter: This was a make or break moment, a reckoning for the family and for the business.

Naomi Kipkorir: They left the company under big debts. So by the time we were coming back as a family, we were coming back to a company that was supposed to be a basket case, and we were supposed to be auctioned. But then the family came together and we asked ourselves so many questions. “What was the problem?” The first one was we were not present. We were not even serving on the board as we were just listening to the partners and just doing what they were saying.

Annette Kimitei: We had to hire account consultants, auditors. And when they went through the books, they said, “Throw out this business, you can’t recover it.” I remember one of them, an international firm, actually bought mama a book that said “How To Know When To Give Up.“ But I’m grateful because we had another local auditor who came and said, “The business looks bad, but with the expertise you have, you know this market. Come back together as a family, utilize your different strengths, and it’s going to be a painful six months, but you can naturally help this.”

Darius Teter: What the consultants saw was that with their combined backgrounds; chairman John from the police, Naomi in sales, Annette in strategic management, and the two sisters in legal and accounting, this family had the tools to turn the business around.

Annette Kimitei: The family was the problem in terms of our governance and our lack of knowledge and drive to be able to understand what corporate governance requires out of us. But again, the family spirit and the values and the passion we have for the business and our reputation is, again, what saved the business. Fast-forward to who we are right now, Senaca is one of the most respected security companies across East Africa.

Darius Teter: Those family values that Peter Francis highlighted would prove to be the secret sauce that brought Senaca back from the brink. And along the way, they created a company that would be worth handing down to the next generation. But because of their rollercoaster experience, when the time came to start thinking about family succession planning, Naomi was a little hesitant.

Naomi Kipkorir: My initial reaction was fear after our previous experience of if I let go, maybe we would fail again. I was troubled a lot because I was not ready for that. But by and by, I could try to plan my weeks, my days, it was not adding up, and I saw that I was not adding a lot of value to some of the companies. So I had to let go of two of the companies. It was never taken lightly, but we kept on talking about it over the dinner table, and they have now come to buy in and they are now supporting the plan of me handing over the baton to Annette.

Darius Teter: Annette, I’d love to hear this story from your side. Was it a shock to you that your mother was thinking it was time for you to take over?

Annette Kimitei: I’m always more comfortable as Madame fix-it. I like fixing where there’s a problem, but I didn’t want to take the leadership position. So at this time, yes, when mom said… We had the family business consultant, and he gave us that tough news and said, “I’ve seen your qualifications, I’ve seen your experience, it’s time.” And of course, for me, I said no, I’m not ready for it.

Darius Teter: So you doubted yourself?

Annette Kimitei: Yes, I did doubt myself, I’ll not lie.

Darius Teter: Naomi, did you doubt Annette?

Naomi Kipkorir: I didn’t because I could see beyond what she could see. I knew her capacity, and I knew she was equal to the task.

Darius Teter: That’s interesting. So Annette, did that give you confidence that your mother believed in you?

Annette Kimitei: No, no, no, not too much. I think succession is not an event, it’s a process. What happened is when I was supposed to be called MD, I actually asked that I be called deputy MD just to warm up to the seat. So for around three years, I was a deputy MD, executing everything an MD does, but just wanting to hide. And the reason for that is, number one, from an industry perspective, I’m one of the youngest managing directors. Number two, I have a really tiny frame and this is the security industry. Most of the people running security companies are way older. They are my father’s age. They are brigadiers, majors. And these are the people that I was going to meet with. And then that is even for my voice, I didn’t have that commanding security voice. So I had a bunch of excuses, Darius, very nice excuses as to why to hide.

Darius Teter: I don’t know. Honestly, those don’t sound like excuses, those sound like serious rocks and boulders that you have to push up a hill. Because it was not just about how you felt, your self-confidence, it was about how you felt you would be perceived in the market.

