Generational change - time to do it right Ford, Walmart, Lidl: what do these companies have in common regarding leadership? Well, it's all about succession. These well-known companies are still owned and managed by family members and descendants of the founders. The generational change is a fact of life for Westerners who live in the capitalist world, but it is a burning challenge for first-generation Hungarian founders. Our article briefly discusses generational change, highlighting the most important aspects.

Generational change - time to do it right
Ford, Walmart, Lidl: what do these companies have in common regarding leadership? Well, it's all about succession. These well-known companies are still owned and managed by family members and descendants of the founders. The generational change is a fact of life for Westerners who live in the capitalist world, but it is a burning challenge for first-generation Hungarian founders. Our article briefly discusses generational change, highlighting the most important aspects.
Seamless change
In the title of the Harvard Business Review 2022 article, Plan a Smooth Succession for Your Family Business, the keyword is smooth - the key characteristic of the ideal succession transition. Yet, the statistics are telling in this regard: even in the more fortunate half of the world in this wealth accumulation, lack of succession preparation contributes to 25% of failed transitions. This article takes you through the strategies to make the generational transition process a success story.
- Popular global series deal with how generations differ in values, habits and attitudes (such as HBO's Max Succession, or Dallas). Therefore, the two parties must balance between the founder's long-term goals and the emerging leaders' dynamism (for example, his son or daughter).
- The founder must accept that the next generation has different perspectives in mind. It is helpful if family businesses have a written set of shared values because they can identify the same purpose.
- Intergenerational communication, knowledge sharing and the early involvement of the next generation in the day-to-day running of the business are crucial.
- Without trust, even the best-laid plans will fall through, which is why trust is one of the most important areas to strengthen.
- The founder must prepare the successor to take over the company. It is a learning process that may involve conflict, but in the end, there is the possibility of a successful transition.
The role of planning
Experts stress the importance of careful planning before a generational change. This includes setting out a vision, which is primarily for the post-transition period. This close planning should include defining the roles and responsibilities of the parties involved, how mentoring should take place and, in general, what should be included in the succession agreement.
In the meantime, of course, care must be taken to ensure that business continuity, customer relationships and revenue figures are not compromised.
Generational change for generations
So far, this article has been about the difficulties, but it is worth looking at family firms from a slightly more distant perspective. As William O'Hara, a renowned expert on the subject, put it in his book Centuries of Succes: "Before multinationals were created, there were family firms. Before the British Industrial Revolution - there were family firms. Before the Greeks and the coming of the Roman Empire, there were family firms."
It is therefore hopeful - even if it seems utopian from here in Hungary - to see an impressive list of family-owned and -controlled firms going back many generations. An interesting example is the Japanese construction company Congo Rubber, which remained in family ownership for more than 40 generations until it was bought out in 2006. But among the European examples, the Italian family company Barone Ricasoli, founded in the 12th century, is a notable example.
Objection? A much-quoted study based on data from manufacturing companies in Illinois in the 1980s found that only one-third of family businesses survived the first generation and only 13% the third. But in 2021, the Harvard Business Review refuted what it called the "three-generation myth", proving that experience shows a much better success rate for similar companies.
Learn, learn, learn
It is important to see that the success of generational change depends on adaptability and the willingness to learn. It is no coincidence that in the US, which is at the forefront of this field, there are dedicated companies. The Williams Group, which specialises in this area, offers the following services for successful succession: family coaching, role development coaching, passion coaching and implementation coaching.
The Hungarian situation
In recent years, many people in Hungary have also sounded the alarm bell: soon the founders of successful Hungarian companies (often the founders themselves!) will want to retire from their companies, often established under the previous system. The situation is understandable from a human point of view, as these people have successfully managed the biggest transition, building thriving companies in the wild, ever-changing conditions of capitalism. But when it comes time for succession, they often face a crisis.
This picture is reinforced by research published by Concorde MB Partners in 2023. In this study, the 250 domestic companies with the highest EBITDA in 2021, i.e. the most profitable, were analysed. Based on this sample, of the many findings, this is perhaps the most telling for this article: “The rate of generational change was only 13.6%, and 1/3 of this was not conscious but forced, i.e. the successors took over because of the death of the founder. This is not a very high rate and shows that domestic firms are rather at the beginning of their journey in this respect."
We are not doing well. The flagship of Hungarian higher education in economics, Corvinus University, has already organised five conferences on family businesses. At the last such event, in 2023, the former Minister of Innovation and Technology, László Palkovics, gave the alarming figure: generational change as a problem affects four out of ten businesses in Hungary.
Those who managed
The situation is urgent, but fortunately, several companies presented good examples. One such is Griff Gentleman, known for its clothing brand. The founder's children are already working in the company and have shown that the new generation is demanding a place under the sun by launching their brand independently while keeping their traditions alive.
The case of Ford Petrányi is a pronounced success story. After parents who were extremely hard-working and blessed with an excellent dealer's vein, the company, founded in 1973 to import spare parts, is now run by the only child, Zoltán Petrányi. On the one hand, the ambitious successor has carried on the credo of his parents (reliability, flexibility, people orientation), and on the other hand, he has expanded the original company profile and adapted it to the challenges of the 21st century by founding and managing new companies. Under Zoltán Petrányi's leadership, the small family business has grown into a group of more than 300 employees, and he has been recognised for his professional work not only by Ford International but also by the National Association of Motor Vehicle Dealers, for example, with awards.
The lessons of this article are well known to Interim Ltd. Indeed, successful generational change is similar in two aspects to the activities of interim managers.
First, it makes sense to keep the practices that have traditionally worked well. Secondly, the new manager can bring a fresh perspective to the company and can make the company more valuable and efficient with modern business solutions.
If these are the two goals your company is looking to achieve, Interim is a reliable partner to help you achieve them.