Another year, another successful Small Business Strategies Roundtable! With approximately 150 Twin Cities business leaders in attendance, Wipfli LLP, Wipfli Financial Advisors and Messerli Kramer were once again proud sponsors of the fifth annual event, with Twin Cities Business Magazine as the media sponsor.
This year’s topic covered a very important and pressing concern for many businesses: leadership transition. It’s an emotional topic for many, especially private companies and family businesses, but its importance in the longevity and success of a business cannot be overstated. What’s more, incoming leaders are now required to effectively engage a multi-generational workforce with different motivations, needs and experiences.
The roundtable took place on May 22, 2019, at the Metropolitan Ballroom in Minneapolis. Patrick Brault, CPA, CFTA, principal and regional director at Wipfli Financial, welcomed the audience and introduced Jason Muhlstein, Wipfli’s Twin Cities market leader, who moderated the 60-minute panel. Attorney Brett Larson, Messerli Kramer’s Minneapolis Division Chair, then led an engaging Q&A session with the panelists with questions submitted by the audience.
The panel featured leaders of four established, Minnesota-based companies that have either a solid history of going through leadership transitions or often work with companies going through one. Panelists included:
- Dan Johnson, President and CEO of M.A. Mortenson Company
- Paul Marvin, CEO of Marvin
- Ethan Casson, CEO of the Minnesota Timberwolves, Minnesota Lynx and Iowa Wolves
- Steve Soderling, Partner at Tonka Bay Equity Partners LLC
To get at the leadership transition challenges facing today’s organizations and business leaders, the conversation centered around anticipating the upcoming need for transition planning, identifying and developing future leaders, acknowledging the generational differences of today’s employees and maintaining company values.
In the case of Marvin, recognizing what makes a good leader was key. The family-owned business appointed non-family board members to lead the succession planning process well over five years before its leader was set to retire so that it could identify a family member who would best lead the business — and then prepare and develop that person. Once chosen as the candidate, Paul Marvin was rotated into new functional areas throughout these five years and worked with outside coaches to learn about his strengths and gaps.
At the same time Marvin was being developed to lead the business, the Marvin family made the decision to, for the first time, select a non-family member as President. It came down to making the right decision for the business.
Of leaders, the panel agreed that the best ones are those who understand their business’s core values and can ensure those values permeate throughout the company. Leaders must also look to the future for more than just meeting business goals — they must consider who will succeed them and how they can develop this person and set them up to take the business to the next level.
Steve Soderling pointed out that many owners think their options are either ‘keep it in the family’ or sell it, but that there is a third option of a partial exit. He discussed how private equity companies can work alongside an owner looking to transition so that the business is put in the best position to succeed after the owner transitions out. A partial exit is often an ideal option because it sets up someone who truly cares about the business’s legacy, name and employees to lead the business.
Speaking of employees, managing different generations came up a lot. Dan Johnson shared how his organization is continually learning that what incentivizes millennials is different from what incentivized baby boomers and Generation X. He notes that the incoming workforce is largely more interested in finding the meaning and purpose in the work itself, as well as what the company’s mission and practices are, and that they seem less likely to step into a higher role just for the title.
As his company is in an industry that continues to struggle with recruiting and attracting talent, he discussed combatting these challenges by putting a structured leadership program in place to mentor and develop budding leaders.
For Ethan Casson, with more than half of his staff being millennials, understanding what is important to them and how they communicate is imperative. Getting the right people in the right positions is more important than looking at what generation they came from.
The discussion then turned to how critical innovation and letting the next generation of leaders try new things are to the survival of businesses today. When looking at new types of customers and investing in the next generation of leadership, the panelists emphasized that it was vital to embrace change and continue to innovate in order to diversify services and products, and that these future leaders would be keys to success.
Values were also a point of focus. Marvin pointed out that when he took over the family business, he had to be intentional to ensure that its ideals, values and cultural initiatives would carry down with him through the transition and continued leadership.
As the business has grown, the leaders have refreshed the company’s values to make sure they have substance and aren’t seen as just words. Marvin noted that success takes the deliberate review of an organization’s systems (both formal and informal), putting in place performance and recognition programs, and even ensuring internal leadership lives out the values as a demonstration to the rest of the company.
Casson agreed that it is important to have the company’s values seen from the top throughout the organization. Through example, he tries to live out his organization’s vision and values, and he challenges his leaders and the entire front- and back-office teams to do so as well. This consistency can help a business not only survive but also thrive through generational transitions.
So what if you’re a business owner looking to transition in the coming years? The group had some parting advice:
- Engage your employees and build a diverse workforce centered around shared values.
- Set up a board of advisors or board of directors to surround yourself with good leadership.
- Focus on the things that drive the most value.
- Diversify your customers, suppliers, products and end-markets.
- Figure out what else you need to be asking about (e.g., technology, partners, etc.).
See more photos and exclusive highlights from the event here.