Annette Kimitei: I always joke that the general manager we currently have is an amazing guy, but he’s very big, and he’s ex-police, and he’s ex-CID. So every time we go to a meeting, guys will be like, “Hey, hello, Mr. MD.” It’s always an assumption that I’m probably his secretary because I’m a little bit tinier. And then by the time I introduce myself, somebody will say, “Oh, so you are Annette. Yeah, we’ve heard of Annette. We just thought she’s bigger.”

Darius Teter: The transition of leadership in any business affects more than just the C-suite executives. And Naomi knew that getting employee buy-in would be vital.

Naomi Kipkorir: My leadership style and Annette’s are very different. I remember even the members of staff calling me and saying, “If you go, this company is done.” Annette is very aggressive. Annette is very strict. I think they were used to the way I was leading them. Everybody was afraid, but then I had to let Annette prove that the company also needed to change the way it was led because things were also changing and the market demands were also changing. Annette, she’s a risk-taker, so she could bring in so many other different things, so many products. And some of them are like, “Are we ready for this?” But she was pushing and I could see the results. They are telling me, “Now it’s not change, it’s even transformation.”

Darius Teter: With Annette now in the managing director role, Senaca is diversifying, and they’ve gained a new perspective on the importance of a well-functioning board.

Annette Kimitei: The ideas come from everywhere, but all these ideas have to be conceptualized. And then we place together on the table the different concepts. And it is the board that’s now going to say, “Out of the five ideas, we felt that these two can work. This one can start this year. And once this one is stable, now we can move on to the next one.”

Darius Teter: So you’re trying to make sure that the proposals are supported by analysis to take some of the emotion out of the decisions?

Annette Kimitei: I feel most comfortable with a project if she says yes. Because if I can convince the whole world. But if I convince the chairman and Madame Naomi or mom, then I know I have worked my figures out.

Darius Teter: Has there ever been a proposal that you took to the board where it was shot down and you still are convinced that you’re right?

Annette Kimitei: Of course. This year is when they finally accepted a concept of diversifying to technology and risk when the numbers were shown. I’ll tell you what I did wrong the last two years was, I saw the dream, but I didn’t have the data to back it up to show that it’s not just the product, the expenses associated with this, at this amount. And guess what? The profit is this. I just did a small pilot by bringing in a few of the dogs, a little bit of the technology, and the bottom line really improved. So I’m really excited because they didn’t say no, they said, “Test this business model.” Because we are moving from 93% guarding and only 7% were other services. Now we are moving it to 30% guarding, 30% technology, and 30% risk. Just one year of doing that, our profits grew by nearly 6%.

Darius Teter: I love this story because that’s what a good board should do, is say, “This is an interesting idea, but you haven’t tested it. Go out and test it. Come back to us with the results, and then we’ll decide.” Would you say, Naomi, that this decrease in the guarding business and increase in risk management business and technology could not have happened without Annette’s leadership in driving for change?

Naomi Kipkorir: Yes, we were still calling ourselves the old school, and we just wanted to manage the guarding business. We worked in the government, we have our pension, so we were not really looking for money. We were not greedy for that kind of growth when it comes to a business. But we have seen that through her efforts and her ambition, she has really made the company now look like, “Oh, this is something that even outlives us, and it can even grow bigger.”

Darius Teter: Senaca is now two years into the transition, and they’re putting a major focus on solidifying their corporate governance.

Annette Kimitei: For a long time, we didn’t understand what is manager, what is director, what is shareholder. So when it comes to our corporate governance, we engaged an external consultant again this time. What we are working on is the family constitution, the family office, the shareholders’ agreement. We also want to bring in advisory board members. We’re bringing in three this year as board advisors. And then based on that is now when we move into independent directors. I think because of our previous experience with our European partners, we thought it’s good for us to be able to engage consultants. We’re going to see what are the skills we are missing in the business, what are the skills that we are missing in the board, and how do we bring in the right people. How do we induct them? How do we monitor their performance?

Naomi Kipkorir: We have seen where we’ve always gone wrong, and we are saying, “If we knew what we know today five years ago, we would be having even the independent boards and other boards that would be able to drive and steer the company to different levels.”

Darius Teter: Naomi and Annette’s plan to first introduce advisory board members and then independent directors is what Peter Francis describes as a best practice.

Peter Francis: There’s a real concern, “Oh gosh, I let an independent director in. He or she is going to take control. It’s going to be awful.” They often will go to friends to be board members because they trust them, and I think that’s a reasonable first step. Think of it as a board of advisors but not a fiduciary board. I would say that at some point creating a fiduciary board, especially as the businesses get somewhat larger, is a hugely powerful step. Only one person who’s actually in management, I think, should be on the board. That’s typically the CEO. I would suggest at least three independent outside directors.

Peter Francis: I think it’s incredibly important to pick those people based on the needs of the business. And this is where the power of a board comes. The Business Roundtable, I think, had a terrific definition of a good director. Effective directors maintain an attitude of constructive skepticism. They ask incisive, probing questions and require accurate, honest answers. They act with integrity and diligence, and they demonstrate a commitment to the corporation, its business plans, and long-term shareholder value. If you could get two or three or four independent directors that fit that, and you listened to them, it’s going to make your business better, it’s going to be worth it, and the business will make more money.

Darius Teter: Naomi and Annette have recognized the skill sets that the business is missing and are actively searching for independent directors that have that expertise. Partly due to the growth of the company and the formalization of their governance, Annette became extremely purposeful about her current and future role.

Annette Kimitei: I’m a little more aggressive now with succession planning for various reasons. Number one is the business is expanding at a higher rate. We are diversifying, and even our customers are demanding different skills now. So I am already working on my succession plan outside Senaca and actually outside Kenya into other countries. I think what we wanted to do was to say that the next successor after Annette has to be a family member. And my sisters, yes, they are good, but they are still young. And then the industry experience. So we had to actually be very bold and say, “For this next successor cannot be in the family. Maybe the next generation will have been nurtured. But at this point, we have a serious gap if Annette is no longer there because mom and dad are very clear that they just want to focus on board and shareholding roles.” I would say in three years I’d be very comfortable to leave not only the general manager but a good number of managers to be able to run this business so that we focus more on what is our key strength, which is entrepreneurship.

Darius Teter: It’s remarkable that Annette is already looking ahead to when she will hand over the leadership to her general manager. The first-generation family succession may still be a work in progress, but it seems that this delicate and lengthy process has taught Annette to plan with purpose.

Annette Kimitei: Procrastination, I would say, has been a bit of a challenge from our side. There was no deliberate plan, and now we have it. Actually, we had our board audit last week on Friday. We thought we were doing so well. I was actually very eager for that meeting. And when the audit was done, I was surprised that we were only at 5%. We are very good at preparing all the documents. So we have the shareholders’ agreement, we have the family constitution, but we just never sit down and sign it. And if it’s not signed, it’s not there.

Darius Teter: Sometimes procrastination is actually a symbol of something else, which is maybe a lack of underlying agreement, particularly if somebody else is drafting all of this stuff. Is there something more to the procrastination than simply, “We just didn’t get to it.”?

Naomi Kipkorir: I think as the founders, me and John, we thought that we are part of the business. And what does it mean? What are we handing over? Why do we need to be succeeded? It became a conversation that we really had to face. We have now fully understood what it means for the business continuity. But initially, that is why it took so long.

Darius Teter: So was it scary? The first time you read it, you said, “Wait a minute, that’s not what I signed up for.”

Naomi Kipkorir: Yes. So it’s like we are going to lose our positions. We are going to lose our titles. We are going to lose everything we’ve built with our hands. We could look back from where we’ve come from and how we were able to turn around the company, and it’s like, “Is it really time for us to hand over to these girls?” I think that has taken a backseat, but it has been a process.

Darius Teter: There’s a lot of businesses and a lot of CEOs and managing directors that are exactly in your position. What’s your message to them?

Naomi Kipkorir: It’s just to take a bold step and know that one day you have to leave. I remember sometime back I was overworking myself, and I had a mild stroke. And then I thought, “What if I died? What would happen to the company?” And I say it’s better for me to prepare for this when I’m still alive. So time has to come for you to let go at one time or the other. And for the business continuity, you have to trust and allow the children to make their own mistakes because you cannot keep on spoon feeding them all the way through. I’ve done that for the last, I think, one year. I’ve been on and off the business, and I’m telling you, they have lost business in the process. So they have to sit back and come up with their own plan on how they are going to recover the lost business. If they fail, they’ll fail. If they fall down, they will still wake up and move on with the journey.

Naomi Kipkorir: Annette, she’s saying that she’s preparing her successor early enough so that he doesn’t wait until she’s threatened by anything ahead. It is always very good to be prepared for any eventuality. We are now even thinking 50 years from now.

Darius Teter: After the initial fear of the unknown and what sounds like many, many pointed family discussions, Naomi has made peace with the act of handing over responsibilities. Annette has been with her all along and is now looking forward to taking some bold steps of her own.

Annette Kimitei: I’ve been in the nest of Senaca for a long time. I am now serving on other diversified boards to enrich my experience, but what I would be happy and say that a second generation we impacted is when I’m able to plant another Senaca in another five countries. That’s when I’ll say my parents started a good business and they left us to run, what did we do with it? We left many more businesses, feeding many more families. That would be the kind of legacy that I would be more proud of other than holding on to this MD seat.

Darius Teter: Whether it’s that generation one to generation two transition, or somewhere further down the line, Peter Francis suggests that it’s really all about process.

Peter Francis: I will say as we speak of Naomi and Annette, somehow they have done a terrific job as a family in having some really extraordinary conversations in this generation one to two transition, which is so critical. It is, I think, very common that certain human emotions rule the day. So denial and conflict avoidance, for example, they’re there in spades. When thinking about how you get started, the founder is the key and he or she can use the universal antidotes to begin to move things along, and I think starting with a vision. And the vision could be a simple, “We really do want this to be a family business that goes through the generations.” And then I would say get help and get educated. I do think there’s a tremendous role to be played by an outside voice, and that is because there are some very emotional aspects to it. So it’s really the process that counts, not so much the content.

Darius Teter: You’ve been through this amazing journey with foreign buyers and then taking control back and rebuilding it. What recommendations do you have for other family businesses who need to develop and implement a family succession plan?

Naomi Kipkorir: Succession is not an event. It is a journey. It is a process. The corporate governance is not enough. There are so many other tools that are needed. You need a very clear board charter that even talks about the third and fourth generation. You also need a family office with a very clear family constitution. You have to think of maybe another 100 or 50 years what kind of a company you’d want to see or you’d want even to leave to your children and even the country as a whole because this business does not just benefit the family alone. And knowing that the children are also different. Like now what I’m doing with my other children, because this one girl who is not really adding a lot of value, I had to look at her strengths and see what else can I do for her? I’ve opened a different business for her, and she’s thriving there.

Darius Teter: Those are really powerful messages. I mean, no presumption that because somebody is in your family they’re the right person for the specific business. And it needs really careful thought and planning. Annette looking back on the past few years, what recommendations do you have for other businesses where it’s still being run by the founders and are thinking about succession planning? What would you advise them based on your experience?

Annette Kimitei: As mom said, make it a bold decision, a bold decision to say that if you want the business to continue and outlive you and go all the way to your great-grandchildren, then the process has to start today. The conversation could be uncomfortable, but it’s a conversation that still has to be had. If it’s difficult for you as an individual or difficult for you as a family, seek help. There are so many bodies there that are willing to help. So go to school, get consultants, join family business associations, do performance assessments, have very deliberate training and induction or mentorship programs. But all of it has to be very deliberate.

Darius Teter: I think it’s really interesting that there are resources in Kenya and in Africa to help you think through these issues. There’s associations of family businesses. There are specific family business consultants. So I don’t know if that industry has always been around or if that’s becoming a bigger opportunity for other companies in Africa that you might say one or two words about how you found these resources.

Annette Kimitei: Initially, we never even wanted to confess we had a family business. We’d go into meetings, run a contract for five years, and nobody knows we are related because of that fear that people think family businesses are unprofessional. We thought we were very lonely and very few until we joined the Association of Family Business Enterprises. And then we went to Strathmore University, and they have a family business unit, and they had courses on family businesses. And then even for our board competence and even for our female leadership, there’s a program that is run in Kenya called the Female Future Programme that really just gives you that boost of confidence. And then from the Association of Family Business Enterprises, we learnt about it around three years ago. It’s a new phenomenon. And what we’ve realized is that there are so many strong businesses in Kenya that are actually family businesses. So what that does is that gives you a safe space to be able to interact. Because family businesses are either new or learning the ropes in Africa, most people don’t have that information.

Darius Teter: Naomi and Annette are still on their transition journey, but Senaca has already been through some big changes, and I wondered, “Where do they see themselves in two years?”

Naomi Kipkorir: Two years from now, I will not be managing the business at all, but I’ll still sit in the booth as a director for three of the companies. But for the two young ones that we started this year and last year, those ones I still have to work with for maybe another five years. That is my personal strategy for how I run with the companies. But for Senaca, I’ll have handed over the baton to Annette within the next two years.

Darius Teter: Annette, two years from now, what does your day look like?

Naomi Kipkorir: My day will be just scratching my head as to where is the next opportunity in another country, and even in that country, what particular products or services. I am also very keen on serving on an international board, not just for the look of it, but because I’ve realized that the world is that global and Africa does need to prepare for globalization. I would love to hone my skills in running an international brand. We have 10 ambitious goals as a family, and one of them is empowering 100,000 people in Africa. And one that stands out is to be an inspiration for family businesses in Africa, simply because there are no companies to look up to, that you say, “When I grow up, I want to be like that business.” I’d really love to be spending time talking to young businesses in Africa and just sharing what we just shared, the good, the bad, and the ugly, of where we got it right, where we got it wrong. I hope that by sharing that we’ll be inspiring more.

Darius Teter: As we come to a close on today’s episode, I’d like to thank Naomi Kipkorir and Annette Kimitei for sharing their personal journeys, and Peter Francis for his keen insights. Family succession planning can be a complex undertaking and it’s full of emotion, particularly for businesses that have had to fight for their own survival. But as we’ve learned today, the will comes from recognizing that continuity and long-term success means preparing mindfully and being ready to let go. And if you do that right, you’ll be handing over fertile ground to grow the ideas of the next generation. So it’s important to keep Peter’s universal antidotes in mind.

Peter Francis: I have those three; education, transparency, and communication. But then I don’t want to forget a fourth one, and that is there needs to be a sense of love. Maybe it’s just a sense of community, a sense of a tribe, a sense of something that pulls you together. That’s important as well.

Darius Teter: This has been Grit & Growth for Stanford Graduate School of Business, and I’m your host, Darius Teter. If you want to learn more about best practices in managing a family business and planning for family succession, follow us now. You’ll be notified about upcoming episodes, including one where I take a much deeper dive with Peter Francis. To learn how Stanford Graduate School of Business is partnering with entrepreneurs throughout Africa and South Asia, head on over to the Stanford Seed site at seed.stanford.edu/podcast. Laurie Fuller researched and developed content for this episode, with additional research by Jeff Prickett. David Rosenzweig is our production coordinator, and our executive producer is Tiffany Steeves, with writing and production from Isobel Pollard and sound design and mixing by Alex Bennett at Lower Street Media. Thanks for joining us. We’ll see you next time.